The apparel industry in India faces moderate threats from suppliers and substitutes but high threats from buyers and new market entrants. Suppliers have low bargaining power due to abundant cotton production and labor in India. Substitute threats are moderate as customers will switch to higher quality brands. However, buyer power is high with many shopping and brand options, and market entry threats are high due to challenges in distribution channels, foreign investment restrictions that have recently eased, and established local manufacturers.

1. Porter 5 Force Model for
APPAREL INDUSTRY
Kritika Bansal 14030141007
Shwetha Bhat 14030141029
Shruti Agarwal 14030141052
Ankita Goyal 14030141082
Sumera Aijaz 14030141096

2. Power of Suppliers
• High availability of cotton.
– India ranks third largest producer of cotton.
• Low Cost of Labour.
– Since labour is available easily and in sufficient
number,cost is less.
• On the other hand,bulk purchases by retailers
leave suppliers with little bargaining power in
organized retailing.

3. • Adoption of backward integration by retailers
and coming with private labels has decreased
the dependence on suppliers. Thereby
reducing their power over the businesses.
• Low level of product differentiation and lack
of switching of cost allows businesses to scout
the supplier group.

4. Competition Between Companies
• Factors of competition
– Strong brand names
– Customer loyalty towards brand
– Requirement of economy of scale
• Competitors include
– Designers
– Manufacturers
– Distributors
– Importers
– Retailers

5. • Example
– Nike, Puma, Reebok , Adidas
– Biba, Global Desi
– Peter England, Van Heusen, Louis Philip , Arrow,
Allen Solly

6. Threat of Substitute Products
• Can be termed as alternative products
satisfying similar needs of customer.
• In appearls indystry the switching for
substitutes can take place due to factors such
as
– Cost
– Quality,Durability
– Status

7. • The risk is low with customer switching for
substitutes with higher cost.
eg: Levis, Van heusen etc.
• The threat of substitutes which poses high
risks can be when switching for quality,
durability, status.
eg: Louis vuitton, Versace.

8. Power of Buyer
• The power of buyer can be defined as the
ability of customers to put the firm under
pressure, which also affects the customer's
sensitivity to price changes.
• The buyer power is high if the buyer has many
alternatives.

9. • Lots of various shopping formats available to
shop from.
• Lots of brand choices available for similar
qualities with different price.
• Individually, customers have very little
bargaining power within the organized retail
stores

10. Threat of Market Entry
• Access to Distribution Channels :
– Challenges in access to distribution channels due to
high real estate cost , limited prime locations and
multiple restrictions on land use
• Government Policies
• Foreign Companies moved from Wholly owned ( Trade
Liberalization(91-97) ) to Franchising (Trade
Restriction in FDI (97-2005))
• Eg: Levis ,Benetton- Wholly Owned 91-97
• Marks&Spencer , Mango – Franchising 97-2005
• Diesel , Walmart , Zara – JV 2006

11. • Cost Disadvantages(Retail locations and local
experience)
– Raw material , geographical proximity to home
and Service (Tailors) , Tax free policies
• Government Policies
– 2006- relaxed FDI policy - Restrictions of single
brand retailing to 51 percent ownership of JV
– Eg : ZARA entered India(2010) with Tata Group JV ,
Walmart with Bharti Enterprises