How Does Porter's Five Forces Can Shape The Evolution Of Retail Industry
exempt. That is, consumers might spend more money on some substitutes of free VAT, rather than those products where VAT is payable.
3.3 Social Environment
Social changes can also shape the evolution of retail industry. Those social factors include lifestyles, attitudes, personal value，household structure and demographic changes, etc. Changes in these aspects can also create threats and opportunities for retailers.
3.3.1 Demographic changes
Demographic changes in UK have profound economic impacts on the grocery retail sector since people of different ages have various consumer behaviours, purchasing power and preferences. As Börsch-Supan (2003) pointed out, the types of goods that consumers demand for are influenced by the changes of the age …show more content…
The porter's five forces model introduced by numerous studies and managers to better understand the industry context in which the firms operate. In below section, five forces model will be used to analysis UK grocery sector. However, this sector is dominated by few large retailers which account for 80% of market share. Thus, industry analysis in this paper will mainly focus on analyzing the environment around those large retailers.
Threat of New Entrants
In the UK, the four-leading retailers, Tesco, Asda, Sainsbury's and Morrisons , are dominating the grocery sector, accounting around 75% market shares and contributing 80% of total grocery sales (Mintel, 2010). As Ritz (2005) states, over the last 30 years the UK grocery market seems switch to the supermarket-dominated structure. Nowadays, the grocery sector in the UK is at an advanced stage in which majority of large chains have already built their power due to one-stop shopping and operating efficiency. Thus, for new entrants, it is extremely difficult to enter this highly developed market. For example, it requires huge capital investments to ensure the frequency of business processes due to the large fixed costs and the expenditure in building new brand name and effective supply chains. The necessary investments in terms
3.3 Social Environment
Social changes can also shape the evolution of retail industry. Those social factors include lifestyles, attitudes, personal value，household structure and demographic changes, etc. Changes in these aspects can also create threats and opportunities for retailers.
3.3.1 Demographic changes
Demographic changes in UK have profound economic impacts on the grocery retail sector since people of different ages have various consumer behaviours, purchasing power and preferences. As Börsch-Supan (2003) pointed out, the types of goods that consumers demand for are influenced by the changes of the age …show more content…
The porter's five forces model introduced by numerous studies and managers to better understand the industry context in which the firms operate. In below section, five forces model will be used to analysis UK grocery sector. However, this sector is dominated by few large retailers which account for 80% of market share. Thus, industry analysis in this paper will mainly focus on analyzing the environment around those large retailers.
Threat of New Entrants
In the UK, the four-leading retailers, Tesco, Asda, Sainsbury's and Morrisons , are dominating the grocery sector, accounting around 75% market shares and contributing 80% of total grocery sales (Mintel, 2010). As Ritz (2005) states, over the last 30 years the UK grocery market seems switch to the supermarket-dominated structure. Nowadays, the grocery sector in the UK is at an advanced stage in which majority of large chains have already built their power due to one-stop shopping and operating efficiency. Thus, for new entrants, it is extremely difficult to enter this highly developed market. For example, it requires huge capital investments to ensure the frequency of business processes due to the large fixed costs and the expenditure in building new brand name and effective supply chains. The necessary investments in terms