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Porter s 5 forces in fashion industry

There are several factors including the fluctuations in the global economy, rise of the digital, technology, demand for fast fashion that are affecting the fashion retail market.

Porter's Five Forces: Analyzing the Competition

Power is in the hands of the customers in this era and therefore the focus of the brands is also on crafting a better consumer experience. Thus, there are several forces affecting the market position of the fashion brands. Bargaining power of customers: Individual customers may have very little bargaining power in the fashion retail industry.

Brands employ several types of customer retention strategies including discounts and memberships. Bargaining power of suppliers: Suppliers are not a significant force in the fashion retail industry.

Competitive Rivalry or Competition with Nike Inc. (Strong Force)

Mostly the suppliers a re from the third world countries and have to follow the rules set by the buying brands. Brands use their financial clout to influence prices. Threat of new entrants: Threat of new entrants is a weak force in the fashion industry. As already mentioned, it is a densely populated industry and for a new brand to find success, it must use a significant level of differentiation.

Still, brands can find unique ways to grow popular and acquire success. The increasing popularity of fast fashion is a proof of this fact. Moreover, investment is also a significant barrier.

  • Is it possible to align with and access existing distribution channels?
  • Brands that have a strong brand image are able to charge higher prices;
  • Generally, outdoor apparel is priced relatively high, especially because it is available through so many brand name firms.

Apart from infrastructure, there is investment in marketing, distribution chain and human resources. The threat of substitutes comes from inside the industry.

Every brand has several competitors and the space is continuously getting limited.

Threat Of New Entrants | Porter’s Five Forces Model

From the high end to the low end segment, brands have populated the fashion landscape. So, even if cloths in general do not have a substitute, brands have many.

Even for those who cannot afford luxury brands there are substitutes that can make high end styles available at lower prices.

  • High costs of switching companies Government restrictions or legislation Power of Suppliers - This is how much pressure suppliers can place on a business;
  • In addition, traditional established physical stores can easily move into online retailing and bring with them their substantial consumer base;
  • Additional country specific sites are being developed with international shipping available on some products to other parts of the world;
  • The fewer there are, the more power they have.

Competitive Rivalry in the industry: The fashion retain industry is remarkable for the intense level of competitive rivalry in it. There are a large number of brands with similar product offerings.

Fashion Industry Five Forces

This makes the competitive rivalry intense. However, some brands also drive loyalty based on features and quality. Fast fashion is an emerging area. Brands that have a strong brand image are able to charge higher prices. Still, the race for winning customers has gotten so tough that there is pretty little space for the new comers.

  • Top industry players offer similar products, sometimes differentiated by minute details, such as specific material, style, and design;
  • Apart from infrastructure, there is investment in marketing, distribution chain and human resources;
  • In addition, the strength and aggression of the response can also vary according to current market conditions, trends and consumer behavior;
  • How strong is the expected retaliation from existing firms?
  • Nonetheless, this element of the Five Forces Analysis shows that Nike experiences only a weak force representing the bargaining power of suppliers.

Overall, the competitive rivalry is a strong force in this industry.