According to Michael Porter’s five forces analysis, there are many factors that affect the decision making process of the company in the industry. In retail industry in the UK, market is highly competitive and full of marketers. Retailers such as Walmart, Tesco, ASDA, etc are very huge in their size and this creates the height of barriers to entry for other companies. This creates a situation to enjoy long term profit due to the competition level in the industry. Capital requirements, cost advantages, differentiation, economies of scale etc., are principal sources of entry barriers.
Due to intense competition level, buyers have the bargaining powers. There are plenty of options available to the buyers to make purchasing decision. On the other hand, suppliers have low bargaining power because such retailers make the bulk purchases of raw material or goods to sell at their store. This makes suppliers to supply at low cost. This becomes a reason for retail companies to put their prices down and become competitive in the market to gain competitive advantage as well.