Retail purchasing groups consist of small, independent, specialised stores that join together and collaborate on purchasing and other areas. In comparison to large-scale corporate retail chains, often labelled mega-retailers, retail purchasing groups are based on collaborative external integration between a central unit and the independent, local dealers. The overall purpose of this research is to explore the specific characteristics that underscore a retail purchasing group. The paper has two research questions: (1) What are the strengths and weaknesses of a supply chain structure based on external integration? and (2) In what areas are the purchasing groups' ownership structure particularly advantageous in comparison to the mega-retailers' vertically integrated organisations? This exploratory research is empirically grounded in a case study of two Swedish purchasing groups. The paper argues that under certain market conditions, a decentralised supply chain, which relies on collaborative external relationships, can provide a competitive alternative to a more traditional centralised structure. The paper elaborate three areas where the structure is particularly advantageous: (1) service-based competition in an industry otherwise focused on cost leadership, (2) in-depth understanding of local conditions and presence and (3) the ability to incorporate entrepreneurial strengths and innovations in the supply chain.