Group 1: Retail Sector

Market Structure: Monopolistic Competition

Explanation: While there are large players like Amazon and Walmart, the retail sector isn’t dominated by a few, and there are numerous smaller chains and independent stores that offer similar products. Each firm differentiates itself through factors like price, branding, product mix, customer service, and location, creating imperfect competition but not an oligopoly.

Chosen Firm: Target Corporation

Porter’s Five Forces Analysis:

Threat of New Entrants: Moderate: High capital requirements for physical stores, established brand loyalty, and online competition from giants like Amazon create barriers, but new online-only platforms or niche retailers can still enter.

Bargaining Power of Suppliers: Moderate-to-High: Large retailers like Target have some bargaining power, but dependence on specific brands and manufacturers, particularly private label products, can give suppliers leverage.

Bargaining Power of Buyers: High: The vast number of retail options gives customers strong bargaining power. They can easily switch between Target and other stores based on price, convenience, and product availability.

Threat of Substitutes: High: Online retailers, discount stores, and direct-to-consumer brands constantly pose a threat. Additionally, non-essential spending can be easily substituted for other needs in times of economic hardship.

Competitive Rivalry: High: The retail sector is highly competitive, with players vying for market share through promotions, price wars, and product differentiation. Online competition like Amazon further intensifies the rivalry.

Main Threats to Profitability for Target:

• Shifting consumer preferences: Customers are increasingly price-conscious and value convenience, requiring Target to adapt its pricing strategies and online presence.
• Online competition: Amazon’s dominance and the rise of other online retailers threaten Target’s brick-and-mortar business and demand investments in e-commerce infrastructure.
• Maintaining profit margins: Balancing competitive pricing with maintaining healthy profit margins amidst rising operational costs (labor, supply chain) can be challenging.
• Keeping up with changing trends: Failure to respond quickly to evolving consumer preferences and product trends can lead to lost sales and market share.

In conclusion, while Target operates in a monopolistic competitive market with numerous rivals, the intense competition, strong negotiating power of customers and suppliers, and threat of online substitutes pose significant challenges to its profitability. To thrive, Target needs to continuously adapt its offerings, invest in its online presence, manage costs effectively, and stay ahead of evolving consumer trends.