In good news for the industry, houseware retailing is set to grow in Australia this year, with IBISWorld predicting a 5.1 per cent increase in revenue.
Over the past five years, demand for housewares (which IBISWorld classifies as tableware, cooking utensils, bakeware and knives) has grown due to a rise in residential building construction along with more consumers investing in renovations to their existing properties.
“Industry revenue growth has been further supported by rising household discretionary income, which has boosted consumers’ ability to spend on housewares,” says IBISWorld senior industry analyst Spencer Little.
Although housewares revenue is projected to grow by 5.1 per cent in 2015-16, IBISWorld is estimating just 1.9 per cent growth in 2016-17. The reason for this slower growth can be attributed to a projected fall in consumer spending and a decline in residential building construction activity, as people begin to fear an oversupply of apartments.
“Despite strong revenue growth over the past five years, industry profitability has been declining steadily, predominantly due to increasing price competition from internal and external competitors,” says Little.
Also negatively impacting the industry is extensive promotional activities and simultaneous price discounting, which have raised advertising costs and caused expenses to grow at a faster rate than revenue, narrowing profit margins.
Nevertheless, over the five years through 2015-16, industry revenue is expected to rise at an annualised 3.7 per cent, to reach $1.6 billion.
By Ruth Cooper
