A substitute is a product that performs the same or similar function as another product. Substitute products or services in an apparel/clothing rental industry are a part of the major threats when there is rivalry among existing competitors. There are many factors that might contribute as to why substitute of the product may become a threat in the clothing rental industry.
First of all it would be switching costs, if there is a low switching cost for clothing/ service offerings for a consumer in another company, then there would be high chance that they may explore and support the clothing/service offerings from that company that has a low switching cost which is of the same quality.
Product price is also another condition that affects the…show more content… On the other hand, if the substitute is more expensive, of lower quality, its functionality does not compare with the industry’s product, and the consumer’s switching costs are high, then a low threat of substitutes occurs.
Therefore, substitutes for clothing/service offerings with regards to clothing are not immediately recognizable since they are often from outside the industry a company operates within. This is the reason why clothing industries need to identify the actual cause of the threat of substitutes and develop strategies to counter it in the long term. Some of the strategies include product differentiation, customer value and brand loyalty.
In product differentiation, by creating unique clothing offering, customers will be able to satisfy their need via specific clothing (same design that the customers want their clothing to be) and would not be distracted by substitute products. There could be additional benefits that might not be available in a substitute…show more content… This helps the clothing companies to prevent easy switch overs to other substitute products. For example, a rental clothing industry can reward customers’ points for visiting the site, 1 point for every visit. This is a great feature to have for flash sale site, when there is a release of new deals, customers could continually visit and check them out. This is also a great loyalty program because it uses tiers. Customers can start in the basic tier and work their way up to the highest level. Every time, there is a progress up a tier, there can be access to more benefits. In the highest level, customers could get early access to sales (huge benefit for flash sales) and VIP customer