Volker Trauzettel
Pforzheim University, Germany
E-mail: volker.trauzettel@hs-pforzheim.de

Abstract

The distribution of fast moving consumer goods (FMCG) via manufacturerretailer supply chains is analysed. Packaged goods in grocery channels are supplied
by manufacturers to retailers selling them on to consumers. The products are
standardized and branded so that each manufacturer is in competition with other
manufacturers as the products within a category are to some extent perceived
exchangeable by consumers. Similarly, the retailers’ offerings are composed widely
of the same items and brands. This competitive scenario is shaping the contractual
relation between each supplier and retailer. In many instances, fierce bargaining is
often the reality in the manufacturer-retailer relationship. This paper reviews the
setting of the distribution of groceries in European markets. We provide empirical
evidence on bargaining processes and the contractual conditions. Furthermore, the
effect on supply chain performance is shown by various examples.

Key words: manufacturer-retailer competition, bargaining, contracting, supply chain
performance

Last Update: October 26, 2017