Threat of Entry

Characteristics

Current situation

Future trend

Importance of reputation and brand loyalty in purchase decision

On this market reputation and brand loyalty represent customers’ belief in products quality, so it is important in purchase decision.

Product quality, design and service quality will become more important for customers, so importance of reputation and brand loyalty in purchase decision will increase.

Entrants' access to distribution channels

Easy access to distribution channels. New companies can open separate outlets, there is no significant costs for remodeling premises.

Access can become more difficult because shopping tends to become more concentrated in shopping malls, which charge retailers for opening an outlet.

Entrants' access to raw materials

Easy access.

The same.

Entrants' access to technology and know-how

Level of technology is unified for the industry. New entrants’ access to technology is easy.

Significant innovations in the production process are unlikely in the near future. The situation will stay the same.

Entrants' access to favorable locations

Hard access to favorable locations (e.g. Nevsky prospect) due to high rent and high demand for these locations.

Favorable locations can become more accessible if new shopping malls will be constructed (supply of selling space will increase).

Experience-based advantage of incumbents

No, except brand loyalty and reputation.

The same.

Network externalities

No.

No.

Government protection of incumbents

No.

No.

Perception of entrants about expected retaliation of incumbents

There is no retaliation specific for this market.

The same.

Characteristics

Current situation

Future trend

What are the most important resource markets used by this industry?

Leather and substitutes, textile.

The same.

Are these markets concentrated? Who has more market power at these markets: buyers or sellers?

Sellers have more market power.

The same.

Do firms in the industry purchase relatively small volumes relative to other customers of supplier? To sales of typical supplier?

Relatively small volumes, these materials are also purchased by firms from other industries.

The same.

Are there substitutes for these resources?

No, currently these are the only appropriate resources for this industry.

There is a possibility that producers will start use recyclable materials.

Credible threat of forward integration

No, it is a retail market.

The same.

Are suppliers able to price discriminate?

Yes, prices differ depending on the size of order.

The same.