Large supermarkets usually bring their own set of private standards and modern management practices when they set up business in another country.
Photo: FAO/Dan White

01.12.2016

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The last three decades have shown that the rash diffusion of formal modes of retailing into developing countries has threatened the livelihood of many smallholders who fail to adapt to retailers’ standards. Although “supermarketisation” has given rise to a wide range of positive outcomes, the huge number of domestic suppliers who could not adapt to buyers’ demands of quantity and quality tend to be left behind. However, adequate support from development co-operation and governments could also enable small-scale farmers to take advantage of the benefits offered by supermarketisation in terms of inclusive economic growth.

The modernisation of retailing in developing economies is a young phenomenon. Thomas Reardon of Michigan State University identified four waves of “supermarketisation”: beginning in the early 1990s in South America and East Asia, followed by a mid-1990s expansion in most of Southeast Asia and parts of Central America, followed by a third wave in the early 2000s in China, eastern Europe / Russia and, finally, a fourth wave in the late 2000s in South Asia, sub-Saharan Africa and poorer countries of southeast Asia. Reardon identified several reasons behind this phenomenon, including decreasing profits in home markets of international retail chains coupled with the economic boom in emerging economies. Other authors argued that urbanisation and improvements in infrastructure in developing countries, the conglomeration of international tastes and the rise of a middle class with more spending power were among the reasons behind the decision of international retailers to venture into developing economies.

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