Introduction

Moreover, retailing is of concern both to governments and consumers not only because of the proportion of GDP for which it accounts in developed economies but also because of the size and market power of individual retailers and the evidence that suggests that retail markets do not necessarily work in a ‘perfectly competitive’ manner. With regard to their absolute size, for example, Belgium’s largest business in terms of sales revenue is the retailer Delhaize ‘Le Lion’; in the United Kingdom Tesco and Sainsbury, who are respectively the market leader and the second company in the grocery supermarket sector, are among the top ten companies in the economy, and their counterpart in Germany, Metro group, is also among the largest firms in that economy (see data in Dobson and Waterson, 1999). Not only are retailing organizations large businesses within their own economies, but they also enjoy considerable market power in terms of familiar concentration ratios. In the mid-1990s, the top five grocery retailers in a range of EU economies enjoyed market shares which, while they were only 25 per cent in Spain, rose to double that proportion in Belgium and France, and to 61 and 64 per cent in the Netherlands and the United Kingdom, respectively. This situation is the outcome of a significant trend that is evident across the whole of the European Union. In the United Kingdom, supermarkets increased their market share of fast-moving consumer goods (FMCG) from 20 per cent in 1960 to 85 per cent in 1997, and across the European Union there have been significant reductions in the number of grocery retail outlets. In northern Europe, the typical porportionate reduction over the 1960s to 1990s was 70 per cent, while rather smaller proportionate reductions, albeit over a shorter period up to the early 1990s, were experienced in Portugal and Italy.