Healthcare reform will encourage preventive care, aiding demand for health stores.
Los Angeles, California (PRWEB) September 16, 2013
Despite struggles across the entire retail sector, the high-growth Health Stores industry has performed well over the five years to 2013. Revenue is expected to rise at an average annual rate of 3.3% to $17.5 billion during the period, including an estimated 3.6% increase in 2013 alone. The aging population, accelerating trends toward healthy living, improving per capita disposable income and escalating healthcare costs are contributing to the industry's growth. In particular, changing attitudes toward personal healthcare are driving demand for natural and anti-aging products.
While sales slowed during the recession, a decrease in private health insurance coverage due to rising unemployment benefited the industry. Reduced coverage caused out-of-pocket healthcare costs to increase, which encouraged consumers to seek out preventive care from health stores. At the same time, however, these factors also bolstered demand for health products sold by mass merchandisers like Walmart and Target and online retailers like Amazon. These alternative retailers often benefit from lower operating costs and can therefore offer lower prices to customers. To compete, industry operators have been developing their economies of scale to better negotiate with suppliers and reduce costs. Accordingly, the number of operators is expected to slowly increase at an average rate of 1.1% annually to reach 63,984 over the five years to 2013.
Moderate growth is forecast to continue through 2018, with the number of companies projected to rise during the five-year period. Despite cost-reduction efforts, IBISWorld estimates that profit margins will fall over the next five years as competition from new market entrants, mass merchandisers and online retailers intensifies and drives down prices. Nonetheless, the industry continues to benefit from several trends that will continue to drive industry growth going forward. Favorable attitudes toward healthy living and the aging population, for example, are anticipated to continue aiding demand for health stores. Meanwhile, healthcare reform, a frequent topic in the healthcare sector, will encourage the use of preventive care and alternative medicine, driving demand for dietary supplements.
Despite recent acquisitions and mergers, the Health Stores industry has a low level of market share concentration. The major companies in this industry include General Nutrition Centers (GNC) and Vitamin Shoppe Inc. The industry is highly fragmented because of the specialty nature of health stores. Specialty health retailers typically cater to a more sophisticated customer by focusing on selection and customer service, while the mass merchants generally offer a limited assortment composed of more mainstream products with less customer care. The more customized nature of the industry makes it difficult to achieve a large national presence, in that products must be monitored closely and staff must be trained and educated. Many health stores also specialize in a small range of products, such as sports nutrition or convalescent aids.
For more information, visit IBISWorld’s Health Stores in the US industry report page.
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This industry includes retailers that primarily sell health and personal care products. Examples include nutritional supplement stores, convalescent and prosthetic supply stores and specialized medical supply stores. The industry excludes pharmacies and optical goods stores, as well as perfume, cosmetics and beauty supply stores.
IBISWorld industry Report Key Topics
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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