Rising total health expenditure has increased demand for industry products
New York, NY (PRWEB) May 11, 2014
The Health Stores industry has been helping Canadians make healthy choices over the past five years. However, mounting demand from online retailers and mass merchandisers have challenged industry operators to reinvent their niche as per capita disposable income and consumer sentiment remain volatile. The industry has capitalized, thus far, on offering superior customer service and high quality products, including vitamins and supplements, sports nutrition products, first-aid supplies, orthopedic equipment and convalescent aids. Industry revenue is expected to increase at an average annual rate of 1.1% to $2.8 billion over the five years to 2014. As the economy continues to recover, Health Stores industry revenue is forecast to increase by 1.2% in 2014.
According to IBISWorld Industry Analyst Sally Lerman, “Rising total health expenditure, partially as a result of the aging population, has increased demand for industry products and, thus, has benefited the industry and its profit margins.” Profit is expected to rise from 3.6% in 2009 to 4.5% in 2014. Furthermore, according to Health Canada, 71.0% of Canadians have used the industry's natural health products (e.g. vitamins and homeopathic medicines). Although these factors have boosted demand for natural health products, online operators and mass merchandisers have cut into this industry's share of the market for such goods. External competitors typically have lower operating costs and benefit from economies of scale to be able to offer lower prices to consumers. However, industry operators have been becoming more efficient in negotiating with suppliers to reduce costs so as to better battle mass merchandisers and online sites. As a result, the number of industry establishments is expected to increase at an annualized 1.9% over the period to 6,098.
“In the five years to 2019, the industry is expected to exhibit steady, yet moderate, growth,” says Lerman. Per capita disposable income and consumer confidence will increase as the economy strengthens, providing consumers with more discretionary funds for the industry's products. Additionally, a growth in the organic product market and alternative medicine will stimulate increased demand for industry goods by the health conscious and aging populations. Industry operators are forecast to minimize external competition from e-commerce sites by increasing expenditures on research and development.
For more information, visit IBISWorld’s Health Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
The Health Stores industry retails products designed to affect an individual's general condition, such as nutritional supplement stores, convalescent and prosthetic supply stores and specialized medical supply stores. The industry excludes drug stores, pharmacies and optical goods stores, as well as perfume, cosmetics and beauty-supply stores.
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