Is the retailing sector plagued with competition problems?

Retailing is concentrated in many countries. A national supermarket chain can easily represent 25% of the turnover of many manufacturers. Should we be concerned about this situation? On 18 April 2008, TILEC devoted a seminar to this issue. Jeanine Miklòs-Thal (University of Mannheim) presented her work (joint with P. Rey and T. Vergé) on slotting allowances (fees that suppliers pay retailers so as to gain access to shelf space). In her model rival retailers, endowed with all the bargaining power, offer contracts to a manufacturer. Contracts that allow for a fixed fee and exclusivity provisions (in addition to specifying the unit price) are not sufficient to achieve monopolization of the industry. Richer arrangements (including, e.g., slotting allowances) are required to that effect. The policy implications are however ambiguous, if only because slotting fees are not strictly necessary to achieve this outcome. Pieter Kuipers (Unilever) addressed the problems raised by the recent development of 'private labels' (retailer's brands). As a result of this trend, retailers now combine the roles of customer of branded goods as well as competitor, with the risk of compromising their function as efficient gatekeepers to final consumers.