Strategic Management

Porter’s Five Force Model

Threat of Entrants: In the supermarket industry, there are no barriers to entry besides the economy. Presently, it does not encourage potential entrants; even the capital required for entry is very high. Majority of supermarkets in Grenada uses a differentiation approach where that they products are perceived by Grenadians as high standard/quality compared to the other supermarkets in the southern part of the island.

Threat of Substitutes: In the supermarket industry, the main threat of substitute would be the various brands of the same type of products available to the customer. Customers have choice but there may be more loyal to the cheaper products which have to do with the amount of disposal income available.

Power of Buyers: Buyers spending power has been high because of the high buyer concentration caused by demand. However, Buyer’s bargaining power is very low because of the variety of products available. They have a choice either to buy brand or non-branded products.

Power of Suppliers: In Grenada, two of the oldest operating supermarkets, Foodland and Food Fair are acquired by holding companies that have distribution divisions. Foodland is a subsidiary for George F. Huggins Group and Food Fair, Jonas Browne Hubbards Group. Therefore, these competing supermarkets may have distribution advantage, because majority of the supermarket purchase from both holding companies’ distribution divisions. Also, cost of switching is low; it’s not risky to switch local suppliers because buyers tend to like choice and availability.

Competitive Rivalry: There is no in balance competition in the industry, because there is no dominance despite mention of Real Value being the leader because of they competitive edge with technology. The industry is really at the maturity stage of the life cycle. Also, there is a lot of high fixed cost when it comes to the supermarket industry.