Scale, Scope, and Specialization Effects on Retailers’ Procurement Strategies: Evidence from the Fresh Produce Markets of São Paulo
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Worldwide, the emergence of large supermarket chains in
food retail markets is often associated with the marginalization of
smaller retailers. A notable exception exists in Brazil, however, where
small retailers have held their place in the market and recently even
gained ground. The literature investigating how retail concentration
has affected agrifood chains has focused activities of the largest retail
chains, implicitly holding the scale, scope and specialization of retailers’
input needs constant, and overlooking the influence of these factors on
retailers’ procurement strategies. This paper tests hypotheses regarding
these variables’ effects on retailers’ fresh produce procurement strategies.
Data is drawn from a survey of retailers in metropolitan São Paulo.
The research results provide insight into factors underlying retailers’
procurement strategy choices and tradeoffs among options. The results
support the fundamental hypothesis of the paper that research on
the competitive strategies of smaller retailers in a context of market
domination by large retailers should not focus exclusively on the degree
to which the smaller retailers imitate the larger retailers rather it should
account for the possibility that the underlying characteristics of the
retailers may make diverse competitive strategies appropriate.