Operators will be forced to innovate as competition heats up
Melbourne, Australia (PRWEB) October 10, 2012
The Convenience Stores industry in Australia has operated in a rapidly changing environment, with industry sales expected to rise by an annualised 0.8% in the five years through 2012-13. While time-poor, cash-rich consumers were the driving force behind industry sales growth, the trading landscape was affected by a downturn in domestic conditions due to the global financial crisis. According to IBISWorld industry analyst Claudia Burgio-Ficca, ‘falling consumer sentiment, fluctuating income growth and continued competition from small-format grocery stores and supermarkets also posed their own challenges for industry operators’. Despite the tough retail landscape, operators remain up-beat by continuing to review their product range and product margins to offer consumers value for money. Industry sales are set to reach $7.08 billion in 2012-13. While convenience stores will continue to experience some turbulence, there will be growth opportunities for operators.
Demand for the Convenience Stores industry in Australia is expected to be driven by income growth and further demand from consumers. However, retail demand will be limited by a contraction in consumer sentiment and concerns regarding the increasing cost of living. Additionally, convenience store operators will continue to face stiff competition from major grocery chains. ‘Sales will also be affected by rising credit card fees, continued consumer demand for health food and further competition from other retailers selling fuel’, adds Burgio-Ficca. Convenience store sales are forecast to post steady growth over the next five years. Retail demand will benefit from continued growth across the domestic economy, a rise in disposable incomes and higher employment. However, strong competition from external retailers will affect profitability, with product margins expected to be cut by convenience store operators in a bid to match prices at supermarkets. Future sales will also be influenced by the flow-on effects of plain packaging on cigarette products, which is set to be introduced from 1 December 2012, and by the carbon tax, which came into effect from 1 July 2012.
Convenience store retailers are expected to have a low but increasing level of market share concentration over the five years through 2012-13. The largest player in the industry is 7-Eleven Stores. While not regarded as true industry players, the entry of Woolworths and Coles into convenience store retailing, via their alliance with petrol retailing companies (back in 2002-03) intensified competition across the industry, particularly with regard to store locations, product range and price, service and promotional deals. Due to their larger operational base and association with petrol stations, Woolworths and Coles have been able to offer consumers petrol discounts and instore promotional deals. In doing so, they have attracted a large proportion of the pool of convenience shoppers.
For more information, visit IBISWorld’s Convenience Stores report in Australia industry page.
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IBISWorld industry Report Key Topics
Convenience stores sell a range of products including cigarettes, beverages, confectionery, snack foods, ready-to-eat foods, communication goods, magazines, newspapers and general merchandise. This includes milk bars and corner stores, and excludes businesses that primarily operate as supermarkets, sell specialised foods (fruit, bread, deli goods) or generate the majority of their sales via petrol retailing.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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