Alliances Help Retailers To Balance Negotiating Power, Says EuroCommerce
EuroCommerce, which represents the retail and wholesale sector in Europe, has said that alliances allow retailers to balance the stronger negotiating power of large suppliers and provide consumers products at a reasonable price.
EuroCommerce was responding to a report by the European Commission Joint Research Centre on retail alliances and their impact on the food supply chain.
EuroCommerce director-general, Christian Verschueren, explained, “Retailers operate on low margins. The large multinational suppliers operate globally, achieve significant margins and have the power to set conditions in the supply chain.
“Most retailers are only present in a limited number of countries in Europe and join alliances to help create a reasonable basis of negotiation with these large manufacturers, and pass on the benefit to the consumer.”
Unfair Trading Practices
The report responds to a call from the European Parliament following the adoption of the EU directive on unfair trading practices in the food supply chain in 2019, EuroCommerce said in its statement.
The study also confirmed that there is little evidence of an impact of alliances on farmers and the existing regulatory toolbox is sufficient to address possible concerns.
It also found no evidence of higher retail and wholesale margins arising for businesses participating in such alliances.
'Alliances Help Consumers'
Verschueren added, "Alliances help consumers, and keep smaller food retailers alive in Europe, including in cities and rural areas where they play a crucial social role, as has been made even more obvious in the current crisis.
"They have no effect on prices paid to farmers, serve to moderate the negotiating power of already powerful multinationals, and support a single market for sourcing."
The report also noted that retail alliances are diverse and should be analysed on a case-by-case basis.
Elsewhere, Else Groen, director of Independent Retail Europe, said that the report recognises the importance of retailer cooperation.
"Alliances help keeping our European retail market diverse, they are therefore an essential element of all consumer goods supply chains," she said. "The importance for consumers of local retailers in both rural and urban areas was once again demonstrated during the current coronavirus crisis.”
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: The European Supermarket Magazine.