To regain revenue, the industry will forge new partnerships and expand internationally
Los Angeles, CA (PRWEB) August 02, 2012
The Janitorial Services industry's revenue has grown moderately over the past five years. Commercial, industrial and government entities that contract operators to clean facilities are the primary markets for the Janitorial Services industry, but demand from these clients fell during the recession. “Low corporate profit and increased pressure to restructure caused many business clients to cut expenses, consolidate or close operations,” says IBISWorld industry analyst Caitlin Moldvay. Furthermore, the rate of non-residential construction fell, decreasing future business demand for cleaning facilities. Consequently, demand for janitorial services suffered and the industry shrank during the height of the Great Recession, with a 6.4% dip during 2009. As a result, over the past five years, the industry has recorded only slow average annual growth of 0.9%.
The industry began to recover from the recession in 2010 and has continued to grow steadily. IBISWorld expects revenue to rise another 3.1% to $47.2 billion in 2012, primarily due to an expansion in the number of businesses and lower office vacancy rates. Over the five years to 2017, revenue is also projected to increase. In the five-year period, the economic recovery will boost demand for cleaning services from businesses and households. According to Moldvay, “The rate of non-residential construction will also experience an uptick, further driving demand.” Lastly, the aging US population will be a growth source as third-party elderly care institutions and households owned by the elderly expand.
The Janitorial Services industry has a low level of concentration. The majority of industry operators are small firms that specialize in specific regions or downstream markets. The industry has low barriers to entry and startup costs, which contributes to its fragmented nature. The vast majority of industry establishments have five or fewer employees, and most of those are non-employers. Market share concentration has risen due to increased merger and acquisition activity, primarily on the part of ABM industries. Nevertheless, the industry is expected to continue to have a low level of concentration in the five years to 2017. Firms are expected to enter the market as the office vacancies decline, but the majority of these operators will be smaller firms that left the industry during the Great Recession. This trend is similar to other sectors that are dominated by small operators, because these entities often enter and exit an industry depending on changes in demand. Overall, the industry tends to be small business-oriented and fragmented. However, franchised operations are a growing industry segment and may increase the average size of firms during the next five years. Franchise expansion is also imminent internationally as operators try to gain footholds in growing economies like China.
For more information, visit IBISWorld’s Janitorial Services in the US industry report page.
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IBISWorld industry Report Key Topics
Establishments in this industry clean building interiors, the interiors of transportation equipment (e.g. aircraft, railcars and ships) and windows. Industry activities include contract cleaning services for factories, retail outlets, shopping centers and malls, business and government offices, trains and airlines and house-cleaning services.
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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