Despite rising demand, increasing competition will hamper specialty stores' revenue growth.
Los Angeles, CA (PRWEB) November 20, 2013
Operators in the Small Specialty Retail Stores industry sell a diverse range of products, from premium cigars to sketch pads. According to IBISWorld Industry Analyst Sally Lerman, “Due to its fragmented nature, the industry is driven not by product-specific trends but by broad changes in consumer sentiment and household disposable income.” Since the recession, these drivers have taken a negative turn, causing consumers to cut back on purchasing industry goods. However, the industry was bolstered during the recession by its largest product segment, tobacco products, which saw increased use during 2008 and 2009. Overall, IBISWorld estimates that revenue will increase at an average annual rate of 1.3% in the five years to 2013 to total $39.6 billion. The steepest growth during this time was in 2010, when revenue spiked 4.0%; however, revenue fell 1.9% in 2011 due to increased e-commerce sales and a restrained rise in disposable income. As consumers began spending again, revenue stayed positive, growing 1.8% in 2012. This upward momentum is expected to carry into 2013, with an expected revenue increase of 3.0%.
In addition to poor spending conditions, increased external competition has further weakened industry demand. In the five years to 2013, warehouse clubs, discount department stores and online retailers have taken market share away from industry operators by providing convenient one-stop shopping and low prices for similar industry products. “These factors have turned many consumers away from small specialty stores, leading to reduced profitability,” says Lerman. This bleak performance has also caused underperforming retailers to exit the industry. The number of enterprises has declined from 130,140 in 2008 to an estimated 126,850 in 2013, which marks a decline of an annualized 0.5%.
As the economy gains traction in its recovery, industry revenue is projected to increase. A rise in disposable income will likely encourage consumers to increase spending on quality products sold in small specialty retail stores. However, such growth will be temporary, as competition from external industries like department stores and e-commerce websites will likely continue to erode demand. The Small Specialty Retail Stores industry exhibits low market share concentration. The industry is highly fragmented, characterized by a large number of small players that are privately owned and operated.
For more information, visit IBISWorld’s Small Specialty Retail Stores in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in Small Specialty Retail Stores industry retail specialized lines of goods, such as art supplies, cigarettes and cigars, paper goods, collectors’ items, fireworks, religious merchandise and trophies. This industry also includes general merchandise auction houses (except electronic auctions), but it excludes mass merchandisers, department stores, grocery stores, warehouse clubs and superstores.
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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Recognized 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 US 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 Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.