Trading conditions will remain subdued and price-based competition between wholesalers will continue to put pressure on fragile profit margins.
Melbourne, Australia (PRWEB) November 26, 2013
Demand for the Toy and Sporting Goods Wholesaling industry in Australia is influenced by trends in real household discretionary income, which affects retail spending and the discretionary buying power of consumers. While discretionary income has generally grown over the past five years, trading conditions across the industry have been hindered by the increasing incidence of wholesale bypass, where retailers opt to purchase products directly from manufacturers. This has enabled retailers to achieve better product margins and take greater control of profit margins. According to IBISWorld industry analyst Alen Allday, “the retail environment has changed substantially over the past decade as more consumers decide to bypass domestic retailers altogether and purchase goods from online stores based overseas.” Further constraining the industry are changes in consumer preferences, which have shifted away from traditional toys and sporting goods and towards consumer electronics, which are not included in the industry.
Industry wholesalers have had a tough battle over the five years through 2013-14, with sales expected to decline by an annualised 1.1%. However, there have been signs of improvement in the past few years as import volumes have increased. Industry sales are estimated to increase by 2.0% to $3.6 billion over 2013-14. Consumer sentiment is expected to improve in 2013-14 after a number of volatile years, which will improve retail sales for toys and sporting goods and contribute to wholesale growth. “However, trading conditions will remain subdued and price-based competition between wholesalers will continue to put pressure on fragile profit margins,” says Allday. The industry is highly fragmented, mainly due to the diverse range of products it sells. There are no major players that control a significant portion of industry revenue.
Trading conditions for industry wholesalers will remain difficult over the next five years. While modest rises in sports participation rates and disposable income will fuel industry sales, the overall trading landscape will be negatively affected by strong competition from wholesale bypass. The Toy and Sporting Goods Wholesaling industry will continue to rely heavily on cheap imports from China, despite an expected weaker Australian dollar, as the local toy and sporting goods manufacturing scene has been almost completely eroded. The continued shift towards offshore product sourcing will have both negative and positive effects on wholesalers, the main negative being increased competition with international suppliers that supply directly to Australian retailers at lower prices than local wholesalers.
For more information, visit IBISWorld’s Toy and Sporting Goods Wholesaling report in Australia industry page.
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IBISWorld industry Report Key Topics
Operators in this industry wholesale toys, bicycles and bicycle parts, playground equipment, firearms, ammunition, fireworks or sporting equipment (except clothing, footwear and tents). Wholesalers source these products from domestic and international manufacturers and then forward sell them to retailers such as specialist stores, department stores, educational institutions and clubs or associations.
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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