The Rise of Mega retailers

The rise of huge mass merchandisers and specialty superstores, the formation of vertical marketing systems, and a rash of retail mergers and acquisitions have created a core of superstore mega retailers. Through their superior information system and buying power these giant retailers can offer better merchandises selections, good service, and strong price saving to consumers. As a result, they grow even larger by squeezing out their smaller, weaker competitors.

The mega retailers are also shifting the balance of power between retailers and producers. A relative handful of retailers now control access to enormous numbers of consumers, giving them the upper hand in their dealings with manufactures. For example, in the United States, Wal-Mart’s revenues are more than five times those of Proctor and Gamble, and Wal-Mart generates almost 20 percent of P & G’s revenues. Wal-Mart can, and often does, use this power to wring concessions form P & G’s and other suppliers.