Poor economic conditions are driving demand for second hand goods
Melbourne, Australia (PRWEB) September 12, 2012
Opportunity shops sell donated goods to people in need. They provide social and environmental benefits to society, helping clothe the underprivileged while reducing landfill by encouraging people to recycle. During the past five years, the Opportunity Shops industry has enjoyed solid growth, underpinned by counter-cyclical demand as job losses and the rising cost of living have swelled the ranks of those relying on charities. According to IBISWorld industry analyst Steven Connell, “The industry has benefited from consumer trends as vintage and second hand clothing have become fashionable, leading a new class of customers to peruse opportunity shops for cheap, unique clothing and accessories.” Industry operators have been forced to contend with rising competition from low-cost and online retailers. Related to this, the industry has also suffered from the deteriorating quality of donations and rising cost of sorting and disposing of unwanted goods. Growth is estimated to slow in 2012-13 as competition from low-cost retailers intensifies and the labour market stabilises. Industry revenue is estimated to grow at a compound annual rate of 9.1% over the five years through 2012-13.
The three largest organisations in the Opportunity Shops industry are the St Vincent de Paul Society, the Salvation Army and the Smith Family. “Their long histories have allowed these operators to establish themselves as the dominant players in the opportunity shop market,” says Connell. Their recognisable brand names are a familiar sight to supporters and consumers, and thus their expansion has been welcomed in many communities. Further, their large donor base has allowed the major organisations to expand rapidly. With access to government grants and substantial corporate support, these organisations have been able to sustain even the less profitable establishments. While there are several independent operators, revenue volatility and the cost of labour may prohibit expansion. Further, the lack of funding reduces the ability of an organisation to compete against the prevalence of external competitors, primarily discount retailers.
The industry still has the opportunity to grow over the next five years. While the wider economy is expected to strengthen over the period, forecast rises in unemployment, savings rates and the cost of living should ensure solid demand for second hand clothing and other goods. Demand for vintage clothing is likely to decline as the changing tides of fashion inevitably come to the fore. However, the rise of environmental and ethical consumerism should support demand from more affluent consumers.
For more information, visit IBISWorld’s Opportunity Shops report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry sells used merchandise and second hand goods at a discount price (excluding motor vehicles, motor vehicle parts, boats and mobile homes). The goods sold by industry operators are either donated directly or purchased from an organisation that received the items as donations.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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