Global Specialty Store Industry
Specialty stores represent a global industry worth almost $483 billion in 2010, reports MarketLine. The industry recorded 2% yearly growth between 2006 and 2010. Book sales represented the most profitable segment in the world specialty store market in 2010, generating revenue of almost $170 billion and accounting for just over 35% of overall market value. Market growth in expected to slow to an annual rate of just over 1.5% between 2010 and 2015, bringing the market to $524 billion by 2015.
Specialty stores focus on selling one product type, including accessories, music, electronics, books, sporting goods, arts and crafts, accessories, pet supplies, hardware, office equipment, and computers. In recent years, specialty stores have seen market share stolen away by other retailers, such as discount department stores, mass merchandisers, online retailers and warehouse clubs. These retailers offer consumers cheap, one-stop shopping and stock similar products.
As smaller specialty retail stores provide mainly discretionary goods, the economic recession represented quite a blow to market growth in this sector. Consumers, now more in the habit of shopping online and at discount department stores may not necessarily be prompted to return to specialty retail stores despite economic recovery.
Market Segments
- The world stationery and cards market expanded by almost 5% in 2010 to generate revenue in excess of $89 billion. MarketLine predicts the global stationery and cards market will be worth close to $112 billion in 2016, representing more than 25% expansion in five years. Stationery represents the leading market segment, accounting for almost 77% of overall market value. The Americas represent just under half of the global stationery and cards market.
- The world jewelry retail market shrank by close to 1% in 2009, reports Verdict. This decline was mainly due to reduced discretionary spending brought on by the economic recession and plummeting consumer confidence. The jewelry retail market has, however, begun to benefit from economic recovery and rising consumer confidence. The luxury segment witnessed 8% expansion in 2010, while mass market growth was only 3%. Over coming years, this turnaround is expected to represent new growth. Countries in the Asia-Pacific region, apart from Japan, have outpaced the Americas in jewelry and watch retailing. One market leader in jewelry and watch retailing, Richemont, has seen Asia Pacific sales rise to account for as much as a third of overall operations, having grown from 20% five years ago. The company was able to minimize the drop in its operating margin throughout the economic recession partly on the back of high sales of Cartier through its 400 stores in Greater China.
- The bookstore market has witnessed important changes in recent years. Competition from alternative retailers, such as mass merchandisers, along with trends in consumer behavior are expected to slow growth in the coming years, reports IBIS World. Demand fuelled by technological innovation, including demand for e-readers, will benefit operators. As consumers purchase less physical books in favor of other formats, companies will benefit from this changing trend. Consumers purchase a range of book and newspaper materials including magazines, textbooks, paperbacks and trade books.
Regional Market Share
- The US small specialty retail store industry is involved in the sale of various products such as sketch pads and cigars, reports IBIS World. The market is characterized by fragmentation and growth is fuelled by levels of disposable income and evolving consumer sentiment. Revenues are expected to decline at a yearly rate of close to 4% between 2008 and 2012, bringing the industry to just under $25 billion. Revenue declined almost 10% in 2008 and almost 8% in 2009. However, revenue fell less than 3% in 2010 and less than 1% in 2011, pointing to economic recovery and, therefore, increased consumer spending. Specialty stores account for almost 20% of the US retail industry, which is worth $4 trillion.
Market Outlook
Specialty stores are operating in an increasingly competitive climate. Apart from rivalry between specialty stores operators, competition is also coming from alternative retailing outfits carrying similar goods such as online retailers, mass merchandisers and discount department stores. While operators are being forced to compete with larger stores that have greater buying power, specialty stores do have an advantage in that they continue to offer consumers a wide range of specific goods and product knowledge. Specialty stores will promote this advantage moving forward in a bid to retain market share.
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