Small Specialty Retail Stores in the US Industry Market Research Report Now Available from IBISWorld

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Despite the economy's turnaround, small specialty retail stores will have a difficult time surviving. The largely discretionary nature of the products these stores sell will continue to push budget-conscious consumers to shop at external industries, such as discount department stores and online retailers. Also, sales of tobacco, once the industry's key moneymaker, will gradually decline as consumers become more aware of the health risks associated with smoking. The economy’s overall recovery may be a boon for the industry, but as consumers increasingly look for hard-to-find items online, the industry will continue to see customers turn away. For these reasons, industry research firm IBISWorld has added a report on the Small Specialty Retail Stores industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Despite rising demand, increasing competition will hamper specialty stores' revenue growth.

Operators in the Small Specialty Retail Stores industry sell very diverse products, from premium cigars to sketch pads. IBISWorld industry analyst Eben Jose says that “Due to its fragmented nature, the industry is driven not by product-specific trends but rather by broad changes in consumer sentiment and household disposable income.” Since the recession, these macroeconomic drivers have taken a negative turn, causing US consumers to cut back on purchasing industry products. As a result, IBISWorld estimates that revenue will decrease at an average annual rate of 3.6% over the five years to 2012 to total $24.7 billion. In line with the recession, the steepest declines occurred in 2008 and 2009, when revenue fell 9.7% and 7.5%, respectively. However, as the economy began its recovery and consumers began spending again, the revenue contraction decelerated, falling 2.5% in 2010 and increasing 0.8% in 2011. IBISWorld expects this upward momentum to carry into 2012.

In addition to poor spending conditions, increased external competition has further weakened industry demand. In the five years to 2012, mass merchandisers, warehouse clubs, discount department stores and online retailers have taken market share away from industry operators by providing convenient one-stop shopping and low prices for similar industry products. These factors have turned many consumers away from small specialty stores, leading to reduced profitability. This poor performance has also caused underperforming retailers to exit the industry; the number of enterprises has declined from 136,896 in 2007 to an estimated 116,613 in 2012. The Small Specialty Retail Stores industry generally exhibits low market share concentration. Jose estimates that none of the four largest players in the industry will account for a significant share of revenue in 2012. “The industry is highly fragmented,” he says, “and is characterized by a large number of small players that are privately owned and operated.” However, concentration has been on the rise in recent years due to heightened external competition from mass merchandisers and e-tailers, which offer customers convenience and low prices.

As the economy gains traction in its recovery, industry revenue is projected to increase from 2012 to 2013. A rise in disposable income will likely encourage consumers to increase spending on quality products sold by industry operators. However, such growth will be temporary, as the competition from external industries like department stores and e-commerce websites will likely continue to erode demand. In addition, permanent price declines will likely keep profitability low in the five years to 2017. For more information, visit IBISWorld’s Small Specialty Retail Stores report in the US industry page.

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IBISWorld industry Report Key Topics

Industry operators retail specialized lines of goods, such as art supplies, cigarettes and cigars, paper goods, collectors’ items, fireworks, religious merchandise and trophies. This industry also includes general merchandise auction houses, but it excludes mass merchandisers, department stores, warehouse clubs and superstores.

Industry Performance

Executive Summary

Key External Drivers

Current Performance

Industry Outlook

Industry Life Cycle

Products & Markets

Supply Chain

Products & Services

Major Markets

Globalization & Trade

Business Locations

Competitive Landscape

Market Share Concentration

Key Success Factors

Cost Structure Benchmarks

Barriers to Entry

Major Companies

Operating Conditions

Capital Intensity

Key Statistics

Industry Data

Annual Change

Key Ratios

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 or call 1-800-330-3772.


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Gavin Smith
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