The recovering economy and rising health consciousness will stimulate industry demand
Los Angeles, CA (PRWEB) April 24, 2013
Sports and athletic goods manufacturers produce and sell sporting equipment to retailers and wholesalers that market those goods to consumers. Because of the specialized nature of these goods, participation in their corresponding activities affects the Athletic and Sporting Goods Manufacturing industry. First, revenue depends on consumers who have the time and wherewithal to play sports and buy the necessary equipment. Next, downstream demand from retailers and wholesalers helps determine industry output and profit: If these middlemen fail to sell the goods, manufacturers will experience adverse effects. In addition to sports participation, exchange rates have been a strong indicator of industry revenue growth; an increase in imports and a decrease in exports have led to the sector's slow decline.
During the five years to 2012, the industry declined due to falling demand. Increased volumes of sporting goods imported into America have hindered manufacturers since a spike in 2005, leading to weak sales. Also, the recession decreased consumer demand for discretionary goods, such as sporting and athletic equipment. “Reduced demand caused a buildup in inventory at the retail level, translating to decreased demand for manufactured goods,” says IBISWorld industry analyst Dale Schmidt. Consequently, industry revenue declined at an estimated annualized rate of 2.6% during the five years to 2012 to reach $8.9 billion; these figures include a 2.1% revenue increase from 2011 to 2012. Over this time, the average profit margin for industry operators has decreased due to the rising competition from imports. As economic recovery builds momentum, retail sales will improve. Also, as consumers become more health conscious, they will be more inclined to purchase athletic equipment. In light of these two trends, demand for the industry's products will increase and steadily grow revenue in the short term, despite the overall decline of the industry. As the recession subsides, revenue is forecast to continue growing through 2017.
Concentration levels have remained low over the five years to 2013, even though the Athletic and Sporting Goods Manufacturing industry has undergone some consolidation. According to Schmidt, the low market share concentration can be attributed to a decline in enterprise numbers over this period due to industry competition. It is also partly attributable to the diverse range of products operators manufacture, making it difficult for any single players to hold a dominant share of the market. Strong competition within the industry and from external players has resulted in significant price-based competition, which has led to a squeeze on profit margins and has prevented firms from accumulating large market shares. Of the various industry segments, golf equipment manufacturers and gymnasium and exercise equipment manufacturers have the lowest concentration levels. The concentration for the fishing tackle and equipment segment is high. For more information, visit IBISWorld’s Athletic and Sporting Goods Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
Following the design of sample products, operators in this industry buy raw materials and transform them into a range of sporting and athletic goods (except apparel and footwear). Examples include balls for sports (baseball, football, basketball) and outdoor equipment (fishing, hunting, camping). The finished products are then marketed to wholesalers and retailers.
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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