Continued technological change will ultimately undermine the industry and lead to reduced demand.
New York, NY (PRWEB) March 29, 2014
The School Supplies Wholesaling industry is in decline due to a number of difficulties that have reduced demand for its core products and traditional distribution channels. For example, spending on education by federal, state and local governments was constrained by the recession. Moreover, a shift occurred that revised the different types of products required by primary, secondary and college students. Currently, consumers are allocating a greater portion of their annual school supplies budget to electronics and computer-related equipment and less on products provided by the School Supplies industry such as notepads, pens and binders.
According to IBISWorld Industry Analyst Andy Brennan, “The school supplies supply chain has become increasingly cannibalized, reducing demand for the intermediary function that wholesalers provide, due to the enhanced market power of mass retailers like Wal-Mart and the greater role of online e-tailers such as Amazon.com.” As a result, industry revenue is expected to decline 2.1% per year on average over the five years to 2014. Since the industry suffered large declines and is only now beginning to recover, revenue is expected to drop just 0.2%, remaining flat throughout 2014. Most school supplies wholesalers also operate off slim profit margins. The average industry profit margin increased over the past five years as many unprofitable operators have exited the industry, allowing larger distributors to gather market share. The number of industry enterprises is therefore expected to decline an annualized 1.4% over the five years to 2014, reaching 221 operators at the end of the period. This is a faster rate of decline than establishments, which indicates that the industry is consolidating, leaving a smaller number of operators with a larger share of the industry.
“While the economy will likely improve over the next five years, facilitating greater spending on education by state and local governments, demand for industry products is forecast to remain subdued,” says Brennan. Despite some years of positive gains, the long-term decline in demand will likely prevail, leading to contractions in industry revenue. Continued technological change, which will encourage higher usage of electronic products in schools and colleges and allow manufacturers to supplies directly to the end user, will ultimately undermine the industry and lead to reduced demand for traditional school supplies.
For more information, visit IBISWorld’s School Supplies industry in the US industry report page.
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IBISWorld industry Report Key Topics
The School Supplies industry comprises companies that primarily perform merchant wholesale distribution of school equipment and supplies. Operators that distribute books and furniture are excluded from 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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