Five Forces Analysis on Indian Retail Industry

Porters Five Forces Analysis on Indian sell Industry An analysis of the structure of the manufacture should be undertaken in baseball club to find effective sources of competitive advantage (Porter, 1985). Therefore, in order to break up the competitive environment of Tesco, Porters five forces analysis has been use by the researcher as fol low-pitcheds Threat of substitute products and services The curse of substitutes in the grocery sell securities industry is considerably low for regimen items and medium to higher(prenominal) for non- pabulum items.In the food retail market, the substitutes of major food retailers atomic number 18 small chains of convenience stores, off licenses and organic shops which ar not seen as a threat to supermarkets like Tesco that offer high quality products at considerably lower prices (Financial Times, 2009). Moreover, Tesco is further getting nominate of these shops by opening Express stores in local towns and city centres creating a hurdl e for these substitutes to enter the market. However, the threat of substitutes for non-food items, for instance clothing, is fairly high.It should be noteworthy that so long as the economic recession prevails, customers will be inclined towards discounted prices hence Tesco is a threat to the speciality shops. Threat of founding of sunrise(prenominal) competitors The threat of entry of new competitors into the food retail industry is low. It requires huge capital investments in order to be competitive and to relieve oneself a brand name. Major brands that have already captured the food retail market be Tesco, Asda, Sainsburys and Morrisons and they account for 80% of all shop in the UK (Mintel, 2010).Therefore, new entrants have to produce something at an exceptionally low price and/or high quality to establish their market value. Gaining grooming authorisation from local government takes a considerable amount of era and resources to establish new supermarkets and this is th erefore a considerable barrier to new entrants. Intensity of competitive rivalry The intensity of competitive rivalry in the food and grocery retail industry is extremely high. Tesco faces intense competition from its direct competitors, including Asda, Sainsburys, Morrisons and Waitrose, which are ompeting with each other over price, products and promotions intermittently. It should therefore be highlighted that Asda is one of the key competitors in this segment with an make up of market luck from 16. 6% to 16. 8% during the fiscal year 2010/ 09, while Sainsburys has shown an increase to 16. 1% from 15. 8% and Morrisons to 11. 6% from 11. 3% through the same percentage point (Euromonitor, 2010). The slow market growth essentially means that these increasing market shares from competitors have intensified the market rivalry, which is threatening Tescos market leadership position.In rural areas where the nearest superstore can be some outstrip away, some primary consumers are a ttracted by retailers like Somerfield and Co-op . unenviable discounters like Aldi and Lidl have taken over the market in clock of recession. During 2008 they recorded a growth of sales of over 25% (Keynote, 2010). negotiate power of buyers The bargaining power of buyers is fairly high. In cases where products have a slight differentiation and are more standardized, the switching cost is rattling low and the buyers can easily switch from one brand to another.It has been proposed that customers are attracted towards the low prices, and with the availability of online retail shopping, the prices of products are easily compared and thus selected. negotiate power of suppliers The bargaining power of suppliers is fairly low. It should be noted that the suppliers are inclined towards major food and grocery retailers and dread losing their business contracts with massive supermarkets. Hence, the position of the retailers like Tesco, Asda, and Sainsburys is further strengthened and ne gotiations are corroboratory in order to get the lowest possible price from the suppliers.