Threat of Entry
Characteristics |
Current situation |
Future trend |
Importance of reputation and brand loyalty in purchase decision |
On this market reputation and brand loyalty represent customers’ belief in products quality, so it is important in purchase decision. |
Product quality, design and service quality will become more important for customers, so importance of reputation and brand loyalty in purchase decision will increase. |
Entrants' access to distribution channels |
Easy access to distribution channels. New companies can open separate outlets, there is no significant costs for remodeling premises. |
Access can become more difficult because shopping tends to become more concentrated in shopping malls, which charge retailers for opening an outlet. |
Entrants' access to raw materials |
Easy access. |
The same. |
Entrants' access to technology and know-how |
Level of technology is unified for the industry. New entrants’ access to technology is easy. |
Significant innovations in the production process are unlikely in the near future. The situation will stay the same. |
Entrants' access to favorable locations |
Hard access to favorable locations (e.g. Nevsky prospect) due to high rent and high demand for these locations. |
Favorable locations can become more accessible if new shopping malls will be constructed (supply of selling space will increase). |
Experience-based advantage of incumbents |
No, except brand loyalty and reputation. |
The same. |
Network externalities |
No. |
No. |
Government protection of incumbents |
No. |
No. |
Perception of entrants about expected retaliation of incumbents |
There is no retaliation specific for this market. |
The same. |
Resources and Suppliers
Characteristics |
Current situation |
Future trend |
What are the most important resource markets used by this industry? |
Leather and substitutes, textile. |
The same. |
Are these markets concentrated? Who has more market power at these markets: buyers or sellers? |
Sellers have more market power. |
The same. |
Do firms in the industry purchase relatively small volumes relative to other customers of supplier? To sales of typical supplier? |
Relatively small volumes, these materials are also purchased by firms from other industries. |
The same. |
Are there substitutes for these resources? |
No, currently these are the only appropriate resources for this industry. |
There is a possibility that producers will start use recyclable materials. |
Credible threat of forward integration |
No, it is a retail market. |
The same. |
Are suppliers able to price discriminate? |
Yes, prices differ depending on the size of order. |
The same. |
Conclusion