Porters 5 Forces of the Retail Industry

Last Updated: 21 Mar 2023
Pages: 2 Views: 3548

Porters Five Forces of the Retail Industry I. Supplier Power The bargaining power of Suppliers is relatively low. There is a high competition between suppliers which means that their ability to raise prices or reduce quantity is very low. Suppliers include both domestic and international manufacturers and because many retail products are standardized, retailers have low switching costs which make the supplier power low.

Larger retailers have power over their suppliers because they can threaten suppliers to change to a different suppliers which would significantly hurt the suppliers because of their great market share. Furthermore larger retailers can vertically integrate with suppliers they are having trouble cooperating with. II. Bargaining Power of Buyers The bargaining power of buyers is relatively low. This is because since there are so many customers, no one customer will have bargaining leverage. Therefore bargaining must be done in massive groups which are hard to organize.

If consumers choose not to shop at a retail outlet they most likely miss out on value or price as well as convenience of shopping retail. III. Competitive Rivalry Competitive rivalry is medium to high. There are numerous competitors as well as many E-retailers that are entering the market rapidly. Several Rivals are highly dedicated to being industry leaders. Furthermore there are diverse approaches and differing goals between competitors. These are all factors that lead to a high force but because exit barriers are low.

Order custom essay Porters 5 Forces of the Retail Industry with free plagiarism report

feat icon 450+ experts on 30 subjects feat icon Starting from 3 hours delivery
Get Essay Help

Therefore weak firms are more likely to leave the market which in turn, increases profits for remaining firms which weakens the power of competitive rivalry. IV. Threat of Substitutes Threat of substitutes is low because there are not many substitutes that offer low prices and convenience to consumers. The goal of retailers it provide a wide variety of products at one location and in many cases create a one stop shopping location which leaves little room for alternatives. V. Threat of New Competitors

Threat of new competitors is low because customers are very loyal to existing brands and retail stores. The companies that are most likely to enter the retail market are grocery stores. However, it takes a lot of time and money to build a good brand image and then get consumers to you store. Because of this, new entrants will spending money on building a brand when establishing which leaves them less money that can be used to give themselves a competitive advantage in the market. Secondly strong distribution networks are required to keep a retail store stocked.

Weak distribution networks result in more expense in moving goods around. Sources Nair, Sanel. "Walmart. " N. p. , n. d. Web. 23 Feb. 2013. . "Retail Industry - Five Forces Analysis. " N. p. , n. d. Web. 23 Feb. 2013. . Porter, M. E. (2000) What is Strategy? Harvard Business Review Retrieved February 5, 2012 from http://hbr. org/product/what-is-strategy/an/96608-PDF-ENG Porter, M. E. (1980) Competitive Strategy, Free Press, New York. "Porter’s Five Forces Analysis of Wal-Mart. " Write Academic, 12 Sept. 2012. Web. 23 Feb. 2013. .

Related Questions

on Porters 5 Forces of the Retail Industry

How do you apply Porter's five forces in a retail industry?
Porter's five forces can be applied to the retail industry by analyzing the competitive rivalry, the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, and the threat of substitute products. This analysis can help retailers understand the competitive landscape and identify areas of potential growth or areas of risk. Additionally, it can help retailers develop strategies to increase their competitive advantage and maximize their profits.
What are Porter's five forces of retail industry in UK?
Porter's five forces of the retail industry in the UK are competition, bargaining power of suppliers, bargaining power of buyers, threat of new entrants, and threat of substitute products. These forces shape the competitive environment of the retail industry in the UK and can influence the profitability of businesses operating in the sector.
What are the forces in retailing?
The forces in retailing include competition, customer demand, technology, and the economy. These forces shape the retail landscape and influence the strategies retailers use to attract and retain customers. Additionally, the availability of resources, such as capital, labor, and technology, can also affect the success of a retailer.
What are the Porter five forces of industry model?
The Porter Five Forces of Industry Model is a framework developed by Michael Porter that is used to analyze the competitive environment of an industry. It looks at five key forces that affect the competitive landscape of an industry, including the threat of new entrants, the bargaining power of buyers and suppliers, the threat of substitute products, the intensity of rivalry among existing competitors, and the overall industry profitability.

Cite this Page

Porters 5 Forces of the Retail Industry. (2016, Nov 11). Retrieved from https://phdessay.com/porters-5-forces-of-the-retail-industry/

Don't let plagiarism ruin your grade

Run a free check or have your essay done for you

plagiarism ruin image

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Save time and let our verified experts help you.

Hire writer