Porters Five Forces with the Retail Industry
I. Provider Power
The bargaining power of Suppliers is relatively low. There is a high competition between suppliers which means that their particular ability to raise prices or reduce variety is very low. Suppliers include both home-based and intercontinental manufacturers also because many selling products will be standardized, stores have low switching costs which make the supplier power low. Greater retailers have got power more than their suppliers because they will threaten suppliers to change to a different suppliers which in turn would substantially hurt the suppliers because of the great market share. Furthermore much larger retailers can vertically integrate with suppliers they are having trouble cooperating with.
II. Negotiating Power of Purchasers
The negotiating power of potential buyers is relatively low. This is because seeing that there are so many consumers, no one customer will have negotiating leverage. As a result bargaining should be done in massive groups which are hard to arrange. If buyers choose not to shop for a retail store they more than likely miss out on value or cost as well as convenience of shopping price tag.
III. Competitive Rivalry
Competitive rivalry can be medium to high. There are numerous competitors and many E-retailers that are coming into the market speedily. Several Competitors are highly committed to being industry leaders. Furthermore there are different approaches and differing desired goals between competition. These are most factors that may lead to a high pressure but mainly because exit barriers are low. Therefore weakened firms are more likely to leave industry which in turn, raises profits intended for remaining companies which weakens the power of competitive rivalry.
IV. Threat of Substitutes
Risk of alternatives is low because there are very few substitutes that offer low prices and convenience to consumers. The purpose of retailers that provide a wide variety of products at one site and in many cases create a one end shopping area which leaves...
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