Increasing discretionary income for compulsory purchases will benefit warehouse clubs and supercentres
New York, NY (PRWEB) June 05, 2014
The Warehouse Clubs and Supercentres industry has fared well over the five years to 2014. Industry operators' ability to pass down lower prices to consumers on a range of merchandise has largely driven revenue growth. This was particularly significant during the start of the five-year period, when per capita disposable income declined and unemployment increased, straining household budgets and forcing consumers to make value purchases offered by industry operators. As the economy recovers, many price-conscious consumers stigmatized by recession will continue to shop at industry establishments. Therefore, revenue for the Warehouse Clubs and Supercentres industry is expected to increase at an average annual rate of 2.1% to $33.1 billion over the five years to 2014. As the economy continues to strengthen, industry revenue is forecast to increase 0.4% in 2014.
According to IBISWorld Industry Analyst Sally Lerman, “With sales rising consistently during each of the five years to 2014, the industry's largest players, which account for an estimated 74.3% of industry revenue, have been increasing their market presence by opening additional establishments.” Therefore, the number of industry establishments is estimated to increase at an average annual rate of 4.0% to 512 over the five years to 2014. Although the industry depends on economies of scale to keep costs and prices low, resulting in some mergers and acquisitions, the number of enterprises within the industry has declined at a rate of 1.1% per year on average over the past five years. Profit, however, has risen slightly over the past five years, from 3.9% in 2009, during the height of the economic downturn, to an estimated 4.2% in 2014. This is due to increased sales of high-margin goods and more efficient management of expenses.
“In the five years to 2019, the industry is forecast to continue to exhibit growth, albeit at a slower pace, as some of the industry's largest operators, such as Walmart and Target, shift focus away from supercentres and toward smaller format department stores,” says Lerman. However, per capita disposable income and consumer confidence will continue to increase as the economy strengthens, providing consumers with more discretionary income for compulsory purchases at warehouse clubs and supercentres.
For more information, visit IBISWorld’s Warehouse and Supercentres in Canada industry report page.
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IBISWorld industry Report Key Topics
The Warehouseclub and Supercentres industry is made up of large stores that primarily retail a general line of grocery products and merchandise items (e.g. apparel). Warehouse clubs offer customers a wide selection of merchandise (often in bulk), at discounted prices, in exchange for a membership fee that is paid by each customer. Supercentres are large discount department stores that also sell perishable groceries. Unlike warehouse clubs, however, supercentres do not have eligibility requirements for customers.
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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