Retail chains help suppliers to be more competative

According to Research Institute of Economics and Enterprises project the multinational retail companies have paradox effect on suppliers.

Global trends indicate that there is increased concentration underway in the retail industry, in the result of which large-scale retail chains play a so-called „gate-keeper" function in accessing the consumer, thus suppliers increasingly depend on them.

Research outcomes have corroborated that the way buyer power manifests itself, including the abuse of it, is well known and tangible in the Hungarian market also. The more powerful a retail chain is in terms of its size and the development of its organisation and tools, the more it avails of the potentials of these tools. The research result suggests that it is not so much the firms that are weaker and more vulnerable in terms of their size and revenue that are affected to a greater extent, but rather the more powerful and dynamic firms the fundamental interest of which is to access an increasingly broader consumer pool and which, by the same token, have a greater potential to contribute to economic development.

It can also be established from the research outcomes that the impact of commercial chains on suppliers is contradictory: their prevalent power supremacy in their business relations and the consequential uncertainty and unpredictability that evolve in such business relations may result in market distortions. On the flip-side, however, a motivating impact of chains can also be ascertained manifesting itself in increasing innovation and product development on the supplier side.