Consumers have been cutting discretionary spending, causing a slowdown in industry sales.
Melbourne, Australia (PRWEB) October 11, 2014
Operators in the Floor Coverings Retailing industry in Australia have struggled over the past five years, with industry revenue expected to rise by an annualised 0.2% over the five years through 2014-15. According to IBISWorld industry analyst Claudia Burgio-Ficca, “global instability and the ensuing lull in retail sales created a difficult trading environment for operators.” Despite growth in residential building construction, the performance of industry operators was affected by increasing competition from hardware and building supplies retailers, which continued to offer competitive pricing across a range of floor covering options. The operating landscape for players has also been affected by trends in real household discretionary income, consumer sentiment and interest rates. Industry revenue is forecast to rise by 3.7% to $2.6 billion in 2014-15.
Growth in the residential building market over the past five years provided opportunities for operators to generate revenue. However, mounting uncertainty regarding the stability of domestic markets led consumers to cut discretionary spending, which caused a slowdown in retail sales. “As a result, growth in discretionary incomes and falling interest rates had little effect on the overall state of the industry,” says Burgio-Ficca. Industry profitability is expected to suffer over the five years through 2014-15, primarily as a result of increasing competition from hardware and building suppliers retailers. The industry exhibits a medium level of market share concentration. Major players include Newfurn Floor Coverings Limited, Carpet Court Australia Limited and Carpet Call (Holdings) Pty Ltd.
Over the next five years, revenue growth is expected to be driven by an overall increase in the level of residential building construction, along with anticipated growth in real household discretionary incomes, which will boost the spending power of consumers. As a result, profitability is forecast to improve as the Floor Coverings Retailing industry returns to a more stable trading environment. Despite this, demand will be hindered by volatility in interest rates and consumer sentiment. Revenue prospects for the industry are also likely to be hampered by increasing competition from hardware and building supplier retailers, which are expected to become a real threat to the industry.
For more information, visit IBISWorld’s Floor Coverings Retailing industry in Australia report page.
Industry operators primarily sell a broad range of floor covering products including carpet, vinyl, rugs and linoleum. Tiles made of lino, vinyl, cork, carpet or rubber are included in the industry. However, businesses that primarily operate in laying floor covering or retailing ceramic tiles are excluded from the industry.
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