Kroger's Five Forces Analysis Paper
The supermarket industry is a mature industry and has established large players that dominate the market. Continued consolidation and a focus on organic and natural products are the major trends that dominated this industry.
Grocery stores account for 90% of food and beverages sales and supermarkets account for 95% of the total grocery stores sales (exhibit 1).Competition is also on the rise for the grocery segment. Larger players like Walmart Stores and Target, supermarkets like Kroger and Roundy’s, as well as organic retailers such as Whole Foods Market and Sprouts Farmers Market are competing to woo customers with similar products and trying to increase their market shares.
Applying the five forces of analysis
Threat of new entry:
The threat of new entry is medium to low, because the grocery segment is characterized by low margins, as the food segment is prone to fierce competition and price cutting. The grocery retailers are able to achieve some customer loyalty by offering convenience and low prices, however, customers are free to choose stores and brands without incurring any additional costs. …show more content…
Bigger players can create mobility barriers for smaller players due to advantages in purchasing, distribution, marketing, and finance. The smaller players cannot afford to compete on price, products offerings, and geographic coverage.
Bargaining power of Buyer:Brgining power of buyers is high. Because they have many grocery stores to choose
Grocery stores account for 90% of food and beverages sales and supermarkets account for 95% of the total grocery stores sales (exhibit 1).Competition is also on the rise for the grocery segment. Larger players like Walmart Stores and Target, supermarkets like Kroger and Roundy’s, as well as organic retailers such as Whole Foods Market and Sprouts Farmers Market are competing to woo customers with similar products and trying to increase their market shares.
Applying the five forces of analysis
Threat of new entry:
The threat of new entry is medium to low, because the grocery segment is characterized by low margins, as the food segment is prone to fierce competition and price cutting. The grocery retailers are able to achieve some customer loyalty by offering convenience and low prices, however, customers are free to choose stores and brands without incurring any additional costs. …show more content…
Bigger players can create mobility barriers for smaller players due to advantages in purchasing, distribution, marketing, and finance. The smaller players cannot afford to compete on price, products offerings, and geographic coverage.
Bargaining power of Buyer:Brgining power of buyers is high. Because they have many grocery stores to choose