Published by MBA Skool Team, Last Updated: March 19, 2022
Porter’s Five Forces Analysis of Debenhams covers the company’s competitive landscape as well as the factors affecting its sector. The analysis focuses on measuring the company’s position based on forces like threat of new entrants, threat of substitutes, bargaining power of buyers, bargaining power of suppliers and competitive rivalry.
Debenhams Five Forces analysis helps to analyze its current position in the market based on multiple internal and external factors like competitors, customers, suppliers (vendors and partners), financial strength, future scope & alternate solutions.
Let us start the Debenhams Porter Five Forces Analysis:
The threat of new entrants in the Debenhams Porter Five Forces Analysis can be explained as follows:
The threat of new entrants for Debenhams is relatively low compared to its competitors in the similar market; this is because it is a market leader. With a high market share in the UK market, Debenhams also enjoys a very stable position. This segment is quite capital intensive, and hence for any new entrant to enter this market, a considerable amount of money must be accumulated beforehand. The company in the clothing industry is a well renowned name and is known for its brand value and high quality; for any new entrant to enter this market, they have to overcome relatively high barriers to entry, the technology, knowledge, and the equipment required for the same it’s pretty scarce. Especially because Debenhams has such a comfortable position, any new entrant would first have to compete with the other competitors that acquire a small amount of market share and are competing for it. We can safely say the threat of new entrants for Debenhams is relatively low.
Threat of Substitutes:
Below are the threats of substitute products of Porter’s Five Forces analysis of Debenhams:
The threat of substitutes for Debenhams is also relatively low; this is because of its presence in both offline as well as the online market; with the online market being the major competitor, its presence in both markets gives it the flexibility it requires in order to work in both places.
Other than the online market, there is no primary substitute for Debenhams. And even though the tiny threads of some retail stores are more to its other competitors who have a smaller market share and are not in a comfortable position compared to Debenhams, which has a significant market share and is relatively stable in its own place. With the online stores being the new marketplace, the company has also acquired quite a good market share there as well; with clothing being an essential need, we do not see a significant threat to Debenham. Hence, we can conclude that the threat of substitutes for Debenhams is relatively low.
Bargaining Power of Customers:
In the Debenhams Porter Five Forces Analysis the bargaining power of the customers can be explained as:
The beginning part of the customers for Debenhams is moderate, which is at par with its competitors; this is because, in retail stores, customers do have a knack for bargaining. One of the primary reasons for this is the saturated market which ensures that the customers always have options; the customers have several vendors to choose from and hence go with the one that provides the best quality at a lower price. However, this bargaining power of customers is a threat to all the players in the market and not only for Debenhams. The bargaining power of customers emerges from the fact that there are several players that are providing similar products at various prices. With multiple vendors, the customer has high bargaining power. Hence, the brands need to ensure that they offer some differentiating factor in order to differentiate themselves from their competitor and therefore eventually reduce the bargain car of the customers.
However, in the online marketplace, the customers do not have much bargaining power as not every competitor is present online.
Bargaining Power of Suppliers:
Following is the bargaining power of suppliers in the Porter’s Five Forces analysis of Debenhams:
The bargaining power of suppliers in the clothing industry is low to moderate, this is again the same for all the competitors in the same segment and not only for Debenhams. The main reason for this bargaining power comes from the fact that in order to keep the final quality of the product the same the companies need to ensure that the raw material is of the same quality, and to ensure this that is quite often vital that the suppliers the raw material is not changed often. To avoid this conflict companies usually tend to give contracts to the vendor for several years in order to ensure that the quality of the raw material is kept constant and hence the quality of the final product remains the same. It is very vital to keep the quality of the final products in order to have a high brand value because if the quality of the product is not kept similar people will not perceive the brand as premium. Being a marketplace for various kinds of clothes, dominium deals with various kinds of vendors that come to provide various kinds of products from clothes for men, women, and children to bedsheets and curtains. After considering all the points we can say that the bargaining power of suppliers in the case of demonym is moderate.
The impact of key competitors in the Debenhams Porter Five Forces Analysis is as follows:
The competitive rivalry in this segment for Debenhams in the clothing industry is moderate. With the market being a highly saturated one and the presence of several vendors the competition is growing day by day. But its presence in both online and offline markets, it needs to cater to both the population and hence deal with competition on both fronts. With the online competition going day by day add the launch of new products in the clothing industry with several new players in the market the competitive rivalry in this industry is growing exponentially. Being the market leader Debenham needs to ensure that it is ahead of its competition in order to save its market share as the smaller players are constantly trying to gain more and more market share every day.
Given the market is extremely saturated and dense with a high number of competitors we can say that the competitive rivalry in this industry for Debenhams is moderate.
To conclude, the above Debenhams Porter Five Forces Analysis highlights the various elements which impact its competitive environment. This understanding helps to evaluate the various external business factors for any company.
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