Department Stores in the UK Industry Market Research Report now updated by IBISWorld

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Department stores were doing well prior to the 2008-09 recession. Things changed when the recession hit. Over the five years through 2012-13, industry revenue is expected to decline at an annualised 0.6% to total £18 billion due to the economic slowdown. The 2008-09 recession led to plummeting consumer confidence, high unemployment and uncertainty in the economy. At the same time, competition from specialised stores and supermarkets rose. They offer similar products at a lower price, which during the recession was a key factor to keep revenue up as consumers became frugal. Department stores suffered at the hands of clothing specialists in particular during the crisis. In 2012-13, revenue is expected to increase by just 0.1% as disposable income growth remains weak and consumer sentiment declines. Therefore, the industry is likely to experience the same value-conscious and reluctant approach to spending that prevailed during the 2008-09 recession. Competition from external stores will continue into the next five years, although it will not be as intense as it was during the economic downturn. Industry revenue is expected to decline marginally over the five years through 2017-18. IBISWorld forecasts that the recovery of the economy and demand for the industry's products will be slow. For these reasons, industry research firm IBISWorld has updated its report on the Department Stores industry.

IBISWorld Market Research

IBISWorld Market Research

A slow economic recovery and strong competition will affect the industry

Department stores were doing well prior to the 2008-09 recession. Demand was driven by the luxury market and high-end stores benefited from this trend. Consumers under the age of 30 are often impulse buyers of non-essential items like personal care products and they contributed significantly to revenue. Things changed when the recession hit. According to IBISWorld industry analyst Suzannah Rowley, “over the five years through 2012-13, industry revenue is expected to decline at an annualised 0.6% to total £18 billion due to the economic slowdown”. The 2008-09 recession led to plummeting consumer confidence, high unemployment and uncertainty in the economy. The government tried to prop up demand by temporarily lowering the VAT rate to 15% in December 2009. It was only partially successful in backing demand, however, as households were too pessimistic about their financial future to spend any money. Stores had no choice but to discount items heavily, which negatively affected revenue. The sale of household items and big-ticket items suffered the most during the crisis.
At the same time, competition from specialised stores and supermarkets rose. They offer similar products at a lower price, which during the recession was a key factor to keep revenue up as consumers became frugal. Rowley adds, “department stores suffered at the hands of clothing specialists in particular during the crisis”. In 2012-13, revenue is expected to increase by just 0.1% as disposable income growth remains weak and consumer sentiment declines. Therefore, the industry is likely to experience the same value-conscious and reluctant approach to spending that prevailed during the 2008-09 recession. Competition from external stores will continue into the next five years, although it will not be as intense as it was during the economic downturn. Industry revenue is expected to decline marginally over the five years through 2017-18. IBISWorld forecasts that the recovery of the economy and demand for the industry's products will be slow.
The Department Stores industry has a medium level of market share concentration with the top four players in the industry accounting for 55% of revenue. Their share of the market has risen over the past five years due to the exit of inefficient companies. Major companies include Marks & Spencer, John Lewis, Debenhams and Bhs.
For more information on the Department Stores industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.

IBISWorld industry Report Key Topics

Department stores retail a wide range of general merchandise, including clothing, household appliances, toys and games, personal care products and garden supplies. Non-specialised stores that primarily sell food are classified as supermarkets and are not included in the industry. Other non-specialised stores that sell a wide variety of items but do not have clear departments are classified as variety stores and are not included in the industry.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalisation & 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
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on many UK industries. 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 London, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.co.uk or call (020) 3008 6568.

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