Indian Retail Industry-Pantaloon Retail (India) Ltd. Part V (ii) (Porter’s Five Forces Analysis)

Bargaining Power of Suppliers

This competitive force may be defined as “the ability of a supplier to control the cost and supply of the inputs in the market”, and it has been observed that retailer try to alter its intensity by taking into consideration various factors such as “differentiation of inputs, switching costs for transferring to other suppliers, availability of substitutes, supplier concentration and suppliers’ dependence on volume” (Pradhan, 2009, pp.58). Though the intensity of this force varies from one product to another, it has been observed that the number of retailers existing in the Indian retail market is significantly high and hence it may be inferred that by and large “the bargaining power of suppliers in India is low because there are a large number of potential suppliers in the market” (Pradhan, 2009, pp.58).

Bargaining Power of Customers

Customers, most obviously, are the most important components of any business, and it has been observed that “a factor which plays a key role in determining the power of buyers in the frame work, is the ratio of suppliers to buyers in the market” because of the simple fact that “if there are many suppliers, and only a few buyers, the buyers have the power to negotiate the price of the goods or services” (Pradhan, 2009, pp.58). However, in a densely populated country like India, the number of buyers is more that in turn increases their bargaining power and at the same time elevates the barriers to entry into the market. In markets like this the buyers “would generally have the last word when it comes down to the pricing of products” (Pradhan, 2009, pp.58). India has come under the limelight as one of the fastest growing economies, and hence, it may be comprehended that the purchasing as well as bargaining power of the Indian consumers is increasing pretty fast. Furthermore, retailers should also realize that “in an age of the informed consumer, meeting the buyers’ expectations in terms of product, price and service is increasingly becoming difficult” (Pradhan, 2009, pp.58).

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