Demand for frames will strengthen as consumer confidence improves
Los Angeles, CA (PRWEB) May 08, 2012
The Picture Framing Stores industry exhibits low concentration, with owner-operated firms dominating and most operating from a single or few locations that serve small geographic regions. Only Aaron Brothers manages to gain a significant share of the entire industry. The purchasing power of its parent company (Michaels Stores Inc.) enables the chain to achieve economies of scale. Firms benefit from a relatively consistent level of demand from the industry's primary market: households earning more than $75,000 per year. Still, according to industry analyst Josh McBee, “the recession of 2009 adversely affected all financial strata of the economy, thereby lowering demand in the wake of reduced disposable incomes.” Unemployment rose, consumer sentiment fell and demand for frames declined as well. Demand remained lukewarm as consumers lacked certainty about the economic future and chose to purchase their frames at alternative outlets such as big-box retailers. Since 2009, the industry has exhibited slow recovery, posting marginal growth each year. The two periods offset each other, and industry revenue is expected to post relatively flat growth of 0.3% during the five years to 2012.
Beyond disposable income, some industry-specific factors tend to dictate revenue performance. First, the marriage rate is a key indicator of framing activity because most weddings employ a professional photographer. The photos from the event are often framed to preserve and protect them. Unfortunately for frame shops, declines in the marriage rate during the past five years have limited demand from this market. McBee adds, “the price of plastics and resins represents an upstream variable that has a direct effect on input costs.” Plastic prices have risen during the past five years, thereby raising the cost of materials like moulding, laminates and ready-made frames. As input costs have risen, firms have sought to save costs by reducing their work force and lowering wage expenses.
In 2012, IBISWorld anticipates that recovering employment and disposable income will strengthen consumer confidence and create a more positive spending environment for the Picture Framing Stores industry. Revenue is expected to grow 0.6% in 2012 to total $2.4 billion. While the marriage rate is projected to continue falling, demand from art dealers is anticipated to grow. Art dealers often sell original and unframed pieces, so their activity typically affects demand for framing. As the overall economy pulls itself out of the financial quagmires in the five years to 2017, industry revenue is forecast to increase.
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This industry primarily provides custom framing services for pictures and other items. Industry establishments may also retail ready-made frames and other crafting supplies. This industry does not include broad-line crafting stores that also offer framing services.
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