Threat of New Entry
It is common knowledge that starting a business has never been as possible as it is nowadays due to the rise and accessibility of technology. Particularly in my sector, which would be women’s lingerie, there’s many blog posts about the “how-to’s” of starting a lingerie brand, and many even include an estimate of how much would be needed to fund the start-up, which ranges from 4k to 10k monthly, varying from brand to brand. Some start-ups may even opt out of certain expenses until the owner sees them as feasible, for example hiring employees, or paying for advertisements.
Among the barriers of entry in my brand’s favor, the first one would absolutely have to be that around a 13% of retail businesses fail within a year from starting and the percentage grows as the years go by. Luckily, Honey Birdette was founded in 2006 in Australia and currently we have 60 boutiques globally, 11 of them in the USA. There are no specific regulations for lingerie-exclusive stores, but in some places like the UK, a sex shop license is required if the shop sells more than just lingerie. In contrast, here in the US, only a business license or sellers permit is required. The rest is pretty much just standard retail regulations, and consumer protection laws.
Buyer Power
A quick google search of “buyer job listing” shows many promising results. A LinkedIn link pops up with over 6k postings even! But once you start digging in, there’s not that many for intimate apparel. However, I wouldn’t say that they are so scarce that the buyer dictates the industry. There are buyers all over the World and they all range in budget. A start-up entrepreneur can be its own brand’s buyer, so essentially, they dictate their terms and styles, and one would think that they are basing their options on research about their ideal customer. Honey Birdette purchases some of its products from Aronne Faccio Group in China. They are their number one customer, so I would go on a limb and say that Honey Birdette as a buyer has a lot of power over its suppliers.
Threat of Substitution
Realistically, it’s very easy to replace or find an alternative to any apparel item. Now it’s like every brand is competing against corporations like SheIn, offering dupes with an unmatched price and compromised quality. This is not even mentioning how bigger brands tend to copy and steal designs from smaller or indie brands that can’t reduce their prices because unfortunately they would risk running out of business. Competitor companies can replicate the items almost to the T, but they will never match the experience provided by the brand.
Meta is growing bigger every day, and its new thing is the Metaverse. That hand in hand with the NFT’s introduced digital fashion. People were not just purchasing physical items to wear but buying digital versions of garments for their online avatars. Some brands hopped on this wagon by creating a digital version of some of their products. It’s worth noting that even though only one of the items is tangible, that doesn’t mean that the digital one is more affordable.
Supplier Power
There are many options in the market for intimate apparel suppliers, China dominating. Quality is often compromised if the price is arguably accessible to smaller or indie brands. Usually, the more you sell, the better the deal is for the buyer. Many suppliers are tough to access for business purposes if you’re a start-up, but companies like AliBaba are easy to interact with. It can be simple to switch suppliers, but quality might be affected, and the customer is likely to disapprove of the change; customer loyalty relies in predictability of quality and brand recognition at the end of the day.
Competitive Rivalry
No one apparel company holds a great sector of the market. That’s why we have “groups” that own several companies that subsequently have different niches. This industry is highly fragmented. Even though malls are not the “it” spots they used to be, you can still go in and see many, many apparel stores and boutiques. Usually, the intimate wear stores are just a handful in any given mall, if any at all. Some bigger stores, like H&M carry their own intimate apparel wear, but that is a different kind of underwear than what we offer. Theirs is for the daily wear, whereas ours is lingerie, and as stated in Glamorise, “Lingerie can be underwear, but not all underwear is lingerie”.
Among our competitors, we can find Victoria’s Secret, La Perla, Savage x Fenty and Agent Provocateur. Brands like these are in our same marketplace because we sell lingerie with fun or sexy colors, textures, and designs. Additionally, some of their products range in a similar price point as ours; we share a similar customer. However, among our differentiators, we sell luxury bondage lingerie.
References
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