Melbourne, Australia (PRWEB) June 16, 2014
While the Discount Department Stores industry in Australia has by no means achieved robust growth over the past five years, it has not fared as poorly as its mid-tier and up-market counterparts. Plummeting consumer sentiment, instability in financial markets and widespread economic uncertainty following the global financial crisis prompted many households to scale back expenditure, increase savings and pay down debt. According to IBISWorld industry analyst Lauren Magner, “These weak economic conditions supported demand for discounted products as value-conscious consumers opted for the cheaper alternatives offered by industry operators.” However, the industry was not immune to the effects of weak consumer confidence and the subdued spending that plagued the overall retail sector, and as a result, industry revenue is estimated to decline by an annualised 0.7% over the five years through 2013-14, to total $9.5 billion.
Price forms the major basis of competition between industry operators, and discount department stores have actively sought to be a market leader in this aspect. Improved global sourcing methods and a strong Australian dollar have enabled retailers to purchase inventory at a lower cost. By sourcing products directly from manufacturers in low-cost countries such as China, industry operators have been able to bypass the wholesale function, saving on intermediary costs. “Companies have passed on some cost savings to consumers in the form of lower prices, and this was the main factor driving a return to growth in 2012-13,” says Magner. Industry revenue is expected to rise by 2.4% in 2013-14, as consumers flock to discount department stores in search of the lowest prices. The Discount Department Stores industry is characterised by a high level of market share concentration, dominated by Woolworths Ltd and Wesfarmers Limited.
Over the next five years, the industry's major companies will continue to adopt strategies involving brand and product repositioning and supply chain restructuring, in an attempt to steal market share from mid-tier and up-market department stores such as Target, Myer and David Jones. Business models will focus on offering consumers the lowest prices possible on a diverse range of products, targeting consumers with prudent spending habits. However, fierce price competition from online stores, specialised retailers and other department stores will constrain growth.
For more information, visit IBISWorld’s Discount Department Stores industry in Australia report page.
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IBISWorld industry Report Key Topics
Retailers in this industry sell various consumer goods at discounted prices. Unlike up-market department stores that have separate cash registers in each department, discount department stores generally have central customer check-out locations. Discount department stores typically purchase products from wholesalers and manufacturers and then sell these on to consumers.
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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