Shoe Industry



Shoe Industry

Question 1

Porter's 5 Forces

Rivalry

There is nothing new about making shoes unless you are in the highest of the fashion or athletic sectors.  Unique Shoe Company is not present in either.  Because of this they are among many strong and established competitors. There are many different things that they deal with but I will focus on just a few and how these factors affect profitability (Porter, 2008). 

Price Competition;  Unique shoe retail chain, Famous Footwear, drives most of its business through sales, specifically our Buy One Get One 1/2 Off sale.  Interestingly enough, their margin is barely sacrificed if at all because they raise most of their prices during sale.  What they have to be careful on is keeping competitive with the core items of each season. 

Slow Industry Growth; The growth of the shoe industry is very small.  Granted, unique shoe are looking at global markets which could have huge growth but in an effort to look at more detail that will focus on the US market.  This slow growth means that they are constantly fighting for market share. 

Question 2

Pressure from Substitute Products

There aren't many substitutes for shoes; everyone has to wear shoes in some form to function in society. What Unique Shoe encounters more are cheap and substitutes or private label brands.

Cannibalization; Unique Shoes bring this up because they have a very strong private label business.  Many of the shoes seen in Target, Kohls and other large retails have companies like Brown make a shoe and in Target's case, throw a Mossimo label on it.  However, Bills Unique shoes sometimes can hurt themselves and by reducing the margin.  Their private label area makes some shoes for other outlet stores.  The quality may not be as strong but it works for what market needs.  These shoes, because of the lower quality, can be sold at a higher margin.  The cannibalization comes in for two reasons.  First is that they now have two divisions competing for the same business.  The other is that the private label shoe has the possibility of appearing to have lower quality and therefore bring the brand image down.

Private Label Dept Stores; Many of other larger competitors partake in the private label business, one of the biggest being The Sassy Shoes.  They sell shoes at a lower cost, for $10 less than a very similar to other brands.  Although not the name brand they may be familiar with, it looks the same, costs less and is being sold at a reputable store so why wouldn't a women buy it?  

Bargaining Power of Buyers

As wholesale and retail Bills have 2 types of customers, the consumers in our retail stores and the retail stores we sell wholesale to.  Where Bill sees a greater impact of the bargaining power is from their retail partners.  They think that our business in department stores is one of the unhealthiest areas of their business and on that is most likely to improve.  At the moment, most of their brands got through the following process when ...