Extremely high levels of competition effectively raise barriers for firms entering the market, making unlikely that major new competitors will enter the market. The internal threat of new entrants is low in the industry but high in our market – Developing countries. Moreover, new trends intrinsically carry the threat of outdating existing styles. Regarding the industry at large, it is unlikely that we will encounter a substitute for all luxury women’s shoes with a new type of product. In several markets the substitute of concern is counterfeit products. Consumers are not buying luxury shoes for their function, but for their brand and social value. The industry as a whole is dependent on third party distribution channels, increasing the power of buyers. Even when brands with the stature of Manolo Blahnik open independent stores, they are often operated by outside companies such as Kurt Geiger. In the United States and Japan several luxury stores carry several different brands of luxury shoes, among other luxury products. Brands in the industry use several key distributors to reach their consumers, such as department stores, and retailers. In the luxury shoe industry many companies do not have their own retail distribution networks. However, distribution is a key concern for luxury brands. The luxury consumer market is targeted at a select few, while buyer power is not concentrated. Finally, the increasing use of exotics skins such as alligator and crocodile may increase supplier power in the long run.īuyer power in the industry is medium. This reliance on a few selected producers raises supplier power. This requires them to produce with high skilled shoe artisans, effectively limiting production to countries such as Italy, Spain, and Turkey. In regards to the former, some luxury shoe brands, including Manolo Blahnik, handcraft their end product.
However, a major concern is the role of highly skilled labor, and exotic skins. These individual suppliers are not able to dominate the industry. The industry requires key, high quality inputs and expert craftsmanship. Supplier power in the women’s luxury shoe market is medium.
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