IBISWorld Market Research
Average profit margins have suffered, as weak demand has led to significant discounting
Melbourne, Australia (PRWEB) January 15, 2015
Mounting competition and changes to the retail landscape have created a tough trading environment for the Domestic Appliance Retailing industry over the past five years. Industry revenue is projected to decline by an annualised 1.5% over the five years through 2014-15. Despite continued advances in product design and technology, industry revenue has suffered due to strong price-based competition, interest rate fluctuations, progressive declines in average selling prices, volatility across the retail economy following the global financial crisis, and uncertainty across the domestic economy. Trading conditions during this period have also been affected by trends in the industry's key drivers, including real household disposable income, consumer sentiment and household formation rates. Industry revenue is forecast to rise by 2.0% over 2014-15 to $12.8 billion, driven by stronger growth in disposable income. However, according to IBISWorld industry analyst Lauren Magner, “Continued price erosion, declining consumer sentiment and volatility in the retail market are expected to constrain further growth.”
Trading conditions across the industry are expected to be challenging given the level of restructuring, store closures and changes in ownership. Products retailed by the industry can also be purchased from a range of other venues, such as discount and traditional department stores. “Average profit margins have suffered over the past five years, as weak demand has led to significant discounting within the industry,” says Magner. In addition, continued advances in technology have led to greater efficiencies across the supply chain, resulting in a progressive decline in the price of the industry's products. Falling purchase costs have prevented further declines in profitability, as an increasing amount of stock has been sourced from low-cost manufacturers overseas. Continued advances in product design and technology, disposable income growth and a stronger economy are expected to drive revenue growth over the next five years. Key growth areas will include smartphones, e-readers, internet protocol TV (IPTV) and 3D TVs. Nevertheless, continued competition from both internal and external operators is expected to constrain revenue growth.
The Domestic Appliance Retailing industry is characterised by a moderate level of market share concentration. Combined, the industry's major players (Harvey Norman, The Good Guys, JB Hi-Fi and Betta Home Living) control a significant share of the domestic appliance market, and compete against smaller chain-store operators and independent stores across a range of products. Industry concentration has intensified over the past five years owing to the demise of operators such as Retravision and WOW Sight and Sound, and the sale of Dick Smith to a private equity group. These changes have caused unrest within the retailer base and presented significant challenges for the industry. The rise in industry market share concentration is in line with its mature life cycle status, with increases in consolidation activity.
For more information, visit IBISWorld’s Domestic Appliance Retailing industry in Australia report page.
Operators in this industry retail a broad range of domestic appliances including televisions, barbecues, refrigerators, microwaves, washing machines and vacuum cleaners. These products are purchased from manufacturers and wholesalers for resale to consumers at retail stores. The industry includes online sales by retailers that have a physical presence, but excludes online-only stores.
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IBISWorld industry Report Key Topics
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
International Trade
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Market Share Concentration
Key Success Factors
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Basis of Competition
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Capital Intensity
Technology & Systems
Revenue Volatility
Regulation & Policy
Industry Assistance
Key Statistics
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Annual Change
Key Ratios
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