Staples Market Structure

The threat that substitute products pose to an industry's profitability depends on the relative price-to-performance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. The threat of

Companies in the retail industry operate in a high price elasticity environment as there is not much product differentiation to leverage. Buyers face almost no switching cost if they chose a substitute offering better value. On the contrary, large and diverse population making small purchases works in favor of the industry. No one individual or a small group has the power to significantly impact the industry, but overall buyers enjoy have a high bargaining power in the industry.

Today’s office superstore industry in the United States provides a convenient one-stop shopping experience for small businesses and individuals with home offices. The main competitors in the industry are Office Depot, Staples, and Office Max. All of them offer a variety of office supplies, as well as computers, office furniture and other business related items.

The industry we have chosen is the department store-retail industry. Within this industry, we have chosen the department stores of JCPenney and Macy’s. We find this industry, as well as these two companies, interesting from a strategic perspective. JCPenney has recently undergone a massive strategic restructuring in regards to its pricing, brand offerings, and store layout, pushing it away from the typical department store strategy of discounts and coupons. Its new strategy has become much closer to Wal-Mart’s strategy of every day low prices. Macy’s, on the other hand, has restructured with a push from the economic

Lowe’s is the 14th largest retailer in the United States and is presently planning aggressive expansion, opening a new store on average every three days. Lowe's revenue growth is primarily a function of penetration of the market increase resulting from a burst of new locations instead of the same store sales. Although Lowe’s has grown tremendously, it remains half the size of Home Depot and has serious debt burden that increases its risk level drastically. Lowe’s is Home Depot’s largest competitor because both companies have the same products, services, and enormous warehouse formats. In this major retail market Lowe’s and Home Depot stores go toe

It is important for our upcoming business to be aware of the current competition in their field. Whether they will become competition or even create a partnership it is important to learn from their decisions. Companies like Best Buy Geek Squad, Microcenter, Apple, and Microsoft are a few of the well-known companies that we can expect to compete with. First with Best Buy, they offer warranties, installations, support, diagnostics, and repairs. They are very well known within the field and generally well respected. The service a wide variety of products ranging from phones to microwaves. Their prices vary between category, however as an example their desktop computers warranties start at $90 for a year (Tech Help & Inspiration). Something we can implement into our own company is how they will service any product they cover regardless of where it was purchased. Secondly Microcenter a well-known computer repair service. Microcenter has a very good reputation for the services they supply. They offer computer repairs, virus removal, data recovery, building, configuring, and data backups. Their wide variety of services is something that our company should also include. Generally, their prices range from $100-$130 for their services (Micro Center). Apple is a company we can also expect to deal with quite frequently. They sell many different products that they will offer repairs for. Their service reputation is not as good as the other examples because of their reported unnecessary

With 30% of Dollar General’s inventory being made up from nationally known brands and the other 70% consisting of Private label brands, Dollar General does not face a large threat from the bargaining power of suppliers. While the national brands are on par, or sometimes below, big box stores such as Wal-Mart’s prices. Dollar General’s focus is supplying consumers with quality products at the lowest price possible. Since the majority of their products are created internally the power of supplies to control prices or production is very low.

The intensity of rivalry and the threat of substitutes are strong components for J.C. Penney to consider as they continue to strive for increased revenue and market share. Their two primary competitors are Macy’s and Kohl’s, both of whom have fiercely competitive strategies to be strong retail operations. For instance, while Macy’s offers a multitude of promotional deals and is working hard to choose products based upon demographics and geographic segmentation, Kohl’s is attempting to reduce their inventory levels and improve their marketing strategies in order to become a stronger competitor in the department store segment of the retail industry. In order to compete with their competitors, J.C. Penney aims to focus on their previously successful promotions and home department segmentations by bringing in new reputable designers in order to attract a larger customer base. Due to the fact that the intensity of rivalry and threat of substitutes are both moderately strong in the retail department store industry, J.C. Penney ought to be diligent in their implementation of strategies in order to achieve success in the retail business.

The organization and characteristics of a specific market where a company operates is referred to as market structure. While markets can basically be classified by their degree of competitiveness and pricing, there are four types of markets i.e. perfect competition, monopolistic competition, monopoly, and oligopoly. In perfect competition markets, many firms are price takers whereas monopolistic competition markets are characterized by the ability of some firms to have market power. In contrast, oligopoly markets are those in which few firms can be price makers while monopoly market is where one firm can be a price maker.

availability of substitutes 1, and the threat of retaliation from incumbents (by lowering price, for

dominant incumbent even if the incumbent priced its products substantially above competitive levels for a significant period of time” (“Microsoft: Court’s Findings…). Obviously, the rival companies such as, IBM and Apple, have found great fact, that

When it comes to the impact of the Five Forces of Competition and its effect on the performance of Staples and Office Depot, there does not appear to be a strong threat of new entrants in the big-box retail office supply segment of the industry. It seems unlikely that anyone will want to open a new office supply store. While there is a level of service differentiation between the two companies, there is little product differentiation between the two. Likewise, there would be little product differentiation from a new competitor. The threat of substitutes comes into play between Staples and Office Depot in that both companies offer basically the same products. If the customer can’t get what he wants at one store, he can go to the other. Likewise, if the customer becomes disenfranchised with one company for whatever reason, he can easily go to the other company. There doesn’t seem to be much bargaining power of customers or suppliers. There does seems to be a strong industry rivalry which, as with most industries, is the major determinant of the competitiveness of the industry.

The retail industry is highly competitive, with few barriers to entry. Each Company competes with many other local, regional and national retailers for customers, associates, locations, merchandise, services and other important aspects of the Company’s business. Those competitors include other department stores, discounters, home furnishing stores, specialty retailers, wholesale clubs, direct-to-consumer businesses and other forms of retail commerce. Some competitors are larger than JCPenney, have greater financial resources available to them, and, as a result, may be able to devote greater resources to sourcing, promoting and selling their products.” There are many factors that characterize competition, including advertising, service,

Staples, Inc. is the world’s leading office supplies company. The firm is committed to making it easy for customers to buy a wide range of office products and services. “[Staples’] mission is to bring easy to

The industry boundaries have to be properly identified in order for Staples to analyze its competitive forces that are in the office supply industry environment to pinpoint its opportunities and threats (Hill, et al., 2015, p. 47).