D) Possible substitute products or services may not appear to be easily substitutable. Works Cited. The cost of switching is also a factor; … Hence it can be concluded that substitutes do not present significant threats to the existing players present in the market. The existence of substitutes will definitely affect the attractiveness of the industry and lower the profitability. The willingness of the buyers to buy the substitu… Cost of Raw Materials . From the high end to the low end segment, brands have populated the fashion landscape. Today Zara is a fastest growing retail merchandise throughout the world. Five Forces Analysis of the Fashion Retail Industry, a market value of several hundred billions of dollars, SWOT Analysis for Restaurants Uncovers the Key to …, 3 Things to Do Before Launching an eCommerce …, Important drivers to Vietnam’s economic growth. Gap Inc. Porter’s Five Forces analysis includes a critical analysis of five separate forces that shape the overall extent of competition in fashion, apparel and accessories industry. A threat of substitutes is the potential that customers will replace your product or service with something completely different outside your market. The threat of substitutes is high when rivals or even companies outside the industry offer more attractive and/or lower cost products. Porter’s 5 Forces, developed by Harvard Business professor M. Porter, is a model of analysis used to gauge the level of competition within an industry. Threat of Potential Substitutes - LOW In the clothing industry as a whole, threat of substitutes are non-existent as there are no substitutes for clothers, barring some technological breakthrough. Raw material Cost: When it comes to fashion industry, it is based upon the linear model with raw materials with the concept of take, make and waste. Thus, consumers who buy Lululemon or are even in the company's target market are unlikely to avail themselves of substitutes. The threat of new entrants exerts a significant influence on the ability of current companies to generate a profitGross ProfitGross profit is the direct profit left over after deducting the cost of goods sold, or \"cost of sales\", from sales revenue. The threat of substitute products seems to be growing faster than retailers expect. This article will attempt to analyze the viability of the fashion retail industry as a whole, by means of a Five Forces analysis. There are large numbers of retailers who sell very similar products, but there’s also the concept of brands, which allow some companies to sell apparel for ridiculous rates. Threat of substitutes or substitution (Moderate Force) Threat of new entrants or new entry (Weak Force) Recommendations. The world is changing at a rapid pace, with everything from global warming to shopping trends affected.So what does this mean for the apparel industry?What challenges are we facing in the next couple of decades? The point of Lululemon from the very beginning was that traditional athletic clothing was a poor substitute for clothing that was expressly built for yoga. The availability of close substitute products can make an industry more competitive and decrease profit potential for the firms in the industry. How Lululemon Athletica Inc. can tackle the Treat of Substitute Products / Services By being service oriented rather than just product oriented. The Canadian apparel retail industry had total revenues of $23.4bn in 2018, representing a compound annual growth rate (CAGR) of 3.1% between 2014 and 2018. In the fashion retail industry, supplier power is a relatively small and insignificant force. C) Identifying substitutes is relatively easy since they look similar. ZARA is the biggest retailing clothing brand which originated from Spain in 1975 when Amancio Ortega started Zara as a part of Inditex group of companies. Investing. However, as consumers start to build confidence in the economy, reports claim that the women’s clothing retail industry will steadily bounce back to its healthy form. Threat Of Substitutes. This is because substitutes directly influence the prices of the products and the demand for the products from the customers as well. Threat of substitutes is one of the five forces that determine the intensity of competition in an industry. Nonetheless, the bargaining power of customers and the threat of substitutes are also significant. Nike Inc. must prioritize strategies that address competition, which is highlighted as the strongest force in this Five Forces Analysis. The other hand brand identification and production differentiation plays the significant role, because brand identification creates a barrier entry! 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