Effects of increasing the power of retail chains on competitive position of producers

Abstract

© 2016, Budapest Tech Polytechnical Institution. All rights reserved. There is a retailing revolution in progress, whose basic characteristic is strengthening the power of retailers. This strengthening causes shifting of the powers between members in the marketing channels and thus it leads to the change of positions and relationships within the channel. The trade revolution affects all the segments of goods and services, and it reflects, with the greatest extent and with special content, on the sphere of food and other products of everyday purchase and consumption. Precisely in this domain, the position of the large retail chains extremely strengthens in comparison to other players in the marketing channels. The effects which cause contemporary changes in the sphere of retail on relationships in the marketing channels are of substantial importance for functioning and survival of the channels. The question of a new position of producers in them is of special importance. All those, and especially smaller producers, are highly affected by the situation in which they are not able to resist the accumulated purchasing power of retailers. However, despite the fact that producers both face the ever-growing and more complex demands the large retail chains impose on them and at the same time become more dependent to the decreasing number of more and more powerful retailers, they also recognize the advantages of doing business with such partners. Simultaneously, the role of modern state is of high relevance. A state is expected to precisely and comprehensively define adequate rules for market players and to work intensively on their enforcement and sanctioning their infringement.