Licensing legislation and growing competition challenge industry operators
London, United Kingdom (PRWEB) November 30, 2012
The music has stopped for many nightclubs during the past five years. Legislation extending licensing hours for other drinking establishments and banning smoking in venues has removed the industry's main competitive advantage. According to IBISWorld industry analyst Steven Connell, “Where late night revellers had to go to nightclubs in the past, now they can stay at a pub or hip bar and enjoy a wider selection of drinks, cheaper prices and more relaxed atmosphere”.
Nightclubs have also come under pressure from the sharp economic downturn, which has made clubbing unaffordable for many. Those who have continued patronising nightclubs have chosen to take advantage of cheap supermarket booze to ‘pre-drink' before clubbing, constraining revenue from drinks sales. This has forced nightclub operators to increase cover charges and has hit profitability. Industry revenue is estimated to contract at a compound annual rate of 6.1% over the five years to 2012-13 to reach £2.46 billion. Revenue will contract by 4.8% in 2012-13.
The lights are expected to remain dim for the Nightclubs industry over the next five years. Nightclubs will continue to suffer from competition from pubs, bars and restaurants. These establishments offer wider selections of food and drink, can afford to charge cheaper prices and have more attractive locations and decor. The uncertain economic outlook will continue to hurt the industry as young people choose to stay at home or go to parties to drink and listen to music. Connell adds, “Minimum pricing on alcohol should present an opportunity for nightclub operators, but other regulations designed to curb Britain's boozy culture are likely to harm the industry”. Independent nightclubs that connect with patrons via social media, diversify food, drink and entertainment offerings and, most importantly, stay on top of the latest music trends, should prove the most successful. IBISWorld estimates industry revenue will remain flat over the five years through 2017-18, with weak growth in later years just offsetting earlier losses.
The industry is highly saturated, characterised predominantly by a large number of small single-site operators, which account for the majority of industry market share. That gives the Nightclubs industry a low level of market share concentration. The number of companies that have obtained considerable market share is no more than eight, each with a market share of about 1.0%. Luminar Group is the strongest exception: the company is the largest operator in nightclubs.
For more information on the Nightclubs industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
The Nightclubs industry comprises licensed establishments providing dance and musical entertainment services. The industry is distinguished from public houses, bars, hotels and restaurants, which are principally food and beverage service establishments.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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