Room to play: Rising demand and regulation to help parents cover costs support revenue
London, United Kingdom (PRWEB) September 13, 2013
Before the economic downturn of 2008, the Child Day-Care Centres industry enjoyed a period of strong growth, encouraged by a booming economy and widely available government childcare subsidies. According to IBISWorld industry analyst Robert Scotton, “the downturn brought rocketing unemployment and falling household incomes, which undermined demand for costly childcare services”. Industry revenue fell by 15.2% in 2009-10 and another 5.0% in 2011-12 as households tightened their budgets and sought substitutes for child day-care. Many made savings by eliminating childcare expenses altogether as stay-at-home parents assumed the responsibility themselves.
Aware of the extreme cost of childcare, the government has implemented new financial support schemes, although its own monetary woes forced it to roll back others. This coincided with the number of children under the age of 15 increasing because of birth rates rising over the past few years. The net result of these developments was higher spending on industry services as demand from new families, supported by public financing, helped return industry revenue to growth in 2011-12. This is expected to continue through 2013-14 as revenue expands by 3.6% to £3.1 billion. However, the economic downturn that ravaged the industry earlier in the period means industry revenue is expected to contract at a compound annual rate of 1.9% over the five years through 2013-14.
Revenue in the Child Day-Care Centres industry is poised to continue to grow over the five years through 2018-19. As the economic downturn recedes, unemployment is gradually falling and disposable household income is set to rise. Scotton adds, “continuing government aid to finance childcare and growth in the number of children under 15 are anticipated to result in demand for and spending on the industry's services expanding over the next five years”. The proposed introduction of a childcare voucher system for households where both parents are employed is likely to encourage faster growth in the second half of the period.
The industry is highly fragmented, and no company generates even 5.0% of revenue. The two largest operations, Busy Bees and Asquith Nurseries, account for a meagre 5.4% share of the market. The industry is overwhelmingly comprised of small players. Childcare involves a high level of supervision and care, which limits the number of children any one centre can manage and the possible economies of scale. The branding benefits available to a large company are minimal, as parents usually rely on word-of-mouth recommendation when selecting a childcare provider and are often sceptical about whether large operators will put the interests of their child first. Location is also a primary factor when people choose day-care services, and this is a further reason for the large number of small establishments.
For more information on the Child Day-Care Centres industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Companies in this industry provide childcare, mostly to children under the age of 12. This can come in the form of full-day care, occasional care, after-school care or holiday care. Childcare is increasingly being incorporated with education and holiday care as parents work longer hours. The industry does not cover early-years education or welfare-based social care for children.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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