The market share of international retail chains substantially increased from the beginning of the nineties. The supplier’s market has been adapted to the evolutions of retailers’ market in terms of modified purchasing processes. The concentration of large food retailers has been much faster than the same process among manufacturers. Due to these changes, the requirements towards food industry suppliers grew in number and quality. Thus it is generally true that the nature of the buyer-supplier relationship in retailing has been undergoing dramatic changes. Important literature has described these emerging relationships as "partnerships" or "strategic alliances," as opposed to the traditional "arm's length" type of associations. But these conditions are likely to change especially in the relationships between small and medium suppliers and large retailers. The paper shows how the relationships between suppliers and retailers are experiencing several important changes, above all at international level. In particular, the analysis is focused on the Italian food SME suppliers related with international large retailers. Considering the focus of this paper, in-depth interviews to 28 Italian food SME suppliers have been conducted in early 2007. Results have been analyzed and compared to the retailers’ point of view, resulting from public reports (such as Annual report, CSR report, etc.) to understand retail companies’ approach to SME suppliers. Considering the main topics of such relations and the selection criteria used by retailers, one of the main results of the analysis is that the unbalance of power in the relation is not necessarily a negative condition, as the growth of SME suppliers is stimulated by an improving attitude to operate with large retailers. Retailers reserve a wide space on their shelves to SME references because they contribute to increase the variety of merchandising and ensure a more tight control on the supply chain (traceability). At the same time, the strong pressure on price and the required organizational qualifications lead to a selection process, in which smaller manufacturers seem to be the more vulnerable actors.

SME food suppliers versus large retailers: perspectives in the international supply chains

MUSSO, FABIO;
2008

Abstract

The market share of international retail chains substantially increased from the beginning of the nineties. The supplier’s market has been adapted to the evolutions of retailers’ market in terms of modified purchasing processes. The concentration of large food retailers has been much faster than the same process among manufacturers. Due to these changes, the requirements towards food industry suppliers grew in number and quality. Thus it is generally true that the nature of the buyer-supplier relationship in retailing has been undergoing dramatic changes. Important literature has described these emerging relationships as "partnerships" or "strategic alliances," as opposed to the traditional "arm's length" type of associations. But these conditions are likely to change especially in the relationships between small and medium suppliers and large retailers. The paper shows how the relationships between suppliers and retailers are experiencing several important changes, above all at international level. In particular, the analysis is focused on the Italian food SME suppliers related with international large retailers. Considering the focus of this paper, in-depth interviews to 28 Italian food SME suppliers have been conducted in early 2007. Results have been analyzed and compared to the retailers’ point of view, resulting from public reports (such as Annual report, CSR report, etc.) to understand retail companies’ approach to SME suppliers. Considering the main topics of such relations and the selection criteria used by retailers, one of the main results of the analysis is that the unbalance of power in the relation is not necessarily a negative condition, as the growth of SME suppliers is stimulated by an improving attitude to operate with large retailers. Retailers reserve a wide space on their shelves to SME references because they contribute to increase the variety of merchandising and ensure a more tight control on the supply chain (traceability). At the same time, the strong pressure on price and the required organizational qualifications lead to a selection process, in which smaller manufacturers seem to be the more vulnerable actors.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11576/2299291
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