The paper discusses retail modernization in the developed and developing world using data from the grocery trade and internet retailing across a global set of nations. Retail modernization leads to more variety, lower prices, and more time savings for consumers relative to a traditional retailing sector consisting of small independent stores and suppliers. The paper proposes a process of retail modernization that relies on vertically coordinated use of scale. A major barrier to retail modernization arises from an externality posed by the need to modernize several sectors at once. Examples of coordination mechanisms are discussed.