Over the past five years, dry conditions forced industry players to improve operational efficiency in order to remain viable.
Melbourne, Australia (PRWEB) October 23, 2013
The Nursery Production industry in Australia is showing signs of recovery, with revenue forecast to increase by 4.1% to $882.2 million in 2013-14. This contrasts with the expected annualised growth rate of 1.3% in the five years through 2013-14, which is partially attributable to dry conditions that reduced demand for industry products. According to IBISWorld industry analyst Nick Flores, “the drought forced consumers to curb plant and garden expenditure, which was exacerbated by stringent water restrictions”. Better rainfall in 2010, combined with the installation of rainwater tanks, lessened the water shortages that had been curtailing industry performance. Dry conditions forced industry players to improve operational efficiency in order to remain viable.
The trend towards higher density living and falling average garden sizes has negatively affected industry performance. This has been partially offset by the increased demand for indoor and patio plants in the move towards urban living. This has also been boosted by increases in dwelling commencements for the majority of the past five years. Furthermore, the rise of hardware retailers has attracted consumers away from traditional nurseries, which struggle to compete against big box stores' economies of scale and extensive supply chain networks. The ability of hardware retailers to drive prices down in times of economic uncertainty has put pressure on industry profit margins. “This has been intensified by volatile consumer sentiment and weak growth in household discretionary income over the past five years, as consumers attempt to reduce expenditure,” says Flores. This, combined with the volatility in prices of key inputs such as fertiliser, has caused the profit margins of local nurseries to be squeezed as they seek to reduce expenses in light of slowing product demand. The industry displays a low level of market concentration, with a majority of establishments operating as sole traders or partnerships.
Nursery Production industry revenue growth is likely to be driven by greater water availability and the more moderate levels of rainfall projected for the next five years. An expected increase in dwelling commencements for the same time period will benefit the industry, as new homes often incorporate landscaped gardens. Fragile consumer sentiment is forecast over the next five years, which is expected to detrimentally affect industry performance. Minimal growth in household discretionary income forecast during the same period indicates that industry players will need to curb costs and increase operational efficiency.
For more information, visit IBISWorld’s Nursery Production report in Australia industry page.
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IBISWorld industry Report Key Topics
The industry includes businesses that are primarily involved in growing trees and shrubs, ornamental plants and bulbs. Businesses sell to retail or wholesale establishments, as well as landscapers, local government and councils, and orchardists. This industry excludes turf growing and flower growing.
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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