Australasian Clothing and Footwear Specialist Retailers Industry
Strategy in Practice – Australasian Clothing and Footwear Specialist Retailers Industry
External analysis:
Industry Profile: Australasian Clothing and Footwear Specialist Retailers Industry (ACFSRI) is mature, with over 16,000 outlets and combined 2010 value sales of NZ$20.1 billion (using current exchange rate). The ACFSRI supplies a wide range of clothing and footwear to end-consumers through outlets and tradeshows; the quality, target pricing, and both economies of scale and scope amongst competitors differ greatly, and therefore large variations exist in terms of cost-structure and profitability. The industry is highly competitive with hundreds of players, and shows lack of dominance; the largest market share held by Just Group Ltd in Australia (5.4%) and Hallenstein Glasson Holdings Ltd in New Zealand (6.1%). Both industries have fewer than 10 companies each that hold over 1% market share, with the of majority share held by small companies who each hold less than 0.1%. The Australian industry is over six times larger than New Zealand industry, attributing to almost 86% of the ACFSR total value sales. The combined annual growth rate (CAGR) between 2005-2010 show Australia (3.2%) considerably lower than New Zealand (4.9%), suggesting the Australian industry is a more mature industry. Easy of entry and exit is greatly reduced by the store leasing and external manufacturing options. Evidence of horizontal integration, such as mergers, exist as a way of gaining market share.
Porters Five Forces: Threat of New Entrants is low to moderate. Low entry barriers exist due to relatively low capital requirements, resulting from leasing options and manufacturing and storage outsourcing; these options also decreases required know-how. Economies of scale and scope are only somewhat important to certain segments of the industry. However, well-established reputable brands greatly reduce this threat by heavily limiting the potential new entrants capturing market share.
External analysis:
Industry Profile: Australasian Clothing and Footwear Specialist Retailers Industry (ACFSRI) is mature, with over 16,000 outlets and combined 2010 value sales of NZ$20.1 billion (using current exchange rate). The ACFSRI supplies a wide range of clothing and footwear to end-consumers through outlets and tradeshows; the quality, target pricing, and both economies of scale and scope amongst competitors differ greatly, and therefore large variations exist in terms of cost-structure and profitability. The industry is highly competitive with hundreds of players, and shows lack of dominance; the largest market share held by Just Group Ltd in Australia (5.4%) and Hallenstein Glasson Holdings Ltd in New Zealand (6.1%). Both industries have fewer than 10 companies each that hold over 1% market share, with the of majority share held by small companies who each hold less than 0.1%. The Australian industry is over six times larger than New Zealand industry, attributing to almost 86% of the ACFSR total value sales. The combined annual growth rate (CAGR) between 2005-2010 show Australia (3.2%) considerably lower than New Zealand (4.9%), suggesting the Australian industry is a more mature industry. Easy of entry and exit is greatly reduced by the store leasing and external manufacturing options. Evidence of horizontal integration, such as mergers, exist as a way of gaining market share.
Porters Five Forces: Threat of New Entrants is low to moderate. Low entry barriers exist due to relatively low capital requirements, resulting from leasing options and manufacturing and storage outsourcing; these options also decreases required know-how. Economies of scale and scope are only somewhat important to certain segments of the industry. However, well-established reputable brands greatly reduce this threat by heavily limiting the potential new entrants capturing market share.