New York, NY (PRWEB) December 24, 2013 -- Escalating external competition from online and mainstream adult product retailers, which increasingly carry vibrators and other erotica, has reduced the stigma associated with shopping at adult stores. According to IBISWorld Industry Analyst Andrew Krabeepetcharat, “As consumers see more sex paraphernalia featured on TV and in stores like Walmart, such items shift from taboo toward more of a social norm.” For example, Fifty Shades of Grey, an international best-selling book that features erotica, popularized certain sex enhancement products and, thus, helped industry sales spike an estimated 7.5% in 2013 to $609.8 million. This one-year jump has pushed annualized revenue growth to 12.5% annually on average since 2008. Countercyclically, the industry performed especially well when disposable income dipped during the Great Recession because consumers were less likely to spend on substitute entertainment, like eating out or going to the movies.
Nonetheless, tighter consumer budgets did result in more sales of cheaper items during the past five years. Heightened consumer price sensitivity and external competition also pressured adult store operators to offer promotional pricing. Although this boosted sales volumes, profit contracted between 2008 and 2013. Furthermore, underperforming retailers exited the Adult Stores industry during the Great Recession as a result of escalating competition, a dip in profitability and tight lending conditions. Consequently, the number of enterprises expanded at a slower rate than revenue, increasing at an annualized rate of 9.6% during the past five years to 3,838 stores in 2013.
Through 2018, the industry is anticipated to benefit from rising disposable income. Growing social acceptance of sex paraphernalia is also expected to push up revenue, resulting in 5.4% annualized five-year growth to $792.0 million in 2018. “Higher demand and disposable income are also estimated to facilitate profit expansion,” says Krabeepetcharat. Nonetheless, adult stores will continue to compete with an increasing number of mainstream retailers and will have to rely on superior staff and a wide selection of specialty products to entice consumers to return to their establishments.
The Adult Stores industry exhibits a low level of market share concentration. The industry is highly fragmented, with a large number of small players that are privately owned and operated. During the past five years, market share concentration has risen due to external competition from e-commerce sites that sell sex toys and pornographic material. As a result of this increased demand from online retailers, some small independently owned adult stores have been forced to close down. This trend has forced poorly performing establishments to consolidate or exit the industry completely. Social trends have boosted demand for industry stores, though, and name-brand stores such as Adam & Eve and Hustler Hollywood are becoming more desirable. As a result, the number of industry establishments grew at an average annual rate of 9.9% to an estimated 3,973 stores in the five years to 2013.
For more information, visit IBISWorld’s Adult Stores in the US industry report page.
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IBISWorld industry Report Key Topics
The Adult Stores industry includes companies that primarily retail sex paraphernalia, or erotica, including pornographic DVDs and magazines and sex toys and enhancement products. Stores that primarily sell movies are excluded from the industry. It also excludes revenue from all goods sold off premises, such as online, through mail-order catalogs or over the phone.
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Gavin Smith, IBISWorld Inc., http://www.ibisworld.com, +1 (310) 866-5042, [email protected]
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