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Porters 5 force model for 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.

Fashion Industry Five Forces

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.

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.

Cost leadership

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.

  • Overall, the competitive rivalry is a strong force in this industry;
  • As illustrated by Porters 5 Forces Analysis, although the competition among top players in this industry can be intense overall, each firm poses an advantage with the differentiation they provide in attracting their consumer base;
  • One way to analyze your competition is by using Porter's Five Forces model to break them down into five distinct categories, designed to reveal insights;
  • Threat of substitute products;
  • Alternatives and addendums While Porter's Five Forces is an effective and time-tested model, it has been criticized for failing to explain strategic alliances.

Moreover, investment is also a significant barrier. 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.

Porter's Five Forces: Analyzing the Competition

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. Competitive Rivalry in the industry: The fashion retain industry is remarkable for the intense level of competitive rivalry in it.

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There are a large number of brands with similar product offerings. 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. Overall, the competitive rivalry is a strong force in this industry.