'Proactive fast-tracking' diffusion of supermarkets in developing countries: implications for market institutions and trade

Supermarkets have spread extremely rapidly in developing countries after the ‘take-off ’ in the early to mid-1990s. Former analyses of supermarket diffusion have not adequately explained the sudden burst and then exponential diffusion of supermarkets in the late-1990s and early-2000s. We argue that rather than taking demand and market institutional and organizational conditions as “exogenous”, as former analyses have tended to do, modern food retailers instead have treated local conditions as substantially “endogenous”. To enable their rapid growth, supermarkets undertake “proactive fast-tracking strategies ” to alter the “enabling conditions ” of entry and growth. Beside the retail investments that have been extensively treated in recent literature, these proactive strategies focus on improving the “enabling conditions ” via (1) procurement system modernization and (2) local supply chain development. One important strategy retailers have used to facilitate (1) and (2) is to form symbiotic relationships with modern wholesale, logistics, and processing firms. An example we address is “follow sourcing”, where a transnational retailer encourages transnational logistics and wholesale firms with whom the retailer is working in home markets, to locate to the developing country. This is a spur to globalization of services in