Business and consumer confidence is likely to remain positive over the medium term
Melbourne, Australia (PRWEB) March 15, 2013
Price competition has been a persistent obstacle to growth in due in part to the presence of large retailers with the ability to attain scale economies and pass on cost savings to consumers. This has intensified competition within the Office Supplies Dealers industry and supported growth in group buying activities, which pool the negotiating power of smaller players to access the same range of products and discounts available to larger retail chains. Price deflation has also occurred due to the ongoing decline in printing and the shift towards technology related office supplies such as tablets and computers, which have also declined in value. According to Suzannah Rowley, “overall, industry revenue is expected to decline over the five years through 2012-13.”
The Office Supplies Dealers industry exhibits a medium share of concentration. “The revenue of the four largest companies is expected to contribute a high level of industry revenue in 2012-13,” says Rowley. Over the five years through 2012-13, market share concentration has increased, propelled higher by the expansion of Officeworks early in the period. From 2010-11, Major players have by and large underperformed the industry and found themselves more vulnerable to broader trends in retail, with declining consumer spending and retail footprints that rely on a high volume of sales.
Looking ahead, the industry's fortunes are expected to improve in line with economic conditions and growing online sales. Business and consumer confidence is likely to remain positive over the medium term as economic conditions improve. This is likely to boost discretionary spending and subsequent demand for the industry's products. In addition, there will be greater public sector spending as budgetary concerns ease. The rise in online sales will accelerate over the next five years as will the shift away from bricks-and-mortar retailing. This will help the Office Supplies Dealers industry cope with persistent price deflation, however, it will also mean employing higher skilled workers able to operate complex inventory management systems and deliver superior customer service. As a result, profitability may fall marginally but revenue is expected to increase.