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

Porter’s Five Forces Analysis

The above figure illustrates the competitive model proposed by Michael E. Porter (1979) on the basis of five fundamental forces, viz. (1) threat of new entrants, (2) threat of substitutes (products and/or services), (3) bargaining power of suppliers (sellers), (4) bargaining power of customers (buyers) and (5) rivalry among existing players. The five forces analysis helps an organization to evaluate the extent to which its strategies and core competencies will be successful in diverse markets. According to Porter (1979) “the collective strength of these forces determines the ultimate profit potential of an industry” (Harvard Business School, 2005, pp.14).

As per the findings of a market survey the retail sector in India is highly disjointed “with 97 per cent of its business being run by the unorganized retailers like the traditional family run stores and corner stores”; furthermore, it has also been reported that “the organized retail however is at a very nascent stage though attempts are being made to increase its proportion to 9-10 per cent by the year 2010 bringing in a huge opportunity for prospective new players” (Corporate Catalyst India, n.d., pp.2). While giving due importance to the fact that “the sector is the largest source of employment after agriculture, and has deep penetration into rural India generating more than 10 per cent of India’s GDP” (Corporate Catalyst India, n.d., pp.2), attempts will be made to analyze the competitive forces that define the scope of prospective players in the Indian retail market.

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