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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2023 Grand Challenge: Workforce Disrupted
Market-Based Solutions to Vital Economic Issues
Jul 1, 2015

United We Stand: The Antecedents and Consequences of Buying Groups


In diverse industries, from grocery retailing to health care, retailers join buying groups to achieve better terms with suppliers. The authors track the buying group membership of Europe’s largest grocery retailers over a 15-year period and evaluate why some buying groups are better than others in increasing retailer performance and why different members belonging to the same group do not always benefit equally from their membership. They find that, on average, buying groups indeed generate scale advantages for their members: group scale increases group members’ productivity and sales and decreases their cost of goods sold. Still, bigger is not always better. Retailers benefit less from buying group scale when the group is more heterogeneous in terms of member size and when it extends its scope across too many markets. Moreover, the smaller a member is within the group and the more it overlaps with fellow members, the less it benefits.

Note: Research papers posted on ResearchGate, including any findings, may differ from the final version chosen for publication in academic journals.

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