As parents reenter the workforce, demand for child care services will rebound
Los Angeles, CA (PRWEB) October 29, 2012
In 2012, the Day Care industry is expected to generate $46.8 billion in revenue. According to IBISWorld analyst Caitlin Moldvay, “Day care services are often a necessary purchase for working families, a factor that mitigates revenue volatility for the industry.” Over the past five years, in spite of the economic recession, revenue growth has remained positive, supported by rising birthrates prior to the recession and the fact that child care represents a relatively nondiscretionary expense for households. From 2007 to 2012, industry revenue is expected to rise at an average annual rate of 2.3%. Nevertheless, revenue growth slowed as a result of rising unemployment during the recession because newly jobless parents were able to provide child care themselves. This factor was mitigated by an ongoing focus on child development, however, with a greater number parents investing in day care that includes high-value services, such as personalized education. During 2012, industry revenue is projected to rise 3.1% as parents begin to reenter the workforce and disposable income rises, which will result in greater usage of day care services.
The industry is largely composed of nonemploying industry operators; in fact, nonemployers make up over 90.0% of operators in the industry. “Over the past five years,” says Moldvay, “the number of companies offering day care has continued to grow, supported by continuing demand for child care services and low barriers to entry.” From 2007 to 2012, the number of enterprises is estimated to increase at an average annual rate of 2.1%, reaching 832,782 operators.
The Day Care industry has a low level of concentration; the four largest firms in the industry account for less than 5.0% of industry revenue in 2012. The industry is largely characterized by nonemployer firms, which make up an estimated 92.4% of operators according to the latest data from the US Census Bureau. Many people supplement their income by babysitting, or they partake in this activity when they are between jobs. However, new firms may arise out of long-standing relationships with many parents. Among the large firms, increasing consolidation by major players in the form of mergers and acquisitions has led to a gradual shift toward large establishments. Stark revenue growth before the recession prompted many players to acquire rivals in their attempts to grow quickly. This acquisition trend has temporarily slowed as a result of the slow economic recovery. However, companies such as Children's Learning Adventure are expected to expand their national presence quickly over the next five years. Over the next seven years, the company plans to open at least 200 more locations nationwide. Nevertheless, given the industry's low barriers to entry, the industry is likely to remain highly fragmented.
Beyond 2012, the industry will likely continue to prosper. Decreasing unemployment will lead to more parents re-entering the workforce and thus raise the demand child care. Additionally, large players will likely benefit from parents' increased focus on child development and education programs, a key growth area for the industry. Large players will therefore offer more personalized development services for children. Early education will be a strong marketing tool to attract new customers. IBISWorld forecasts that the industry will grow over the five years to 2017.
For more information, visit IBISWorld’s Day Care in the US industry report page.
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IBISWorld industry Report Key Topics
This industry provides day care services for infants and children. These establishments generally care for preschool children, but may care for older children when they are not in school, such as during the summer or after school hours. Establishments may also offer some educational programs.
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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