INTRODUCTION
In the competitive landscape, every organization intends to gain and sustain the competitive advantage. A true religion brand is in the limelight due to its high-quality denim jeans. The most important thing for the company is to integrate with modern industry trends and attract customers. Trends in the fashion industry have also changed with time. There is a need to conduct a comprehensive market analysis to derive some key insights and make pertinent strategies. Using the strategic business tool to conduct the analysis is a good approach to obtain some predictable and unpredictable outcomes.
IS THE PREMIUM JEANS INDUSTRY AN ATTRACTIVE MARKET? CONDUCT AN INDUSTRY ANALYSIS USING PORTER’S FIVE-FORCE MODEL.
Bargaining Power of Buyers
The bargaining power of buyers in the premium jeans market is moderate. It has been revealed that that economy of the United States of America faced some spikes from 2008 to 2012. In fashion retail, customers, due to low-income levels and limited financial capability, contained higher bargaining power. Customers always wanted to buy the lowest priced jeans along with the sustained quality in the market. However, on the other hand, with some improvements in the US economy, the bargaining power reduced due to good income level. For Instance, after regaining the economy growth, premium jeans industry depicted 11% growth in 2011 (Austine 14). It also rose 7 to 8 percent in the next years.
The big reason for this growth was the low bargaining power of buyers, as they want to wear high quality and differentiated jeans, which is almost inimitable. The buying power in the premium jeans industry depends on the income level and sense of fashion among customers. It demonstrates the attractiveness of the industry. The increase or decrease in sales depends on customer perceptions and intentions.
Bargaining Power of Suppliers
The bargaining power of the supply is low. The low bargaining power is due to available options for companies such as True Religion Brand. For Instance, for the premium jeans industry, major suppliers are India, Pakistan, United States, China, and Brazil. It has been revealed that these suppliers produce and supply 79% of the world (Austine 18). However, all suppliers contain low bargaining power due to availability. Conversely, many premium denim jeans makers are looking to rely on different local fabric suppliers. These are cheaper and superior in quality to make pertinent premium denim jeans for customers. The example of the White Oak Mill is quite visible. This company is producing high-quality selvage denim, being used in expensive jeans for men and women. Interestingly, with different quality features, many US suppliers are willing to sell the salvage. Thus, the availability of suppliers reduces the bargaining power.
Threats of Substitutes
It is a fact that different retailers, emerging in the competitive fashion industry, are willing to transform the fashion industry. They are looking to differentiate premium jeans for men and women. Thus, the threat of the substitutes is quite high. Interestingly, competitors or fashion retailers are willing to create space from premium jeans products. Integrating with different brands to increase the sales increases the threats of substitutes of this true Religion Brand. Color, design, patterned design, wrinkles, and comfort wear due to the stretchable fabric are some features that can be observed from other brands as well. Other brands have access to different suppliers, and it also increases the threat of substitutes (Austine 17).
Threats of New Entrants
The threat of new entrants is quite high for the company. It is due to the easy entry of different companies in the country. In different fashion retail stores, denim can be seen everywhere. New arrivals in the market are exploring the market because the denim business does not need heavy investments. There are some minor regulations on this business. After deriving insights from the US denim market, it has been observed that retail stores are selling more than 86 denim brands, including True Religion Brand (Austine 15).
Competitive Rivalry
The competitive rivalry is high. 7 for all mankind, Levis, AG Jeans, Hudson, Rag & Bone, Joe, J Brand, and genetic denim are some major competitors. All these competitors are focusing on quality and differentiation. These competitors are selling premium jeans at premium prices in the market to create the perception. Conversely, True Religion Jeans is also giving a tough time to these rivals. Thus, the rivalry is tough, and intention to gain and sustain the competitive advantage increases (Austine 16).
DOES TRUE RELIGION ENJOY A COMPETITIVE ADVANTAGE IN THE SEGMENT? IF SO, IS ITS ADVANTAGE SUSTAINABLE? DISCUSS THE SOURCES OF COMPETITIVE ADVANTAGE AND USE THE VRIO FRAMEWORK TO EVALUATE TRUE RELIGION AND ITS MAJOR COMPETITORS.
True religion brand is enjoying the competitive advantage due to the consistent development of premium denim jeans and an increase in sales over the past 10 years. However, it is to mention that the advantage is not sustainable due to the emergence of all other rivals. In this contemporary market, the firm only focused on the quality, design, and differentiation to gain the edge for a while. Comparatively, VF Corporation has depicted the sustainable competitive advantage by acquiring Rock and Republic (Austine 24).
Unfortunately, True religion has not tried to come up with some mid-priced jeans. Premium jeans are sold to premium customers only. The management of the company has not created multiple customer segments to offer low priced denim jeans. Like VF Corporation, the firm could gain the sustainable competitive advantage by grabbing some local jeans manufacturers. The sources of the current competitive advantage are quality, differentiation, adequate distribution, and access to suppliers (Austine 26).
VIRO framework can highlight the source of competitive advantage along with the evaluation of True Religion Brand and its competitors.
VRIO ANALYSIS
| Resources & Capabilities | Valuable | Rare | Inimitable | Organized | Impact on Competitive Advantage |
| Brand Image | Yes | No | No | Yes | Unused Competitive Advantage |
| Differentiation | Yes | Yes | Yes | Yes | Competitive Parity |
| Change | Yes | Yes | Yes | Yes | Competitive Parity |
| Life Style Brands | Yes | No | No | Yes | Temporarily Competitive Advantage |
| Deep Customer loyalty | Yes | Yes | Yes | Yes | Temporarily Competitive Advantage |
| Expansion of full-priced Stores | Yes | No | No | Yes | Temporarily Competitive Advantage |
The VIRO analysis indicates that the firm does not have a sustainable competitive advantage. Trends of doing business in the fashion industry are changing, and there is a need to change or evolve with time to make the difference. However, the temporary competitive advantage is gained by the company through expanding stores, retaining customers, and developing the lifestyle brand. The company has a good brand image.
However, other firms like 7 for all mankind, Hudson, and VF Corporation also depict the high brand image. Thus, it seems tough for this company to just focus on its brand image to gain a sustainable competitive advantage. Now, it is time to come up with some thoughtful considerations to make a big shift in the competitive denim market.
CONCLUSION
In the end, it is to conclude that the True religion Brand is facing intense rivalry in the fashion industry. However, by streamlining some strategic considerations, the firm can regain its growth rate and get a sustainable competitive advantage. Different strategic management tools such as Porter five forces and VIRO analysis have provided many competitive insights to the management. It depends on the management’s capability to perceive this information in the context of the competitive retail market and make the difference. Gaining a sustainable competitive advantage has become the main preference of the company. Accordingly, some strategic decisions are needed to meet this purpose.
Work Cited
Austine, Bonita. “Case 1-2: True Religion Brand Jeans: Will Going Private Regain Its Congregation?” Hesterly, William and Jay B Barney. Strategic Management and Competitive Advantage Concepts and Cases. 5. Pearson Education Limited, 2015. 11-31.
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