supermarket and grocery store industry threat of new entrants

The retail industry involves the grocery items and products of daily use, which means that there is no need to invest massive capital for startups to operate. The threat of new entrants in the retail business is usually high as the retail business can be started to form a convenience store which is basically an idea of starting a business at a trim level. Therefore, the risk of substitutes in the petroleum sector is minimal. The innovation in technology and the emergence of e-commerce channels have affected substantial retailing, but it cannot be termed as a substitute for retailing.

Another factor is that cost of goods sold is less expensive than other providers. Also, the variety of products is offered in such big stores and supermarkets makes it difficult for consumers to move away to the store or chain having some substitutes. The forms of retailers can be changed like smaller or bigger scales, but the nature of the products and goods remain the same.

The threat of having substitutes is typically low in the retail industry because the products can not be sold out without the help of retailers to a massive population to meet the needs. Therefore, the presence of such big companies in the industry makes the competition more complex. The major competitors of the company are Walmart, Amazon, Costco, and Target. Kroger hired approximately 435 thousand employees in 2019, making it the second-largest retail contractor in the United States behind Wal-Mart (Statista, 2021). Kroger has seen healthy growth over the last decade, with overall revenue of nearly 122.3 billion dollars in 2019, up from around 76.6 billion dollars in 2009. As a result of this increase, several groups and companies have captured the market to provide options for the customers to purchase from, resulting in fierce competition among established players. The competitive rivalry in the retail industry is high because of the increasing need in demand and supply of goods by the community to fulfill the requirements. From the American Retail industry perspective, the assessment of Porter’s five forces would be a helpful mechanism for maintaining prospect strategies to better understand the company standing position. The firm is operating over a country-wide network of around 3000 supermarkets and stores. As of 2019, the corporation showed substantial revenue of 121.16 US billion dollars and has involved an employment figure of almost 453,000 (Kroger, 2020).

In context to the retail sector, the company was founded in 1883, having its headquarters in Ohio, United States. The Kroger Company is an American company dealing in the retail industry and providing services in supermarkets and supermarkets across the country.

Supermarket and grocery store industry threat of new entrants