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In the past, most firms have not been able to match Wal-Mart’s “everyday low prices.” The problem is that Wal-Mart’s barrier to entry (economies of scale) and strength (supply-chain management) can be easily replicated with sufficient resources. By definition, discount retailers are competing to see who can offer the lowest prices. This places a heavy burden on all firms to maintain a profit margin as they do so.
Threat of New Entrants:
The Grocery/Discount Retailer industry’s threat of new entrants is very low. New firms would be faced with the task of beating the prices of wholesale giants immediate upon entry...
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