Porter Five Forces Model - Fashion Retail Industry

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Porter’s Five forces model This section will analyse Porter’s five forces for the global luxury goods market by looking at the wholesalers/retailers of luxury goods as players. The report will take the end-user or customers as key buyers and manufacturers as key suppliers. Forces Strength Competitive Rivalry The competitiveness in the industry is relatively high due to the number of big and small players in the fashion industry. Particularly, in the high end, there are a good number of designers which compete with similar products within the same customer base. However, it is important to recognise that the competition in luxury fashion is not based on price but rather on image perception and brand value and quality. It could be argued that competitive rivalry is slightly lower in emerging markets because of their recent development and the slower entrance of key players in this industry. Potentially, this can be offset by the competition of local fashion retailer. Bargaining Power of Buyers Luxury brands have all individual consumers to sell to globally but also in a given country. However, due to the higher prices, there is a certain segment to which these brands can appeal to – this strengthens the power of the buyers. Because of the high competition and many brands within the industry – there are low switching costs for the buyer. This is complemented by online shopping, which means that the retailers do not even need to be physically in the same place. This lowers the switching costs for the buyer and increases their power. The rise of the ethical social consumer and the information availability that came with the internet made the buyer demanding and less likely to develop loyalty towards a brand – this increases their power. However, there are demographic and psychological bearings of certain garments, which are
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