Gymshark is a fitness apparel & accessories brand, manufacturer and online retailer based in the United Kingdom. They focus on selling men and woman’s sportswear that is designed to be fashionable but also have high performance.
Gymshark was founded in 2012 by Ben Francis, who was aged 19 at the time. It started with Francis screen printing products in his garage but rapidly grew to have customers in 131 countries.
The PESTLE analysis shows that the main external factors effecting Gymshark are political and environmental. The uncertainties of situations like Brexit or Covid-19 have caused a lot of insecurity, including economic uncertainties and possible future changes in UK law and politics. This will affect Gymshark from different trading laws, to a weaker pound making imports dearer, while recent generations have an increased conscience over where they purchase clothing from, with searches for sustainable fashion.
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The Five Forces Analysis shows the most detrimental threat for Gymshark is substitutes. Their products are very easy to replicate (as they have no patents) and there are many other substitute sportswear products available within the market.
However, in the future the most detrimental force is likely to be buyer power of supplier, due to the increase in demand for sustainable materials. As a result of this demand, suppliers of sustainable fabrics will have more control over prices and be more selective of who they supply to, raising costs for brands such as Gymshark.
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Threat of New Entry: Low
There is not a large threat from start-ups due to costs associated with entering an oligopoly market. However, it is worth recognising that the rise of social media has lowered the barriers to entry, consequently allowing some start-ups to release their own sportswear, although these businesses are very small and not a direct threat to Gymshark.
Threat of Substitutes: High
There is a large threat from substitutes as many other brands offer alternate product with lower prices. Due to the fact that there is no switching cost to consumers there is high threat to Gymshark, as they can easily loose a large amount of market share if a competitor came out with a product with similar quality and designs (seamless), but with a lower price.
Power of Suppliers: Medium
Suppliers have a large influence over the sportswear industry as they affect prices and product quality, designs and lead times. Gymshark use specific manufacturers to develop their own technical fabrics, and new styles, with products being manufactured and bought to consumers within 6 weeks. However, as a result they are tied into using the same manufacturer in order to maintain this, giving the supplier the power to raise prices.
Power of Buyers: High
Customers have a strong buying power as there are many substitutes within the market for sports apparel, especially as there are no switching costs involved. Gymshark need to ensure they differentiate their products in order to avoid consumers switching to a substitute product.
Industry Rivalry: High
The combination of many suppliers, low differentiation and low switching costs makes this a very competitive industry.
Gymshark is a great story of a company going from one person in a garage to becoming international in reach and having a value of in the hundreds of millions. In order to keep it’s growth protectory and remain successful the company will need to establish a clear new strategy, one different to the plan that has got them to this point.
So, what would you do? Why not check out some strategic options from Bowman’s Strategy Clock and apply them to the Gymshark case – what would work and what wouldn’t? Something to consider when out for a run… 🏃
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