The threat of substitution in the fashion industry

to the Group, subcontracting only making stage, which means that the providers have little or no bargaining power.

Threat of substitution

in the case of the fashion industry, talk about brands substitution rather than substitutes, since we are not discussing a particular product, but the full range of a brand. Due to its characteristics, some products are more subject to the substitution of others.

The main features of the products with higher degree of substitution are usually:

products with short life cycles,

products with a trend towards an improvement in the quality / price,

and products with high margins.

In the fashion industry, these three characteristics are often present. In fact, due to the outsourcing of production to low-cost countries, brands increasingly compete aggressively in money improving their products, offering buyers a range of possibilities when buying. Moreover, the marks are usually products with short life cycles, following the trends tend to change rapidly. Finally, trade margins in this sector may be quite high, especially when the brand is strong. Therefore, we conclude that the threat of substitution is relatively high and is a factor that can not be neglected.

Competitive Rivalry

In many cases, this central component of Porter's model is the main determinant of the competitiveness of the industry. In the retail sector of clothing, competition among rivals is very high. They can compete aggressively on price as well as other dimensions such as quality, design, innovation and marketing. The textile distribution is a highly competitive industry in which Inditex is facing global companies (H & M, Benetton ...), national chains also operate out of Spain (Mango, Adolfo Dominguez, Cortefiel), and small local boutiques.

Threat of new entrants

The arrival of new players is often conditioned by the existence of barriers to entry, such as patents, economies of scale, substantial capital requirements, switching costs, access to distribution, government policies, etc..

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