Economic Research Report No. (ERR-122) 33 pp

July 2011

The Expansion of Modern Grocery Retailing and Trade in Developing Countries

Over the past few decades, modern grocery retailing has been expanding rapidly in developing countries. The implications for food demand and trade are influenced by the extent to which modern food retailers focus primarily on growing preferences for nonprice characteristics, such as dietary diversity, convenience, and quality, as opposed to introducing supply chain efficiencies that may reduce real food prices over time. Based on a data set of 103 developing countries, there is suggestive evidence that the expansion has been associated with growth in demand for nonprice characteristics, such as convenience in food shopping and preparation. On the other hand, growth in modern food retailing appears to be uncorrelated with variables indicative of the emergence of more efficient food supply chains. The impacts of modern grocery retailing in developing countries are potentially important to U.S. agricultural markets. Growth in developing country imports of U.S. agricultural products has outpaced growth in developed-country imports in the 1990s and 2000s, with developing countries accounting for 64 percent of U.S. agricultural exports during 2007-09.

Keywords: Modern grocery retailing, supply chain, efficiency, developing countries, food demand, trade

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