Shifting consumer shopping preferences will lead to further constrained revenue.
New York, NY (PRWEB) October 18, 2014
The Small Specialty Retail Stores industry, which relies on discretionary purchases of products, such as tobacco, art supplies, calendars, candles, trophies and swimming pools, has been plagued by sluggish growth of per capita disposable income and consumer confidence. “In addition, increased external competition from department stores and online retailers offering the same goods at lower prices have limited industry growth,” according to IBISWorld Industry Analyst Sally Lerman. Industry revenue is expected to increase at an average annual rate of 1.5% to $3.9 billion in the five years to 2014. Consumer trends are not expected to change anytime soon, leading to a slow 0.7% growth of industry revenue in 2014.
On-the-go consumers are increasingly shifting toward one-stop or mobile shopping. Many mass merchandisers are adding specialty items to their product lines and are offering lower-priced goods due to their economies of scale; therefore, industry operators are left with fully stocked inventory and declining revenue. “Online retailers also carry discounted substitute industry products as well as hard-to-find specialty items, often with no additional shipping costs,” says Lerman. Consequently, there has been consolidation among operators, while others have left the industry altogether. As a result, the number of industry enterprises has decreased at an annualized rate of 0.3% to 8,904 operators over the five years to 2014.
In the five years to 2019, the industry is forecast to continue growing, albeit at a slower rate. Despite rising per capita disposable income and consumer confidence in the strengthening economy, changing consumer shopping preferences and declining leisure time for activities, such as shopping, will lead to further constrained revenue. Small specialty retail stores will continue to face rising competition from department stores and online retailers, which make one-stop and mobile shopping more appealing to the time-strapped consumer. Consumers are also anticipated to keep shopping on a budget, specifically for discretionary goods, which are largely substitutable. For instance, consumers may opt to purchase tea light candles in place of pillar or jar candles, which creates a lower profit margin for industry operators. Over the next five years, revenue is expected to increase slightly at an average annual rate of 0.7% to total $4.1 billion in 2019.
For more information, visit IBISWorld’s Small Specialty Retail Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry retails specialized lines of goods, such as art supplies, cigarettes and cigars, paper goods, collectors’ items, fireworks, religious merchandise and trophies. Stores retailing beer and wine-making supplies are not included in this industry. This industry also includes general merchandise auction houses, but it excludes mass merchandisers, department stores, warehouse clubs and supercentres.
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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