Executive Summery The retail industry is a very important part of the world economy. “Variety can be categorized by different level of service, and generally fall into one of the following categories: discount department stores, wholesale clubs, supercenters, hyper marts, and so-called category killers” (Variety Stores). A retail business operates in a fixed market location selling goods and service for consumers. The retail industry buys goods from the supplier in large quantities to provide to consumers and make a profit. This could include anything from consumer product and delivery of products to consumers. PESTLE analysis Political The change in politics and policy sometimes affects domestic and international firms. However, the …show more content…
Legal When operating in U.S. the retail industry experience’s too many rules and regulations set by the government. These laws could be anything from not giving an opportunity to minorities or hiring illegal immigrant. Not complying with the rule and regulation could result in fines. Porter’s Five Forces Entrants- High The brand name and the number and location of retail stores appears’ to be the main barriers to entry. The retail industry also has the advantage of an established name. A retail store that has been around for quite some time generally is not affected the new entrants due to the high cost. The company will have difficulty in gaining customers unless they can provide innovative strategies that are better than the others in the retail industry for it to be able to get the customers retail business. Rivalry- Low There are few direct competitors in the retail industry. Any competitive rivalry that comes into the market has very low influence on a retail industry that has been around. Since there are limited numbers of competitors there is low rivalry. Also, new competitors don’t have much power over other in the industry since they have more of the market share. Substitutes- moderate to high A substitute has higher effect because substitution could make the company lose profit. In order to avoid these, companies always need to be in tune with customer needs and wants. Also, providing excellent service and
Threat of new entrants is relatively low. There are high barriers to entry in the discount retail market, including high capital costs, limited access to investors, and a largely crowded-out market place.
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 threat of entry of the supermarket industry in US is low, which base on the analysis of the three major sources that related to the entry barriers. The first barrier is the economies of scale of the existing large supermarkets. When these incumbents achieved larger volume sales, they can have lower unit costs than new entrants, and it will very difficult for those new entrants to compete with them (Johnson, Whittington, &Scholes 2011). For example, Wal-Mart had invested in innovative procurement, automated distribution centre and bar coding to increase its economies of scale, and these investments created a great barriers for new small retailers to enter into the supermarket industry (Porter 2008). The second barrier is the incumbency advantages, which mean the incumbents established their own strengths that cannot be used by competitors (Porter 2008). For example, the top ten supermarkets in US have accumulated extensive experiences on how to run their businesses more efficiently than new entrants (Johnson, Whittington, &Scholes 2011). The subtle differentiation between the products that sold in supermarkets is the third barrier for new entrants. Because most of the product assortment is same or similar between each supermarket,
The retail sectors are specializing in the selling of products that the consumers need in specific times and places. However, it is hardly the retailer's responsibility to produce the goods. The retailers just act agents, as they get the products to the consumers. Industrial retailing will focus more on the sale of small quantities of the products to the buyers. Transformational processes are not integrated in the retailing processes, as the retailers neither produce nor manufacture any goods. Initially, retailing was just transacted in stores and shop. Presently, technological upgrades and developments have affected the retailing process positively, leading to the use of electronics to do transactions. In most cases, the retailers will transact with cash specifically during payment of the products (Retail Council of Canada, 2009).
In the last part of the book, the author talks about small retailers and co-operators and their views regarding the monopolized retailers. This part also talks about the mass retailing business from a broader perspective. It turns out that the government did not want to intervene in the retail business and they were only able to bring in a tax reform for these big businesses. Even today, mass retailers still dominate the consumer landscape.
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
The retail industry is a sector of the economy that is comprised of individuals and companies
During the past decade, retail markets have undergone many changes in their processes, services, and formats. The last part of distribution of the market strategy, retailing serves as a bridge between the final consumer and the mass producers of products. Retailing has reached every corner of the globe, and Wal-Mart has been eying areas where the
Potential entry of new competitors is rendered low for the grocery retailing industry. Puregold, SM Hypermarkets, Rustans, and Robinsons Supermarkets are amongst the top key players in the game. The entry of new competitors could be very low because of the huge capitalization funds that this industry requires. In addition, the industry has been long time dominated by the giant players that had already well established and positioned their brands throughout the country and that they had already spread out with branches in Metro Manila and other regions.
As we all know, the retail industry is very crucial and is highly competitive. As this company
Any retailers without loyalty buyers will quickly fail. Therefore, attracting more potential customers, acquiring more new customers, and maintain more loyal customers will help a company success in the high competing industry. Also, if retailers can get the suppliers with lower price or better quality product, the more likely a retailer could win in the industry. Since there are only limited number of suppliers in the industry and the merchant they supply account for a larger part of the retailer’s sales. All of the retailers are competing for the
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,
The risk of generic substitution is also increasing with especially China dominating the production market. Customers will substitute for a generic product if the disposable incomes of the customers reduce resulting in customers willing to trade down for a inferior but cheaper product.
The nature of the merchandise and services the retailer will offer to satisfy the needs of the target market
The economies of scale in the retail industry are huge. All of the companies in this industry have first mover advantage. Many of the competitors in this industry already have immense and diverse relationships with many of the suppliers they obtain and any new competitor will have a tough time trying to squeeze into the dealer network in order to establish themselves as any type of threat to another retailer.