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Retailing And Producer-retailer Relationships In Food Chain

Papers From The 88th Eaae Seminar Paris 2004

Retailing And Producer-retailer Relationships In Food Chain
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In May 2004, I was invited to give a keynote address on Wal-Mart’s internationalisation at the 88th seminar of the European Association of Agricultural Economists (EAAE) in Paris. The theme of the event was “Retailing and Producer-Retailer Relationships in Food Chains” and six of the papers presented at the conference are the subject of this issue of the journal. Martin Hingley’s paper on power imbalanced relationships sets the scene for the issue. Martin’s work is strongly focused upon the fresh food supply chain in the UK. Drawing upon in-depth interviews with senior management of fresh food suppliers and their key customers, the large retail chains, he shows that the imbalance in power in such relationships does not preclude these companies from entering meaningful successful relationships. He therefore challenges the more accepted view in the relationship marketing literature that trust, symmetry and mutuality are necessary constructs for a successful exchange relationship. The paper by Andrew Fearne, Rachel Duffy and Susan Hornibrook continues with this theme. In their paper, however, the focus here was on best practice principles in relationships between retailers and suppliers of meat, dairy and fresh produce in the wake of the Code of Practice initiated by the Office of Fair Trading. In a postal survey to suppliers in these commodity sectors it was interesting to note the degree of heterogeneity in relationships. Indeed, best practice was achieved by companies with a low pricing or niche marketing positioning indicating that these companies had adopted lead suppliers to manage supply chain relationships. Our next three papers are from France. Dominique Bonet and Gilles Pache´ note that the concentration of power towards retailers in the food channel is similar in France to that in the UK. Like their UK counterparts, French retailers (mainly in the trade press) have espoused their commitment to building close relationships with their suppliers. The authors interviewed 17 senior managers representing manufacturers, retailers and a consultant. Using Tropes software to analyse the structure of narrative in these interviews, Bonet and Pache´ argue that despite the rhetoric of collaboration and joint problem solving, in practice vertical competition and a commodity marketing approach is the norm. In their paper, Didier Chabaud and Jean-Marie Codran discuss such changes as the growth and scale of the French retailing industry but in the context of retail organisation at the store level. By using the Aokian theoretical framework they show that the centralisation/decentralisation of management functions is very relevant to product specificity. Thus an “assimilation” pattern is evident for branded products compared with an “encapsulation” pattern more suited to fresh/locally produced products. The next paper by Sans, Fontguyon and Briz illustrates how stakeholders in the meat supply chain in France and Spain have tried to restore consumer confidence in the aftermath of BSE health scares in the 1990s. They chart the impact of these health scares on consumption and consumer reaction in both markets (less evident in Spain because actions were already implemented in France earlier). Nevertheless, both Carrefour and Auchan which operates in both markets have used their quality assurance programmes to differentiate their products and restore consumer confidence in the retailer’s brand. Our final paper is from Germany by Astrid Jonas and Jutta Roosen and it focuses upon private label organic products in the German retail market. They note that the share of organic product sales lags behind some other countries in Europe, including their neighbour, Austria. Nevertheless, this is a growing sector and the authors conducted an online survey of 110 manufacturers and 14 food retailers to ascertain market developments, retailer strategies towards organic products and relationships with producers. The survey shows that retailers use organic products as part of a premium product, image building strategy and there are less stringent “shelf space” requirements for these suppliers than their branded, non organic competitors.

John Fernie

Previously published in: International Journal of Retail & Distribution Management, Volume 33, Number 8/9, 2005

Emerald Group Publishing Limited; July 2005
153 pages; ISBN 9781845444419
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