Competition is increasing from online retailers and discount department stores.
Melbourne, Australia (PRWEB) April 04, 2014
The Discount Variety Stores industry has benefited from relatively stable demand conditions over the past five years. Its appeal to the price-sensitive consumer led to above-average growth during the global financial crisis, unlike most other retail industries. IBISWorld industry analyst Sebastian Chia states “the industry has also benefited from an elevated Australian dollar, which has allowed firms to buy goods at lower prices, leading to higher margins on goods sold.” Over the five years through 2013-14, revenue for the Discount Variety Stores industry is expected to grow at an annualised 1.3%.
The industry consists of a few larger players and numerous smaller owner-operated stores. Over the past five years, there have been a number of highly publicised struggles in the industry, with the closure of a large number of Dimmeys and DSG Holdings stores illustrating the rising pressures facing the industry. The industry leader, Reject Shop Limited, has pursued aggressive expansion to dominate the industry. The emergence of efficient global competition, in the form of Japanese chain Daiso, is expected to increase pressure on owner-operators within the industry through the use of vast global economies of scale. In 2013-14, the industry is forecast to grow by 1.1% to reach $2.4 billion. The next five years are expected to be less rewarding for the industry. The falling Australian dollar is expected to lead to struggling firms leaving the industry. Competition from online and discount department stores is expected to intensify, further increasing pressure on firms. The growth shown by Big W, Kmart and Target is expected to continue to constrain industry revenue. According to Chia, “industry leaders will have to streamline supply chains and increase efficiencies to stay relevant.” Online deal stores and aggregators are expected to satisfy consumer appetite for niche and low-cost goods. Firms that are able to capitalise on their proximity to consumers will benefit.
The Discount Variety Stores industry is characterised by a medium level of market share concentration. Outside of the major players, the industry is highly fragmented, allowing many smaller players to operate within the industry. Although market share concentration remains at a moderate level, it has decreased over the past five years. While the industry's largest player, the Reject Shop Limited, has grown substantially, other major players have rapidly declined. This reduced concentration has provided an opportunity for smaller players to enter the industry. The industry’s major players include Reject Shop Limited and DSG Holdings Australia. For more information, visit IBISWorld’s Discount Variety Stores report in Australia industry page.
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IBISWorld Industry Report Key Topics
Discount variety stores retail general merchandise such as food products, toys, household goods, hardware, furniture, apparel and novelty products. These goods are typically inexpensive and offered at discounted prices. The industry excludes department stores, supermarkets and warehouse clubs.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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