Industry profit margins fluctuated, largely due to shifting prices in raw materials
New York, NY (PRWEB) April 23, 2015
Revenue for the Shoe Stores industry in Canada is expected to grow modestly over the five years to 2015. According to IBISWorld Industry Analyst Zeeshan Haider, “This industry is characterized by overall stable demand and slight year-to-year fluctuations based on prevailing economic conditions; however, downstream demand drivers have not been favourable for industry operators over the past five years, as per capita disposable income growth remained subdued over most of the period.” Consequently, consumer sentiment declined, leading to a period of low consumer spending and retail sales, which grew at a much slower pace. Thus, revenue for this industry exhibited slight growth and fluctuations, without an exogenous catalyst to influence consumption patterns and provide the incentive for greater purchases by downstream consumers. In 2015, industry revenue is estimated to grow slightly, as accelerated income growth is expected to release pent up demand, as it did in 2014. Per capita disposable income is anticipated to rise marginally during the same year.
On the other hand, industry profit margins fluctuated significantly over the five-year period, largely due to shifting prices of raw materials such as leather, synthetic fibre, cotton and rubber. The practice of fire sales and severe discounting also hurt profit margins. Discouraged by volatility and unable to compete with competition from department stores, many operators exited the Shoe Stores industry; the number of industry enterprises is estimated to decline slightly over the five years to 2015.
This industry has a low level of market share concentration. The four largest players in the industry are expected to account for a small share of the total industry revenue. Most shoe stores operate as nonchain retailers and few big chains specialize in the sale of footwear. Data from Industry Canada indicates that an overwhelming majority of industry operators (99.4%) are small-scale and employ less than 100 people. “Low barriers to entry also make it easy for aspiring operators to enter the industry and induce greater competition,” says Haider. Over the next five years, market share concentration is expected to increase as smaller operators struggle to contend with competition from their larger counterparts and department stores.
Over the next five years, the industry is expected to shift toward favourable growth. Aided by stabilizing prices of raw materials such as rubber and significant growth in per capita disposable income, consumption is expected to increase. As a result, revenue is projected to grow slightly. However, despite this modest revenue growth, the number of businesses in the industry will likely continue to decline, as many players find themselves unable to compete with online retailers and department stores, which have many cost and competitive advantages over operators in this industry.
For more information, visit IBISWorld’s Shoes Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
Industry operators primarily sell footwear, which involves purchasing shoes from wholesalers or manufacturers and selling them from a physical retail location. Catalogue sales and online sales are not included in this industry. Sales of sports shoes such as cleats are also excluded from this industry.
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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