The increasing frequency of online shopping has left operators with declining revenue.
New York, NY (PRWEB) January 27, 2014
When the going gets tough, consumers tighten their purse strings. The Department Stores industry, which relies on consumer spending, has met weak sales over the five years to 2014, as a result of anemic growth in per capita disposable income and consumer confidence, as well as increased external competition from supercentres and e-commerce sites. This has transpired in declining sales of this industry's general merchandise, including apparel, cosmetics, home furnishings, appliances and toys. Industry revenue is estimated to decrease at an annualized rate of 1.5% to $28.2 billion over the five years period. With consumers' spending habits toward industry goods expected to continue on this downward path, industry revenue is likely to drop a further 1.4% in 2014.
“The increasing frequency of online shopping and the conversion of discount department stores into big-box retailers, such as supercentres, has left industry operators with declining revenue,” according to IBISWorld Industry Analyst Sally Lerman. The addition of fresh grocery products to discount department stores generally attracts more customers by offering one-stop shopping to time-strapped consumers; however, it also relocates the expanded store from this industry to the Warehouse Clubs and Supercentres industry. Therefore, the number of industry establishments has decreased at an average annual rate of 5.1% to 644 over the five years to 2014.
In the five years to 2019, the industry is forecast to exhibit more steady growth, albeit at a slow pace. Per capita disposable income and consumer confidence will increase as the economy continues to strengthen, providing consumers with more discretionary income for compulsory purchases at traditional department stores. “Additionally, discount department stores are anticipated to do well as consumers continue to shop on a budget,” says Lerman. However, these gains will be largely offset by ever-increasing competition from e-commerce sites, whose technological advancements (e.g. mobile wallet) make online shopping more appealing. Over the period, revenue is expected to increase at an annualized rate of 1.5% to $30.4 billion in 2019.
For more information, visit IBISWorld’s Department Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry retails a broad range of general merchandise in separate departments, such as apparel, jewellery, cosmetics, home furnishings, general household products, toys, appliances and sporting goods. Discount department stores, which are also included in the industry, retail similar lines of goods at low prices. Big-box retailers and supercentres that offer fresh groceries in their stores and warehouse clubs that operate under membership programs are not included in this industry.
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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