Melbourne, Australia (PRWEB) August 15, 2014
Delicatessens in Australia have struggled over the past five years. Poor consumer sentiment and spending during the years following the global financial crisis contributed to the industry's decline. Following this, strong competition from the major supermarkets added to the industry's pain. However, according to IBISWorld industry analyst Brooke Tonkin, “rising preferences for premium products among some consumers have buoyed the industry over the past three years.” Over the five years through 2014-15, industry revenue is projected to post annualized growth of 0.6% to reach $908.3 million. Supermarkets and grocery stores are the largest competitive threat to the industry. The price war that escalated in 2011 drew consumers away from specialized retailers and into supermarkets. Consumers at the low-price end of the market changed their shopping habits, purchasing deli items in the supermarket instead of at delicatessens. Delicatessens targeting the lower income quintiles have been forced to decrease their prices in order to compete and entice customers back to their shops. However, the combination of rising purchase costs and lower prices has caused average industry profit margins to fall over the past five years.
Some delicatessens have distinguished themselves from supermarkets by targeting consumers at the premium end of the market. Rising discretionary income among these consumers has contributed to a growing trend of premiumization. Delicatessens that have altered their product mix (by adding a number of imported French cheeses, for example) and shifted their focus to the premium end of the market are expected to have performed better financially over the past five years. Industry revenue is expected to grow by 1.7% in 2014-15 as a result of the premiumization trend. “Despite ongoing competition from supermarkets, the industry is anticipated to perform well over the next five years,” says Tonkin. Ongoing premiumization and opportunities for expansion will contribute to revenue growth.
The Delicatessens industry is expected to exhibit a low level of market share concentration. The industry is characterized by a large number of highly diverse operators. The majority of delicatessens are independently owned and operated, targeting a relatively small geographic area such as their local neighborhood. Consequently, it is difficult for any individual delicatessen to build the economies of scale required to expand nationally. This has made the industry highly susceptible to competition from other retailers, most notably the major supermarkets, Woolworths and Coles. Over the past five years, the industry's market share concentration has remained low. Industry operators have struggled to compete against supermarkets that are also offering an increasing range of deli-style products. Over the coming years, the industry is expected to increasingly gear its product offerings towards higher income shoppers, though this is not expected to significantly change market share concentration.
For more information, visit IBISWorld’s Delicatessens industry in Australia report page.
Firms in this industry retail specialty meats, cheeses, bread and other products, which are often sold by weight.
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IBISWorld Industry Report Key Topics
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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