Improving incomes will boost revenue, but expansion into smaller stores will limit growth
Los Angeles, CA (PRWEB) November 11, 2012
The Warehouse Clubs and Supercenters industry has been one of the fastest-growing industries in the retail sector. IBISWorld estimates that revenue will rise at an annualized rate of 3.8% in the five years to 2012, to total $413.4 billion. According to IBISWorld industry analyst Justin Waterman, “the industry's ability to pass down lower prices on a range of merchandise to consumers has been the primary driver of this success.” Even when household budgets were strained during the recession, the industry attracted new value-focused customers, leading to a strong financial performance. In 2012, revenue is expected to jump an additional 4.8% due to rising consumer disposable income.
With sales on the rise, the industry has rapidly expanded in the five years to 2012. In particular, the industry's two largest players, Walmart and Costco, account for an overwhelming majority of market share and have established new stores to capture an even larger share of consumer dollars. As such, the number of locations in the Warehouse Clubs and Supercenters industry has increased over the five-year period. “The industry’s dominant presence in the retail sector has had a lot to do with its expansion into grocery retailing, providing consumers with the convenience of a one-stop shop,” says Waterman. Grocery stores have shifted from an industry dominated by small grocers serving local markets to one characterized by large retailers active across international markets. This factor combined with the substantial capital required to generate enough revenue to compete with the industry’s major players is expected to keep concentration higher over the next five years.
From 2012 to 2017, industry revenue is forecast to continue increasing strongly. Improving disposable incomes, consumer sentiment and corporate profit, all of which act as key drivers for the retail sector, will aid growth. With rising sales, average profit margins are also expected to increase slightly during the period as small players continue to consolidate operations to compete with the players that currently dominate market share. As such, store expansion will be limited in the years to 2017. Furthermore, major companies like Walmart, Target and BJ's are currently shifting their company expansion strategies from opening new supercenters to opening smaller convenience-store-size locations (which are not included in this industry), and will likely continue these plans into the next five years; these trends may ultimately limit the industry's long-term growth. For more information, visit IBISWorld’s Warehouse Clubs & Supercenters in the US industry report page.
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IBISWorld industry Report Key Topics
The industry is made up of large stores that primarily retail a general line of grocery products and merchandise items. Warehouse clubs offer customers a wide selection of merchandise (often in bulk) at discounted prices in exchange for a membership fee that is paid by each customer. Supercenters are large discount department stores that also sell perishable groceries. Unlike warehouse clubs, supercenters do not have eligibility requirements for customers.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.