Q1. Analyze the retail scenario in India in terms of Porter’s Five Forces and investigate the growth across different segments of retailing. Ans:
Indian Retail Scenario in terms of Porter Five Forces
Porter in 1974 has given “Five Forces” model to assess the industry environment.
Five forces of Porter model which determine effectiveness of any Industry are: 1. Barriers to Entry 2. Bargaining Power of Buyers 3. Bargaining Power of Suppliers 4. Threat of Substitutes 5. Rivalry among Competitors
1. Barriers to Entry
India’s Retail industry has high barriers to entry for Global retailers. Reasons are as below. * Strict Regulation to prevent entry of global retailers to operate freely into India. Indian retail
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* Increased Mall culture and its acceptance in society.
3. Bargaining Power of Suppliers
India’s Retail industry has low bargaining power of suppliers. Reasons are as below. * Suppliers to retail Industry are also very fragmented and available in abundance to every part of India. * Suppliers have high rivalry among themselves to keep the prices low. * Most of the goods are locally available for Indian consumption and lower import tariff help in importing goods from other countries. * Transporters have lobby but they are fragmented too.
4. Threat of Substitutes India’s Retail industry has lower threat of substitutes. Reasons are as below. * Organized Retail format is picking up in India. Government is encouraging private and multinational players to play major role. So no immediate threat for any other format. * There is only one threat to retail format is online retailing. But Indian internet penetration, user acceptance and laws are not so stringent for effective online retailing. So no immediate threat from online retailing format as well. * People prefer more and more standardised and quality certified products and hygienic ambience for shopping. So local “mom & pop” shop are under constant threat to upgrade. People are gradually shifting towards organized retailers. So threat from unorganized local retailers is gradually decreasing.
5. Rivalry among Competitors
India’s Retail industry has moderate intensity of rivalry among
There are various competitors in the online shopping retail business. Anyone cannot enter in the industry. The threat of new entry into the retail business is low. Again the recession has made several restrictions for the competitors to enter in this business.
Threat of new entrants: Retail industry has a higher barrier to entry. First, it is difficult to work out a good value chain as it involves a complex process. Second, it is difficult for new entrants to gain competitive advantage and earn above-average returns in such a highly competitive market. Besides,
The overall threat of new entrants in the retail market is a high level threat as it is relatively easy and inexpensive to enter
International retail environment is competitive, rapidly developing and increasingly dynamic environment. It has a great impact on our lives and lifestyles as it all around us. In terms of economic significance, the retailing sector makes a major contribution to the Gross Domestic Product of countries and employs a large number of people. (Fernie et al., 2003) At the same time, retail environment is influenced by larger societal factors, such as political, economic, socio-cultural, natural and technological, that affect the retailer and marketing decisions. Due to this, retailers have to
The economic success of retailers greatly depends on their ability to reach customers and meet customer demands in ways that is convenient for the customer. No longer can retailers expect customers to only shop at their retail stores. Retailers are required to provide customers with the multiple shopping channels and flexible fulfillment options that they demand. Companies who fail to do so will see their customers take their business to competitors who are both willing and able to serve customers based on consumer demand (xxx)
The industry does not possess major threat from new entrants due to strong barriers to entry and strong competition for retail space. There is also a strong rivalry between competitors as limited space is being contested by major players alongside
As we all know, the retail industry is very crucial and is highly competitive. As this company
The industry is therefore highly competitive right now. With fewer people making their way to department stores, the industry is filled with players all struggling to maintain market share through innovative strategies. The retail industry however is unusually hard to penetrate. Despite the high level of competition among the players in the industry, new players are finding it hard to stay in the industry because of the size of the players. One of the strategies of retailers right now is expansion in almost all cities across all states. This would enable them to capture as much market as they can. The industry players ' size is one of the important barriers to entry that should be considered. With the size of the main competitors and the increase in the number of their stores, new players are finding it hard to enter the industry.
Expensive products evoke the desire of physical interaction before purchase, while cheaper items require less inspection. From this lens it seems that physical stores stand a better chance in the appliance and high priced electronics segments. Technologically the environment poses more concern. Online retailers are able to show more detail of products and offer an artificial user experience with video technology and high definition photography. The future of logistics also will hurt physical retailer with same day shipping already available in areas.
1 - Introduction In recent years, there have been vast growth in the wider business world regarding the overall influence of retailing and because of which, retailing and the issues that surround it, have become a vital sector in today’s global economy. (Fisher & Raman, 2001) It has been said that retailers no longer compete on retail activity alone, rather on the overall efficiency of the whole supply chain and overcoming ever expanding management issues of which arise throughout business activities. (Fernie & Sparks. 2004)
• India's $250 billion retail business is the eighth largest in the world and has the potential to grow 7 per cent by 2011. [McKinsey Report] For a company already dominating the world markets, this is an un-passable opportunity.
* Prevalence of Forward/Backwards Integration, Channels of Distribution, Pace of Process and Product Technology Change:
Retailing is rapidly becoming a global industry and many retailers are expanding to foreign markets. However, some retailers successful in their home countries have failed in emerging markets such as Chile. A case
Today’s customers are more aware and empowered, and have more bargaining power due to the exponential increase in competition – direct, indirect or substitute. In retailing, they want hassle-free shopping, have less time at their disposal to locate the shop and the merchandise and are reluctant to keep waiting. The modern format retail stores are doing their best to anticipate the customer’s demands and are going all out to redesign their store interiors, offer more choices in varieties and assortments, and are giving as many services as feasible.
In India, the middlemen between the producer and the retailer also played a prominent role in the retail and wholesale industries. Walmart’s proposal was to cut out these middlemen and to connect the producers directly to the retailers, in order to reduce the inefficiencies in India’s traditional supply chain. This was to be implemented through the joint venture, wherein Bharti would manage the retail store operations and Walmart would focus on logistics capabilities and building the supply chain. However, cutting out middlemen would create more opposition to Walmart’s presence in India. Notwithstanding the benefits that Walmart could bring to India, the retail lobby increased its protest against Walmart’s entry to the Indian retail