Intense retail-level competition and rising wholesale bypass will restrict revenue growth.
Melbourne, Australia (PRWEB) March 22, 2015
Operators in the Hardware Wholesaling industry in Australia sell a range of products, including power tools, metal fasteners, cement and paint. Industry wholesalers also sell some building products, such as roofing materials, bricks, tiles, doors, windows, sand, paint, plaster, locks, wire netting and fibreglass swimming pools. According to IBISWorld industry analyst Spencer Little, “Demand for these products has been subdued over the past five years due to weaker demand from residential building construction markets.” Weaker activity in non-residential building construction markets has also restricted the industry's performance over this period.
Wholesalers initially benefited from accelerated expansion in institutional building markets, associated with the Federal Government's primary school refurbishment program. However, subdued demand from commercial and industrial building construction markets has offset these benefits and further contained industry revenue. As a result, revenue is estimated to increase at an annualised 1.2% over the five years through 2014-15. Growth is expected to pick up in 2014-15, with revenue forecast to rise by 3.9%, to reach $15.4 billion. “This projected increase is due to greater demand for hardware products from residential construction markets and DIY homeowners,” says Little. The industry is composed of many small-scale firms that operate in narrow regional markets, which are typically part of a larger franchise or buying group. There has been some consolidation of industry ownership over the past five years, but the largest players still account for a fairly small share of total industry revenue. The industry exhibits a low level of market share concentration. Major players include Wesfarmers Limited.
Over the next five years, the Hardware Wholesaling industry's performance is expected to remain sluggish. Modest recovery in residential housing and non-residential construction markets is set to boost demand for many hardware products and other building supplies. However, as competition intensifies at the retail level and instances of wholesale bypass rise, revenue growth is likely to be restricted. The 2011 entry of Masters Home Improvement, a joint venture between Woolworths and US retailer Lowe's, is set to result in strong price-based competition.
For more information, visit IBISWorld’s Hardware Wholesaling industry in Australia report page.
Companies in the industry primarily wholesale a large range of hardware products including building supplies, tools, doors, and windows. The industry excludes firms that wholesale timber and plumbing products.
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