Couche Tard is a Canadian multinational operator of convenience stores. The group is headquartered in Laval, Canada. The company was founded in 1980 (Couche Tard, 2021). It sells goods for immediate consumption, road transportation fuel, and other products mainly through company-operated stores and franchise stores. The company operates through its 14200 stores in over 26 countries and employs around 135,000 people worldwide (Couche Tard, 2021). The group operates through its three brands Couche Tard based in Canada, International brand Circle K and Nordic based fuel stations INGO (Couche Tard, 2021). Couche Tard is one of the most valuable retail brands in the world. Porter’s five forces model is a helpful tool to identify threats and opportunities faced by Couche Tard in the world.
Couche Tard – Competitive Rivalry in The Market
The retail industry all over the world is very competitive. The retail industry is predominated by a food conglomerate with its presence all over the world. It is considered as the second-tier retailer in the world behind Walmart and Metro Group. The most significant competitors of Couche Tard’s are 7 Eleven, Costco, Kroger, and Target Corporation. All these multinational companies have a strong foothold all over the world and possessed diversified portfolios. The revenue of Costco and Target Corporation is $163.2 Billion (Statista, 2021) and $93.565 Billion (Fortune, 2021), respectively, as compared to the revenue of Couche Tard $54.132 Billion (Statista, 2011). Couche Tard has a slight edge in marker over its competitors due to its diversified products and presence in most of the world. However, the retail industry remains highly competitive.
Couche Tard – Threat of Substitutes
The threat of substitutes in the retail industry is always moderate to high. The clientele always has multiple options to choose from. Different brands are offering similar products. So to keep with them, they must not compromise on their products while keeping the prices in control. Online stores are taking physical retail stores, and companies are venturing with IT companies to explore new business dimensions. Couche Tard invests heavily in AI; it integrates AI with Retail by testing a contactless checkout at stores (CSNEWS, 2020). It partnered with McGill University to launch a retail innovation lab for innovative and frictionless technologies that address the future of retail (Lewis, 2021). The diversified portfolio which caters to different demographics provides them with an upper hand. The threat of substitutes is moderate to high in the retail industry; however, Couche Tard is taking progressive measures to stay relevant.
Couche Tard – The Threat of New Entrants
New entry of retail firms is easily achieved even in industry runners such as Couche Tard. Small retailers can enter the market and compete based on convenience, location, specialty, and other factors. Online Retail stores are expanding at exponential speed, and due to pandemics, the growth is skyrocketed. Retail e-commerce sales reached a record $3.9 billion in May in Canada, a 2.3 percent increase over April and a 99.3 percent increase over February ($2.0 billion). Year over year, e-commerce sales more than doubled—with a 110.8 percent increase compared with May 2019 (Toneguzzi. M. 2020). Couche Tard is evolving its business with the need of time. Despite the stronghold of incumbents in the retail industry, there is a potential for new aspirants by leveraging technology. Therefore, the threat of new entrants remains medium.
Couche Tard – Bargaining Power of Buyers
The buyer’s bargaining power depends on the number of characteristics of its market situation. Buyer can exert their power if the product available are standards; they are buying them in bulk quantities if the product produced is not up to the mark (HBR, 1979). Most retails giants hold a diversified portfolio in the world. It provides a wide range of products for the customer, which increases its clientele. It caters higher number of individual consumers with diversified product lines. The individual customer is the small-scale purchaser. So, it decreases their bargaining power. The bulk purchaser can expect higher power bargaining power. Retail giants hold higher bargaining power here.
Couche Tard – Bargaining Power of Suppliers
Suppliers provide resources to the industry, such as materials, services, and labor (i.e., individuals, organizations such as labor unions, or companies that supply contracts labor). The bargaining power means the ability of the supplier to increase the price of raw material or the industry’s cost (Hill and Jones, 2012). Suppliers hold higher power if a few suppliers dominate the industry, it provides more products in the market & it is future integrated. The supplier’s enormous population of suppliers & intense competition between them decrease their bargaining power. The supply chain of the material is excessive. So in this supplier can have little or impact on the company. So they hold a weak level of bargain power against the company.
References
Fortune. (2020). Target. Available at: https://fortune.com/company/target/fortune500/
Harvard Business Review. (1979) How Competitive Forces Shape Strategy. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy
Hill, J., 2012, Essentials of Strategic Management, 3rd Edition. South-Western,
Toneguzzi. M. (2020) Retail E-Commerce Explodes in Canada Amid COVID-19 Pandemic. Available at: https://retail-insider.com/retail-insider/2020/07/retail-e-commerce-explodes-in-canada-amid-covid-19-pandemic/
CSNEWS. (2020) Alimentation Couche-Tard to Pilot Autonomous Checkout Technology. Available at: https://csnews.com/alimentation-couche-tard-pilot-autonomous-checkout-technology
Lewis. J. (2021) Couche-Tard Launches Retail Innovation Lab. Available at: https://www.cspdailynews.com/technologyservices/couche-tard-launches-retail-innovation-lab
Couche Tard. (2021) Story. Available at: https://www.couche-tard.com/story?lang=en
Couche Tard. (2021) Our Brands. Available at: https://corpo.couche-tard.com/en/our-company/our-brands/
Couche Tard. (2021) Where We Operate. Available at: https://corpo.couche-tard.com/en/our-company/where-we-operate/
Statista. (2021) Total revenues of Alimentation Couche-Tard worldwide from fiscal year 2017 to 2020. Available at: https://www.statista.com/statistics/1030415/net-revenues-of-alimentation-couche-tard-worldwide/
Statista. (2021) Net sales of Costco worldwide from 2011 to 2020. Available at: https://www.statista.com/statistics/269762/costcos-net-sales-worldwide/