Posts Tagged ‘IBISWorld’
With the economy showing signs of recovery, industry research firm IBISWorld analyzed more than 700 industries to identify the winning sectors in the coming year.
Many of the biggest industry losers during the recession are expecting a massive rebound in revenue growth and are on their way up in 2010:
Finance
The financial system, which was brought to its knees over the past two years, is showing signs of life. The biggest winners in the upcoming year will be:
- Venture Capital & Principal Trading – 63.4% rise in revenue, up from -28.9% in 2009
- Portfolio Management – 33.4% rise in revenue, up from -18.7% in 2009
- Real Estate Loans & Credit Lines – 27.4% rise in revenue, up from -3.1% in 2009
- Private Equity, Hedge Funds & Investment Vehicles – 21.4% rise in revenue, up from 10% in 2009
However, these industries have a long way to go before they return to pre-recession conditions.
Oil & Gas
Much like the finance sector, oil-related industries are expected to rebound strongly in 2010:
- Natural Gas – 24.3% rise in revenue, up from -35.5% in 2009
- Oil Drilling & Gas Extraction – 49.3% rise in revenue, up from -44% in 2009
- Petroleum Refining – 47.2% rise in revenue, up from -40% in 2009
- Gasoline & Petroleum Stations – 37.0% rise in revenue, up from -35% in 2009
Demand for crude oil and gas will rise substantially in 2010. With the recovery in the world economy and increasing revenue prospects for fuel distributors and retailers, operating conditions will be more favorable.
Automotive
Virtually the entire automotive supply chain in 2010 will be in far better shape than the disasters of the past two years:
- Motor Vehicle Body Manufacturing – 12.5% rise in revenue, up from -26.8% in 2009
- Car & Automobile Manufacturing – 19.1% rise in revenue, up from -30.5% in 2009
In fact, these industries and New Car Dealers are the top three growth industries in terms of employment for 2010 – all of which will grow their employee size by more than 16 percent.
Telecommunications
The telecommunications sector has remained resilient in the face of the recession, and is set to thrive during the recovery:
- Voice Over Internet Protocol Provider (VoIP) – 17.9% rise in revenue, compared to 30.8% in 2009
This sector is poised to prosper from a recovery with the government’s allocation of $7.2 billion in stimulus funds. Throughout the recovery, M&A activity is expected to continue as telecoms attempt to position themselves to make the most of the converged communications world that will emerge over the next decade.
Retail
Following a dismal year of retail demand over 2008 and much of 2009, the coming year is set to be far more positive for retailers:
- eCommerce & Online Auctions – 13.4% rise in revenue, up from -10.8% in 2009
Although spending in 2010 will not mirror the highs experienced throughout the economic boom, it will be significantly better than that of the past two years. eCommerce-related businesses will outperform the broader retail market, while women’s and children’s clothing sales will also experience favorable gains. However, men’s clothing will take longer to recover.
Health
Operators that provide elective treatments had some trouble during the first half of 2009, as the labor market has deteriorated and consumer sentiments remained weak. But, demand should intensify for these industries from mid-2010 onwards:
- Dentists – 1.6% rise in revenue, up from 0.7% in 2009
- Chiropractors – 0.5% rise in revenue, up from -2.0% in 2009
- Physical Therapists – 2.0% rise in revenue, up from -1.0% in 2009
Other Winners
Other industries expected to experience solid growth during the recovery period include Donations, Grants and Endowments, Water Well Drilling, Mining Support, and Biotechnology.
Top 10 industries of the decade
Posted on: December 23, 2009
As another decade comes to an end, industry research firm IBISWorld identified the top 10 best performing industries based on accumulative revenue growth from 2000-2009.
Here’s the list of winning industries in the past decade and their corresponding growth figures for the 10-year period:
- Voice Over Internet Protocol Providers (VoIP) – *See Note
- Search Engines – 1655.9%
- eCommerce & Online Auctions – 468.9%
- Online Dating & Matchmaking – 248.8%
- Tank & Armored Vehicle Manufacturing – 244.7%
- Petrochemical Manufacturing – 221.2%
- Mining Support – 186.7%
- Wireless Telecommunications Carriers – 183.4%
- Biotechnology – 182.1%
- Warehouse Clubs and Supercenters – 146.5%
“VoIP has skyrocketed from non-existent to a massive application targeting telecom carrier’s voice revenues,” explained George Van Horn, senior analyst with IBISWorld. “Continuing cost advantages for service providers, improving service quality and the expected emergence of mobile VoIP during the next 10 years pave the way for VoIP to be the primary beneficiary of the next leg in telecom’s service development cycle.”
IBISWorld also added that over a 10-year time frame, the industries that outperform or underperform their peers are those that either benefit from competitive strategic advantages or worse, suffering from significant disadvantages. While the performance of the economic recovery will dominate near-term industry performance measures, innovative products, competitive costs and improving efficiency will continue to separate the winners from the losers in the upcoming decade (2009-2019).
Note: VoIP is a new industry that only began to earn revenue in 2002. In the short period to 2009, revenue growth accumulated to an astronomical 179035.8%.
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While gadgets and electronics continue to be hot items year-on-year, there will be fewer large purchases this holiday, such as TVs and computers. This is partly due to the fact that retailers will look to reduce the number of deep discounts – which severely damaged margins this time last year – along with the fact that customers will move towards needs over wants.
“This season there won’t be a “wow” factor in terms of sales,” said Toon van Beeck, senior analyst with IBISWorld. “Consumers have been so inundated with discounts for more than a year that it will be difficult for retailers to get shoppers excited about holiday promotions.”
However, one of the biggest gadget winners this holiday will be e-book readers, partly because the prices are being driven lower by competitors entering the market (e.g. iRex and Nook). About 30 percent of all e-reader sales in 2009 are estimated to derive from the holiday period alone.
“Consumers will reduce spending on big ticket items,” said van Beeck. “Instead, they’ll trade down towards trendy and cheaper gadgets like e-readers; iPod Nanos; Nintendo Wiis and other game consoles; Flip Video and small point-and-shoot digital cameras. This is where the real value will be for consumers this Christmas.”
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For the second year running, this will be a make or break holiday for retailers, as many cannot survive another season of suppressed sales. With total gift sales forecasted to decline 2.6 percent this Christmas season, “necessity gift” like clothing will be the only growth category, according to industry research IBISWorld.
“Clothing is the only gift category to see growth this year because it serves a dual purpose,” said Toon van Beeck, senior analyst with IBISWorld. “Parents are using this Christmas season as an excuse to update their children’s wardrobes, still filling space under the tree and ultimately saving money in the long run.”
As the biggest retail category, clothing represents 18.6 percent of total Christmas gift sales in 2009, at $81.91 billion. Discount and convenient retailers like Zappos and Kohl’s will continue to see strong sales volumes, as consumers move away from higher-end goods to more value-added purchases.
However, brand name products and celebrity labels are going to fare poorly this year, while basic clothing items are expected to perform well. Overall, clothes are expected to rebound from their dismal performance a year ago – which was among the worst Christmas retailing seasons this century.
Consumers hang-up on ringtones
Posted on: September 21, 2009
The music ringtone market is within the decline stage of its short life cycle, according to industry research firm IBISWorld. The company forecasts industry revenue to decline for the second consecutive year – down 15 percent from its $880 million peak in 2007 – totalling just $750 million in 2009.
“Music ringtones practically boomed overnight, but with two consecutive years of decline it seems the industry is exiting just as rapidly as it entered,” said Toon van Beeck, senior analyst with IBISWorld. “And with the ringtone market already reaching its decline stage, its life cycle is only expected to last about 15 years.”
Normal life cycles consist of three phases: growth, mature and decline. Data indicates that the music ringtone market may have gone directly from growth to decline. If industry revenue peaked only two years ago and is already in decline, the mature phase was completely skipped or lasted for such a short period that it went unnoticed by most observers.
Surging demand of digital albums and singles, worth an estimated $1.94 billion, are the reason behind the eroding mobile ringtone market. Early ringtones were bought via text and cost consumers up to $5 a song. Today songs can be purchased for less than a dollar now that mobile phones can connect to the Internet and music can be stored on memory like a computer.
“Mobile Phones are now truly wireless Internet devices and allow consumers to download full songs for ringtones rather than the 30-second versions available in the past,” said van Beeck. “Providers like iTunes and Amazon.com have revolutionized the way we buy and use music, driving consumers to hang-up on ringtones.”
Walmart eating Tiffany’s pie?
Posted on: August 27, 2009
Sales are lackluster for high-end jewelry retailers this year as Tiffany & Co. is declining much faster than the jewelry industry as whole, according to industry research firm IBISWorld. Analysts at the firm expect industry revenue to fall 4.8 percent to $28.26 billion this year, with price competition from big-box retailers, like Walmart, stealing market share sparkle from traditional jewelry retailers.
“Although luxury shoppers represent a small elite portion of the population, they are the primary target market for high-end jewelers,” said George Van Horn, senior analyst with IBISWorld. “Even the wealthy are cutting back on extra discretionary purchases like jewelry and watches.”
Tiffany is expected to generate earnings per share of about $0.34, which will represent a decline of 46 percent from the $0.63 cents per share compared to the same quarter in 2008. Also, revenue for the quarter is expected to be about $600 million, which will be down 17.3 percent from the $732 million for the same time in 2008.
The fourth quarter of 2009 should see a significant revenue boost compared to the tough Christmas trading period of 2008. It is during this period, the fourth quarter, when jewelry stores will begin to realize more solid returns and better operating performance. As a result, profitability is expected to rise from 10.5 percent of revenue in 2009 to 11.2 percent of revenue in 2010, as luxury spending slowly returns.
While some improvement in industry operating conditions is expected in 2010 as the economy improves, IBISWorld industry risk ratings for jewelry retailing will remain at a very high level. Despite some modest improvement in ratings during the past six months, jewelry retailing continues to have the highest risk rating among the 60 different forms of U.S. retailing that IBISWorld monitors.
Over the coming few years, one of the major challenges for the industry will be the entrance of De Beers into the Jewelry Stores Industry. De Beers is planning to stake its ground as a retailer with a long-term plan to open around 150 stores under the De Beers LV joint venture with LVMH Moet Louis Vuitton. IBISWorld estimates that this move by De Beers will further increase the competition and boost the consolidation that has been under way over the past few years.
“The Jewelry Stores industry is on the precipice of a restructure at both retail and wholesale level that forces players to move quickly to ensure long-term viability,” added Van Horn. “Tiffany will continue to be challenged in finding new ways of selling its products without compromising its brand.”
- In: business | fashion
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Fashion week is approaching and despite the recession putting a damper on retail sales, industry research firm IBISWorld ranks fashion design as one of the top start-up opportunities for entrepreneurs in 2009. As fashionable clothing is becoming more affordable and consumers start to regain confidence, the Los Angeles-based firm forecasts industry-wide recovery to take place in the second-half of 2010, with an average annualized growth of roughly 6.3 percent in the coming five years.
“Consumer attitudes towards spending are changing, and it’s shaping the direction of fashion,” said George Van Horn, senior analyst at IBISWorld. “Being style-conscious doesn’t mean people aren’t being budget-conscious, and vice versa. Successful fashion houses are those delivering style and quality with affordability, and we can expect this trend to linger for the foreseeable future.”
As the saying goes, cheap is chic. With overall prices being driven down, retailers offering luxury apparel, like Saks Fifth Avenue and Neiman Marcus, have been the hardest hit, cutting costs and discounting stock in an effort to sustain profit margins.
Industry-wide, fashion design businesses have seen significant pressures on margins in recent years, with current levels approaching 6 percent versus 30 percent only a few years ago. The need to retain contracts and ensure ongoing cash flow is yet another factor behind prices going down. Even prestigious designers are bailing on displaying their latest collections on the runway or have declared bankruptcy, such as German fashion house Escada and couture designer Christian Lacroix.
“This has certainly been a make-or-break year for fashion,” said Van Horn, who advices new entrants to differentiate their services based on smart pricing strategies, quality and creative self-marketing, rather than through reliance on advertisement. “In recent years, smaller independent designers have been sprouting like never before, largely attributed to the growing popularity of online retail, as well as relatively low entry barriers and start-up costs. This has helped give the industry the ability to move forward, despite the retail sector taking a big hit.”
The Cash For Clunkers aftermath…
Posted on: August 24, 2009
If there was one pocket of the auto industry doing remotely well this past year, it was used car dealers. While the recent Cash For Clunkers program did boost new car sales, it also accounts for 7 percent of the expected decline in used car sales in 2009, according to industry research firm IBISWorld.
“Of course, there are winners and losers,” explained George Van Horn, senior analyst with IBISWorld. “Dealerships selling used cars will invariably get the short end of the stick, as the program has created a greater number of substitute consumers to purchase new rather than used vehicles.”
New car sales this year are estimated to be 20.5 percent lower than in 2008, down to 10.5 million. But if the program was not implemented, IBISWorld estimates total new car sales would be about 700,000 units fewer in 2009, at about 9.8 million (representing a 25.8 percent decline). So far, the most popular vehicle purchases and trade-ins are as follows:
Light trucks were the most traded-in vehicle, which is a net positive for the program’s goal in encouraging Americans to drive more environmentally-friendly, fuel-efficient vehicles. And while critics are quick to argue how most of the cars sold will actually benefit foreign companies like Toyota, General Motors ranks second as being a top manufacturer for new vehicles purchased:
Among others to reap the benefits of the program are finance and insurance companies. Even with a $4,500 maximum cash rebate, lenders and insurance providers will both benefit from the higher fees associated with increased loan volumes, loan balances and higher car values on the new cars purchased. At the other extreme, with all that clunker clutter, salvage yards will be a lot busier than usual.
“Cash For Clunkers strives to induce consumer spending on fuel-efficient cars, as well as give the auto sector a boost by helping dealers generate turnover. The program has been successful in doing just that, but it’s really a short-term fix, not a long-term solution,” said Van Horn.
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With 55.8 million kids enrolled in public and private schools this fall, retailers can anticipate their usual brief stint of shoppers. But given lackluster consumer spending and a 9.4 percent unemployment rate, it is no surprise analysts at industry research firm IBISWorld expect back-to-school spending to decline by 3.4 percent – from the $20.42 billion generated in 2008.
“Parents will inevitably put more thought and less dollars into their back-to-school shopping strategies,” said George Van Horn, senior analyst at IBISWorld. “In particular, dollar-variety stores can expect to see a greater wave of traffic since parents are doing everything they can to save an extra buck”. In fact, IBISWorld approximates 21.3 percent of sales from the $47 billion discount-retailer industry to come from school and office supplies alone.
The fastest growing category, electronic school supplies, will see a slight decline of 1.8 percent, down to $5.12 billion. Parents on average will spend $91.69 per child on electronic equipment this year, a fairly significant leap from the $43.36 average observed in 2005. Items such as calculators and personal laptops are must-haves in today’s learning environment, and IBISWorld predicts that by 2016, this sector will become the number one back-to-school spending category – overtaking the core area of clothing, as the learning environment becomes more technologically focused.
The biggest decline this year comes from the clothes category, expected to plunge 5.4 percent. For each child enrolled in school this year, sporting the latest trends in clothes and accessories will cost parents $136.60 on average.
And for the 1.23 million kids that will be home-schooled this year, IBISWorld found that while parents may be saving on certain expenses like clothes and shoes, educating a child at home escalates costs in other areas. In particular, parents incur the hefty price of purchasing the latest teaching tools, textbooks, and learning equipment – typically covered by public and private schools.
“Back-to-school spending is a necessary and justifiable expenditure,’” said Van Horn. “Retailers have driven down overall prices in order to draw consumers, so price-conscious parents won’t need to significantly cutback because they will get a lot more for their dollar this year.”
- In: baby | kids | Pregnancy | Women's News
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This year, 4.3 million babies will be born in the United States, representing a 0.4 percent decline from 2008. While recessions typically lead to fewer birth rates, the latest research from Los Angeles-based IBISWorld shows that not only does parenting get pricier with time, but the impact of current economic conditions will further exacerbate the financial commitment.
“We can expect to see a surge in the boomerang generation [ages 18-24] returning home and continuing financial dependency on parents due to a scarce and competitive job market,” said Toon van Beeck, senior analyst at IBISWorld. “This phenomenon has become more apparent in recent years, with higher costs in tuition and rent making transitioning into adulthood increasingly difficult. Thanks to the recession, many parents will get prolonged time with their kids until the graduate’s debt is paid off or market conditions improve.”
From the moment of conception to age 18, the average cost of raising a child is about $227,862—which translates to an average cost of $12,658 a year. A household yielding an annual income of less than $45,000 will spend roughly $156,469 on their child until they turn 18. Incomes between $45,000 and $75,000 spend $214,829, while households earning $75,000 and above splurge over $312,286 by the time their teen graduate’s high school. Afterwards, parents can expect to shell out for college tuition, along with additional financial burdens induced by a stagnant economy.
Marvelous Girl Has Moved! 