Strategic Managment

Grocery Checkout

Porter’s 5 Forces

The Five Forces model is used to evaluate an industry structure, it helps to analyze the level of competition in an industry and influences business strategy development as such. The Five forces help determine the competitive intensity and therefore the attractiveness of an industry.

1. Rivalry: Moderate

* No rivalry in terms of online grocers, but there is intense rivalry in terms of grocery stores

* Highly concentrated (Valu mart, Price Chopper, Loblaws, metro)

* Rivalry could intensify as bigger chains decide to enter the online marketplace

* Little exit barriers, slight entry barriers in terms of distribution

* Very little switching costs, purchases driven off price

2. Threat of Substitutes: Moderate

* Current threat of substitute for online service is low, notwithstanding additions to the space

* Substitutes for groceries are very dense, (restaurants, vending machines, competitors)

* Products are substituteable, service is not

3. Threat of New Entrants: High

* Little barriers to entry, large chains can easily join the online marketplace, likely at a lower cost because of economies of scale/scope

* There is little in terms of proprietary technology

* No switching costs for customers, they will buy at cheapest price

4. Supplier Power: Low

* All suppliers are local and concentrated, heavy competition in terms of price

* No switching costs for GCO

* No volume importance to supplier

5. Buyer Power: Low

* No current substitute for online shopping

* No buyer concentration, heavily saturated market

* Switching costs from online service necessitate travel to brick & mortar grocers

PESTEL

PESTEL Analysis is a framework of macro-environmental factors. It provides an overview of external environmental factors a company has to take into account. These factors are not related to the...