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An undersupply of affordable housing is contributing to industry growth, as home owners seek instead to improve their existing homes through DIY renovations. For this reason, industry research firm IBISWorld has updated its report on the Hardware and Building Supplies Retailing industry in Australia.
Melbourne, Australia (PRWEB) July 17, 2014
Hardware and Building Supplies Retailing in Australia has performed strongly over the past five years. Revenue is estimated to increase at a compound annual 3.8% over the five years through 2014-15. After subdued expenditure on private homes in 2009-10 and 2010-11, revenue growth has since returned due to rising consumer sentiment and greater expenditure on DIY renovations and home improvement projects. An undersupply of affordable housing, coupled with rising housing prices, has contributed to this growth. According to IBISWorld industry analyst Spencer Little, home owners have been deterred from moving house, seeking instead to improve their existing homes through DIY renovations. In addition, the abolishment of mortgage exit fees has made it easier for home owners to refinance and unlock equity in their homes, which can also be put towards home improvement projects. Industry revenue is forecast to rise by 4.0% in 2014-15, to reach $14.8 billion. The industry's structure has changed dramatically over the past five years, with the introduction of Masters stores in 2011. These stores now act as a major competitor for Bunnings, the industry's dominant player.
During the next two years, declining capital expenditure on private properties is expected to restrict the industry's performance. Households are expected to delay any home improvement projects over the next five years, which will cause a build-up in demand. After conditions improve, steady rises in discretionary income and the number of households will contribute to revenue growth. Industry profitability is anticipated to increase as retailers slightly reduce wages and tighten operating efficiencies. The competition between Bunnings and Masters is projected to remain a crucial part of the industry's structure over the next five years. Both companies have signalled their intentions to build a number of new big-box stores over this period, in an effort to increase their dominance. Smaller hardware retailers will find it extremely difficult to remain competitive in the industry over the next five years, says Little.
The Hardware and Building Supplies Retailing industry has a medium level of market share concentration. The major players are Wesfarmers Limited, Woolworths Ltd and Metcash Limited. Hardware retail chain Bunnings has significant dominance over the market, but the industry also consists of a large number of smaller, independent operators. The introduction of Masters hardware stores and Woolworths' rapid expansion has increased market share concentration substantially over the past five years. Wesfarmers has sought to maintain its dominance over the industry and aggressively expanded its Bunnings big-box warehouse network, which also contributed to increasing market share concentration over this period.
For more information, visit IBISWorlds Hardware and Building Supplies Retailing report in Australia industry page.
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IBISWorld industry Report Key Topics
Firms in the industry primarily retail hardware and building supplies to households, tradespeople and businesses. These retailers stock a range of goods including hardware, timber, tools, paint, plumbing supplies and garden tools. The industry excludes companies that primarily retail garden supplies such as plants, seeds and soil.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nations most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.
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