|Company Economics Sales Development
The retail industry has had tremendous changes over the past 20 years, and what was being experienced in 2000 in the retail industry has completely metamorphosized in 2020. Much has changed over the years from population demographics to the spending habits of people. The continued advancement in technology that bore the e-commerce market brought a totally new trend in the retail market. Competitive rivalry in 2020 is far much higher than that of 2000 (Clement, 2020). The e-commerce platform cultivated exemplary flourishment in the market. Many retail stores that had earlier been confined to a smaller geographical region got the opportunity to expand internationally. Many retail companies have had to cut down their prices and conduct extensive campaigns to lure customers (Clement, 2020). The Alibaba company, for example, had to tinker its marketing strategy and market prices to allure consumers. Companies have had to strengthen their brands and expand their product selections to keep their customer base (CGMA, 2013). The Pandora jewelry industry, for example, had to restructure itself to increase its product options and conduct endorsement campaigns with celebrities to rejuvenate itself.
The supplier power has also changed for the past 20 years, with more suppliers coming on board. The last 20 years have experienced tremendous growth in industrialization and the number of manufacturers has increased significantly. With many suppliers available, the retail industry has a broad spectrum to choose from this can easily switch to an affordable supplier (Lobaugh et al., 2019). The buyer power has also seen an alteration in the last 20 years. People's spending habits have drastically transformed. The existence of many retail industries in 2020 than there were in 2000 shows that buyers have many options, and it is easier to lose a market base (Meyer, 2020). Given that most of the products in the market compete well quality-wise, it does not cost the buyers to switch to alternatives (Meyer, 2020). The many alternatives have made buyers so strong that they dictate terms to the retailers.
Further, there is a higher threat of substitution currently than there was 20 years ago. The continuous advancement in technology and changes in demographics is shaking the stability of the retail market. Innovation is growing each second and products are being customized to meet customer needs (Meyer, 2020). This implies that the retail market has to keep improving its products or otherwise they fall outside the market. The case of Amazon, for example, which keeps improving their products and services to satisfy their customers.
The threat of new entrants is higher in 2020 than it was in 2000. The position of the retail industry is greatly affected by the ability of other retailers to join its market. The increase in this threat called for retailers like Amazon and Alibaba to strengthen their customer base to get a foothold of their markets (Meyer, 2020). Many companies have built their stakes higher such that any company entering their market struggles to survive. This has enabled companies to preserve fair positions and have a higher competitive advantage.
CGMA. (2013, Jun 11). Porter’s five forces of competitive position analysis. https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html
Clement, J. (2020, Apr). Total and e-commerce U.S. retail trade sales 2000-2018. https://www.statista.com/statistics/185283/total-and-e-commerce-us-retail-trade-sales-since-2000/
Lobaugh, K., Stephens, B. & Simpson, J. (2019, May). The consumer is changing, but perhaps not how you think. https://www2.deloitte.com/us/en/insights/industry/retail-distribution/the-consumer-is-changing.html
Meyer, S. (2020). The history and evolution of retail stores: From Mom and Pop to online shops. https://www.bigcommerce.com/blog/retail/#4-retailers-that-stay-ahead-of-the-curve
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