This study aims at exploring how recent developments in the retail sector affect trade in consumer
goods. It focuses on three areas of development: i) internationalisation; ii) market structure; and iii) the
growing market share of retailers? private labels. It distinguishes between food and non-food products as
there are significant differences between the sourcing patterns of these two product categories. The gravity
model is extended by integrating a retail intermediary sector, and a novel estimation technique (zero
inflated Poisson) is proposed. It is found that the foreign operations of a retailer are positively related to
imports from the host to the home country of the retailer. The rate of market concentration and the market
share of private labels are both found to be negatively related to imports of food and positively related to
imports of non-food consumer goods, but private labels tend to shift sourcing towards low-income
countries. Lower tariffs yield a stronger import response in countries with a less concentrated retail sector,
particularly for food items suggesting that competition policy and trade policy are complementary. In
developing countries the entry of international retailers can have a positive impact on exports and product
quality.
