Stollery’s established its store in Toronto almost 114 years ago, and it has maintained its high-class position up until now, whereby the company has announced its closer next January or February. The article mentions that the firm has been facing rising competition pressure to sell its property. The question is, why? And how can we prevent this from happening in the future?
By applying some of Porter’s Five Forces, it is possible to identify the changes in the external environment, and possibly develop ways to make the firm less vulnerable to these changes if it were not closing.
The clothing industry — specifically the menswear industry — is growing rapidly, like the article mentioned. With the fact that the number of competitors is large, it immediately makes the market quite competitive. A company like Stollery’s would need to establish a unique selling proposition to differentiate itself from the many firms out there that are also offering men clothing. This also leads to the fact that there are a plethora of substitutes in the menswear industry, ranging from inexpensive to expensive stores with low cost of switching, making Stollery’s vulnerable to lost of sales if it is not differentiating itself. As a result, the buyer’s bargaining power is quite large — because customers have a large range of options to purchase menswear from.
Furthermore, there are few barriers to entry. There are few laws and regulations that are preventing new competitors from entering the market. Resources for producing menswear are also not exactly rare to the point that it is difficult to find. And while a certain degree of knowledge is required to operate in the menswear industry (such as the knowledge of trends, perhaps), it is not as difficult as, say, trying to enter into an industry like pharmaceutical.
Looking at just a few aspects of Porter’s Five Forces, along with the fact that “industry observers have said [Stollery’s is] tired and in need of an update,” it is evident that the changing external environment, especially the growth of competitors/substitutes and the changing tastes in fashion, contributed to the closure of an iconic menswear store. To give a possible start of how to deal with the changing external environment, Stollery’s may have utilized Porter’s Generic Strategy and perhaps focused on a smaller segment, for instance the focus differentiation strategy to reposition itself, as it seems like a high-end store.