Two recent studies of manufacturer and retailer profitability in the f
ood industry have raised questions about whether the widely cited, but
empirically untested, shift of power from manufacturers to retailers
has really occurred. Has the marketing community been operating under
a misconception or are these studies flawed? This paper uses more comp
lete measures of exercised and potential market power and a broader sa
mple of industries and retail classes to address this critical questio
n. Not only do our measures have strong theoretical grounding in the i
ndustrial organization, finance and accounting literature, they incorp
orate in them the impact of actions that have been commonly cited as i
llustrations of a power shift. Our analysis of 14 consumer good indust
ries shows that only a few of them exhibit a shift in market power tow
ards retailers. Further this apparent shift is highly influenced by a
small number of retailers within a single retail class.