IBISWorld Franchising Industry Report
IBIS recently released their Franchising Industry Australia - May Update report, with some minor but important changes noted since their October version. The best news for franchise operators is the report posted figures showing annual growth in the industry for the past five years at 2.7 percent, with the forecast for the next five years remaining strong at 2.3 percent.
One of the key changes noted was a decline in weekly work hours, which actually helped the industry with demand for franchised services like beauty salons, spas and fitness centres. Of course, along with a decline in hours goes a dip in discretionary income, which also caused a slight decline in revenues for the industry.
Another notable change is that consumer sentiment has curbed demand by offsetting higher disposable incomes. Though the economy has recovered from the slowdown that occured a few years back, and real household income has increased, consumer sentiment remains guarded. Consumer sentiment will change in the short-term, as consumers become more confident about the economy and job security.
As always, movement in the cash rate (determined by the Reserve Bank of Australia) has affected demand for products and services. Forecasts call for a decline in the target cash rate; as that happens, it will boost the amount of cash consumers have to spend on services and products, like those from furniture or pet segment franchises.
Major market share holder within the franchising industry, Metcash Limited saw a decline in their share of the market due to the sale of its automotive divison of the business.
Additionally, IBIS is bullish on franchise services in the health, nutrition and wellbeing areas as disposable incomes grow. They also noted the huge opportunity available for franchised online retailing and tout it as an area of growth during the next five years.
Finally, the report noted that the Australian franchise industry is mature, so they expect growth numbers overall that are relatively stable, even while individual franchises will continue to grow.
Information from this blog has been sourced from IBISWorld Industry Report X0002, Franchising in Australia, May 2016 by Claudia Burgio-Ficca.