The Global Spread of Modern Food Retailing

In this chapter, Benjamin Senauer and Thomas Reardon examine the transformation of food industries and supermarket retailing. This industry is leading edge in the diffusion of global retailing throughout the developing world today. Nine of the top ten retailers of 2007 sell food products, and all these chains use food retailing as a wedge to introduce a range of other consumer goods to the people in the developing world. In the last quarter of the twentieth century, food retailers, including food service operators, began to play a major role in creating global consumer and supplier markets. Thanks to global sourcing, consumers have now become accustomed to having fresh fruits and vegetables year around and exotic food products from abroad. A small number of European companies, including Carrefour, Aldi, Tesco, and Metro, along with Wal-Mart are dominating the international expansion of food retailers. These global retailers have spurred the development of regional supermarket chains in many developing countries, and together they are having a profound impact on agricultural production throughout the world. These supermarkets are reshaping the supply chain for locally sourced products, all the way back to the farm level. Supermarket chains want to deal with a small number of reliable suppliers, not hundreds of small peasant farmers. A contractual arrangement is frequently established with a few "preferred suppliers" who can meet their standards.