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Threat of SubstitutesThere are no substitutes to food and clothes and therefore this means that the threat of substitutes is low. However, Marks & Spencer has a lot of substitutes in the form of other retailers. For their food business they have Tesco, Asda and Waitrose as substitutes and for their clothing business they have Zara, Topshop and Next as substitutes. One of the main reasons for Marks & Spencer’s decline over the past 10 years is due to the competitive retailers operating with cheaper foreign imports. People would rather prefer shopping from retailers which sell similar quality products at a much more affordable price.
Threat of New EntrantsThreat of new entrants is relatively low in the retail industry. This is due to the large capital investment required to enter the market. Furthermore, as it is a mature market, most customers are already loyal to their preferred store and therefore a new entrant would need to offer something completely different in order to be successful. The market is homogenous as the products are similar with small differences. Furthermore, it would be extremely hard for a foreign company with relatively low knowledge and experience of the UK market to enter it. ASOS, which is a relatively new entrant has taken over the online clothes shopping market with over a billion pounds of revenue in 2016.Bargaining Power of BuyersIn the retail industry, the bargaining power of buyers is relatively high. As thereis a large number of customers, they have more power over the firm and therefore can dictate their own tastes and possibly prices. The price elasticity of demand for Marks and Spencer is relatively high and elastic as they sell luxury food and clothes. Bargaining Power of SuppliersThe bargaining power of suppliers is low as their Marks & Spencer is a large company which means that suppliers would want Marks & Spencer to sell their products. Furthermore, due to the free trade agreements and globalisation it is cheaper for Marks & Spencer to find foreign suppliers and therefore there is a large number of suppliers available to them.This is unlike the 1990’s where nearly 90% of Marks & Spencer’s suppliers were British and therefore their bargaining power was high as there weren’t as many suppliers available to them.
SWOT AnalysisStrengths●Marks & Spencer is one of the most powerful retail brands in the UK. ●Their products are perceived as a value for money due to the high quality of the products. This would appeal to a lot of people and so would promote customer loyalty.●Marks & Spencer try to make the customers feel more comfortable in their stores by making them brighter and easier to navigate around. In Plan A, they have a goal of making stores easier to navigate around for the elderly. ●They have strong presence internationally with over 1300 stores worldwide.