The rapid rise of supermarkets and the use of private standards in their food product procurement systems in developing countries

Abstract

Supermarkets play a leading role in food supply chains in developing countries, and grades and standards are becoming key instruments for product differentiation and agri-food chain coordination. This article traces main patterns and trends in the emergence and expansion of supermarkets in developing countries, and illustrates their leading role in domestic food retail. This gives rise to a restructuring of the procurement systems of supermarkets, based on central sourcing, growing use of specialized/dedicated wholesalers and a shift towards preferred suppliers. Emerging trend also indicate a rapid rise in the implementation of private safety and quality standards in the supermarket sector for reducing the coordination costs in procurement systems. A taxonomy and illustrations of the interfaces between procurement systems and private standards is presented and implications for smallholder participation and agricultural development are discussed.