Fiskars Porter's Consolidation

Fiskars is operating in an industry which remains competitive, with traditional brick-and-mortar arts and crafts stores such as Jo-Ann Fabrics, Michaels, and A.C. Moore facing competition from big-box retailers such as Wal-Mart and Target, as well as online players such as etsy.com. The increased competition had caused many retailers to increase promotional activity to drive sales. Also, many operators in the industry compete for the same customers with similar products. Furthermore, many incumbent operators have established links with suppliers that have been built over time, enabling them better supply management than new entrants. The aforementioned factors point to the fact that the new entrants will need to expend large sums on product promotions, advertisements and focus on building the relationships with the suppliers through substantial discounts.

Also, entrance into the industry requires a high initial capital investment. Incumbents in the industry compete heavily in the product portfolio. Customers are price-sensitive and must be presented with a wide range of products to effectively reduce the need for customers to visit multiple stores. Large national retailers, such as Michaels and Jo-Ann, are able to stock a comprehensive list of products and are generally more successful in pricing competition as they are able to purchase in large quantities at once, maximizing cost savings. Another important factor for consideration is that though the older generation does recognize the Fiskars brand and sees brand value, the newer generation does not see the brand equity of Fiskars as much. IBISWorld estimates that the top four companies operating in the Hand Tool and Cutlery Manufacturing industry have combined market share of 34.0% in 2017. The vast majority of industry operators are small enterprises. In fact, about 70% of companies in this industry employ fewer than 20 people, while less than 10.0% of operators have over 100 employees.