A tough retail environment has hindered industry growth prospects.
Melbourne, Australia (PRWEB) November 12, 2013
The Toy and Game Retailing industry has been affected by difficult trading conditions over the five years through 2013-14, with revenue expected to post static growth (0.0% annualised). IBISWorld industry analyst Claudia Burgio-Ficca states “while solid demand for electronic and interactive toys provided revenue opportunities for operators, trading conditions have been tough due to intense internal and external competition.” Revenue prospects have been affected by annual fluctuations in real household disposable income, interest rates, consumer sentiment and the relative share of the total Australian population aged 14 years and younger. The tough trading environment faced by operators has affected industry profit, with strong price-based competition putting downward pressure on margins. Industry revenue is forecast to post modest growth over 2013-14, rising by 1.5% to $1.4 billion.
The retail market for toy and game products has been constrained over the past five years. While an overall increase in disposable incomes provided consumers with the necessary spending power to drive revenue, the softer retail market flowing from the global financial crisis and volatility in consumer sentiment failed to convert industry demand into revenue. Demand for electronic and interactive toys remained strong, but spending on these products was weaker due to consumer uncertainty regarding the stability of the domestic economy. Furthermore, industry operators have faced mounting pressure from e-tailers and auction websites and competition from other external players such as traditional and discount department stores. Industry operators are expected to benefit from an upturn in retail trading conditions, supported by growth in disposable income, an increase in the relative share of Australian consumers aged 14 years and under, and consumer demand for the latest tech toys. However, retail spending on toy and game products is likely to be hindered by volatility in consumer sentiment and interest rates. According to Burgio-Ficca, “industry retailers are expected to diversify their operations by reviewing their product ranges, entering niche markets or placing greater emphasis on customer service.”
The Toy and Game Retailing industry is characterised by a low level of market share concentration. Almost half of all enterprises in 2013-14 are expected to be small, non-employing operators. Barriers to entry are moderate, due largely to competition, weak product differentiation and the industry's mature life cycle. However, these factors do not significantly hinder the entry of new players. Market share concentration has exhibited little change over the past five years due to the difficult trading environment faced by operators following the collapse of global financial markets and slowdown in retail spending. A reduction in the number of speciality stores is also likely to have hindered growth in concentration. The industry’s major players are Associated Retailers Limited (Toyworld) and Toys “R” Us (Australia). For more information, visit IBISWorld’s Toy and Game Retailing report in Australia industry page.
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IBISWorld industry Report Key Topics
Operators in the industry primarily sell a broad range of toy and game products including dolls, hobby equipment and board games. Retailers operate as part of a chain-store network, be franchised businesses or independent players. Store merchandise is purchased from domestic manufacturers and wholesalers or imported into Australia from overseas suppliers.
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
About IBISWorld Inc.
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 every Australian industry. 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 Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.