Consumers are increasingly shifting toward online shopping and will continue to shop on a budget
New York, NY (PRWEB) April 30, 2015
The Book Stores industry has continued to decline over the five years to 2015 amid high competition from online retailers and e-books. Moreover the industry, which predominantly sells discretionary products, such as books, has been plagued by sluggish growth in per capita disposable income and consumer confidence. According to IBISWorld Industry Analyst Britanny Carter, “Consumers are increasingly opting to consume information through their laptops and mobile devices; as a result, industry sales of books, newspapers and magazines have declined.” Industry revenue is estimated to decrease significantly over the five-year period. Such trends are anticipated to continue through 2015, leading to a marginal decline during the year.
Consumers are increasingly shifting toward online shopping. With many mass merchandisers adding books to their product lines, in addition to being able to offer lower priced goods due to their economies of scale, industry operators are left with fully stocked shelves and declining revenue. Consequently, there has been great merger and acquisition activity among industry players, while other operators have left the industry altogether. Therefore, the number of industry establishments is expected to decrease slightly over the five years to 2015. Heightened online competition has also limited price markups for many retailers, decreasing profit over the period despite the exit of nonprofitable players.
The Book Stores industry has a moderate level of market share concentration. The industry's largest player, Indigo Books and Music, has multiple retail outlets throughout Canada, while the majority of the other companies are smaller, independent companies that operate at the regional or local level. Over the past five years, the level of concentration for this industry has fluctuated as many stores have consolidated or left the industry.
Consolidation is expected to continue in the next five years as competition intensifies for consumer dollars. “Operators will likely continue to increase the quality of customer service and diversify their product range to meet consumer demand,” says Carter. It is also anticipated that an increased number of broadband and mobile phone connections will sway more consumers away from brick-and-mortar stores and toward online retail platforms.
In the five years to 2020, the industry is forecast to continue declining, albeit at a slower pace. Despite rising per capita disposable income and consumer confidence in the strengthening economy, changing consumer shopping preferences and declining leisure time for activities like reading books will lead to further drops in revenue. Technological advancements and mobile applications from external e-commerce competitors make online shopping more appealing to the time strapped consumer. Consumers are also anticipated to keep shopping on a budget, specifically for discretionary items, which are largely substitutable. For example, a consumer may opt for a mass-market paperback book on sale over a hard cover book in the same genre, which creates a lower profit margin for industry operators. Consequently, over the next five years, revenue is expected to decrease moderately.
For more information, visit IBISWorld’s Book Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry retail a broad range of book and newspaper merchandise, including trade books, textbooks, magazines, paperbacks and religious books. These goods are purchased from domestic (and in some cases international) manufacturers and wholesalers. Operators then retail these goods through their stores, to the general public. This industry excludes retailers that operate primarily as used merchandise stores or electronic shopping and mail-order houses.
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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