Strength of Competition

1. What does a five-forces analysis reveal about the strength of competition in the U.S. family clothing stores industry?

Rivalry- [Very Strong] The rivalry amongst the existing established clothing store chain is pretty strong. All companies are geographically present with several hundreds of stores, all have capabilities to outsource manufacturing or purchase from developing countries at prices and quality that they demand. In addition all stores are selling online and providing the same customer service categories and levels. They are all able to manage purchases and inventories in such a way that they replenish the stock quickly and get fresh new designs and looks every season with more frequency.

Suppliers – [Weak/Moderate] the suppliers to the clothing stores in the United States are companies around the world. They do not have much of a bargaining power as compared to the clothing store company. An order for one style of a garment can run into million pieces of order for a supplier. Clothing companies are sourcing it from developing countries where the cost of labor is cheap and quality can be demanded. These type of orders are huge for such suppliers. They have to deliver quality product and on time otherwise the good can be rejected. The same supplier market is now accessible to all clothing stores.

Buyers – [Strong] the buyers/ customers are strong as they have a variety of choice from each store. Every store is accessible in mostly all neighborhoods and online shopping is also available. They can shop from one store versus the other based on the latest trend or choice availability. One limitation here is that if a product is sold out, it is not easy or possible to re-order for customers. The buying is for fixed pieces and distributed to stores according to capacity.

Substitute products – [Strong] there is always substitute available in the market for clothing