Despite many challenges in retail at present, several niche retail industries are expected to post bumper growth in the next five years, according to IBISWorld.
The business information analysts have revealed the top six niche industries that are set for the highest annualised growth through 2019-20.
As the Australian market continues to see an influx of international high street fashion chains offering cheap, mass market, trend-driven products, it may come of little surprise that Fast Fashion takes the top position, with annualised growth in the next five years expected to top 11%
“Fast fashion business models, which have been harnessed particularly well by overseas retailers, are benefiting from our desire for up-to-the-minute and affordable fashion,” says IBISWorld Australia General Manager Daniel Ruthven.
Coming in second is Luxury Retailing, which is forecast for 8.5% growth in the next five years, with revenue expected to reach the highest amount of all six niche industries at nearly $2.4 billion.
“Luxury retailing has been buoyed by Australia’s relatively stable economy, high disposable incomes and increasingly discerning consumers,” says Ruthven. “Furthermore, wealthy international visitors are providing additional incentives for luxury stores to increase their floor space.”
Third on the list is Fitness and Athletic Clothing Stores, which is expected to grow by 3.9% in the next five years, reaching almost $2.2 billion.
Ruthven highlights labels like 2XU and Lorna Jane have expanded aggressively into this category, via the launch of fashion or performance-focused products that allow them to compete with the big international brands.
“As a nation of sports lovers – whether from the sidelines or on the try line – our expenditure on fashionable and functional sports clothing shows little sign of abating. Demand has increased in line with the continued introduction of new products that promote the benefits of perspiration wicking, breathability, improved recovery and comfort.”
Coming in at number four is Maternity Wear Retailing, forecast for 2% growth and revenue of just over $202 million. “Many of the industry’s players are either online-only stores or traditional operators with an online presence. Online shopping is particularly popular in this segment, with women taking advantage of the convenience and time savings,” says Ruthven.
Number five on the list is Plus Size Clothing (1.9% growth and revenue of nearly $856 million); with Bridal Stores rounding out the top six (1.4% growth and revenue of almost $585 million).
Ruthven highlights approximately 63.5% of Aussies are overweight or obese, which has been growing consistently over the last five years. “Over the past five years growth in plus sized turnover has followed an increase in options for fashion-conscious buyers. However, international competition has also increased, with the launch of dedicated plus-sized ranges by online fast fashion retailers attracting this demographic.”
On bridal stores, Ruthven says more couples are in a better financial position to splurge on big-ticket items like wedding dresses when they do decide to tie the knot.
Overall, Ruthven notes retailers are undergoing one of the biggest transformations in the industry’s history.
“As our disposable incomes increase, our tastes and buying behaviour change too.”