Diversification of Food Retailers

Grocery retailers, as the last link in the long chain of "middlemen" who handle food and related products, exercise considerable control over the supplying and selling of a wide variety of products. Many retailers have found diversification into manufacturing or wholesaling to be quite attractive. They have a ready outlet for the products and, unlike many manufacturers, an assurance that the products will be displayed to the consuming public. Manufacturers and wholesalers rarely find it as easy to diversify into retailing either because they lack merchandising experience or produce a specialized line of products. Since grocers are basically mass merchandisers, it is relatively easy for them to diversify by retailing other types of products like drugs and general merchandise. To become more diversified, food retailers need additional financing and the technical capability to manufacture or wholesale products, and they must generate sufficiently large sales to achieve economies of size.