Shifting demand from brick-and-mortar stores to online retailers is boosting revenue
Los Angeles, CA (PRWEB) May 17, 2012
The Online Office and School Supplies Sales industry shook off a brief slowdown during the Great Recession to post strong earnings growth in the five years to 2012. During the recession, falling corporate profit and per capita disposable income forced businesses and consumers to cut back on the office and school supplies they used, causing industry revenue to drop. In addition, small-scale industry operators left the industry en masse because businesses and consumers switched to the industry's large-scale operators who could consistently offer lower prices due to economies of scale, says IBISWorld industry analyst Dale Schmidt. But as the economy returned to growth in 2010, record corporate profit and rising per capita disposable income have led to average annual revenue growth of 3.4% over the past five years, including 6.8% growth in 2012 to reach $5.9 billion.
Revenue gains for the Online Office and School Supply Sales industry have mainly come on the back shifting demand from brick-and-mortar office supply stores to their online counterparts. Online retailers hold a few advantages over retail stores, namely that they can offer a wider selection and can be accessed from a home or office. In addition, online retailers have fewer expenses because they can forgo the costs of renting and maintaining a store space, including wage costs for store staff. This has allowed online office supply stores to grow strongly despite flagging sales for brick-and-mortar office supply stores. However, the rise of the internet is decreasing the need for office supplies in general, which will hamper industry revenue growth over the next five years, continues Schmidt. On the other hand, the number of students and businesses will continue to steadily increase, causing demand to rise organically.
The industry exhibits a high level of market concentration. The three largest players — Staples, Office Depot and OfficeMax — are the biggest retailers of office supplies in the United States. In the five years to 2012, industry concentration has increased marginally due to major player acquisitions. Furthermore, the recession hurt industry demand, especially given increased external competition from discount retailers. During the recession, other retail industries, including discount stores and supercenters, began providing convenient shopping experiences as well as low prices, which caused industry growth to slow. This trend has caused underperforming operators to consolidate or exit the industry. During the next five years, an increasing number of niche players are expected to enter the industry as business and consumer sentiment rise. Businesses will no longer need to search for the absolute lowest price on industry products, and instead can work with specialized small-scale operators. In spite of this, the largest firms will remain dominant, so market share concentration is not expected to change drastically. Industry revenue will continue to grow over the five years to 2017. Improving per capita disposable income will drive growth, and lower unemployment will increase consumer demand for industry products. For more information, visit IBISWorld’s Online Office and School Supply Sales in the US industry report page.
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IBISWorld industry Report Key Topics
This industry sells school and office supplies or a combination of school and office supplies with stationery, new computers and office equipment.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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