Clothing Industry and Competitive Strategies
Clothing industry in the U.S is a big but very competitive industry. It has a very high potential for firms to generate million dollars of profit. However, it is also a very tough environment to survive. Express Inc, Gap Inc, and Guess ? Inc are three of the U.S clothing companies who are experiencing the extremely competitive environment. Each company has its own competitive strategy to fight in the market. With Express, the firm tries to differentiate its products by creating unique, formal, luxury and sexy image in their minds. Gap, on the other hand, try to provide customers with high variety of products and prices. Guess tries to follow the fashion trend investment to attract its customers. Whatever the strategies are, the most important thing is archive huge market share and generating profit. This paper will provide some background, analyze the market condition, the strategies as well as give some recommendation for each of the three companies above.
Overall Market Conditions
Threat of New Entrant: Clothing industry has a very high threat of new entrance. Because the U.S population includes many of different cultures, races, and regions, fashion tastes can vary widely among people. Moreover, U.S is an open-minded country, so new styles of clothing will more likely to be accepted in U.S than other countries. U.S is also the world's leading apparel market with $338 billion sale in 2012, so there are very high opportunities for companies to make great profit. Thus, there is a high change that new or foreign companies will come in and compete with traditional firms.
Buyer power: Individually, a retail customer has very low bargaining powers. However, the view of a group of customers in a community is extremely important to clothing firms. If a big group of target customers does not buy a product because it is not worth the price, then the company needs to give a better deal for the product to be sold. ( lower the price, giving extra features, coupon reward, etc.)
Supplier power: Clothing has very low supplier power since most of the firms in the industry outsource their raw materials and production process. Most of the suppliers from foreign countries, especially from developing countries like China, Indonesia, etc... wants to deal with American clothing firms because they will get good wholesale price with huge order quantity and long-term relationship. American firms can choose among them, and they can easily switch suppliers since there are many suppliers waiting to be their partners.
Competitive level: Clothing industry is a huge industry with a very high competitive level. There are around hundreds of clothing brands who compete with each others, each of them only have a piece of the market share. The industry is also growing at quite a fast rate so we can expect an increase in competitive level in the future.
Threat of substitute products: Sine there are hundreds of styles and...