Porter's Five Forces

Topics: Kroger, Supermarket, Supermarkets of the United States Pages: 2 (440 words) Published: November 4, 2008
Buyer power. Although food supply demand depends on product quality, buyers’ demand is inelastic. If they sell the same quality of products of the same brand, buyers would choose the cheapest one. But there are certain segments prefer high quality of service too. So buyers’ power depends on their segments and location as well. So to appeal buyers, stores make various things as an advertising, saving cards and coupons etc to promote new products and to boost the store traffic. The ability to attract new customers, while retaining current customers is important and hard to task. •Supplier power. I don’t think there would be much supplier power. Most suppliers of grocery stores have an interest of selling their products through big chain and would try to deliver their products before their competitors do. For example, Kroger is the nation's number one pure grocery chain and operates 2,532 stores coast to coast under several different names. Ralphs, King Sopoer, City Market, Dillions, Gerbes, Owens, Smith's, OFC, Fry's, Food 4 Less, Fred Meyer, Barclay, Kwik Shop, Quick Stop, Turkey Hill, Tom Thumb. So supplier would try not to lose their cooperation with Krogers. •Threats of new entrants. It is not easy for new entrants to compete in Grocery industry unless they find proper location close to neighborhood. So for existing stores do not have much threat of new entrants. Entry barrier for the industry is high as large capital investment, few dominators in the market and their names are already known and familiar for customers. 1998 to 2004 amount of grocery stores fell down from 131000 to 86000 stores, which means small stores have been out of the market. •Threat of substitutes. For grocery industry, I think there is not that much threat of substitutes. Everyone needs to get food and any other household stuff to their home. On the other hand, people are getting busier and they would prefer going to restaurants or fast food places. Again it depends on certain...
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