Industries to fly and fall in 2013

Industries to fly

Online shopping

Forecast to grow by 9.1 per cent to reach almost $11.8 billion in 2013, the online shopping industry has continued to flourish as consumers demand more of their goods and services via the online realm.

"Australians are increasingly expecting traditional retailers to have an active investment in the online sphere, and to provide options for online browsing and shopping to complement their storefronts," Dobie said.

Over the coming year, IBISWorld expects online retailers to move into the bricks-and-mortar space, providing convenient pick up and return locations for consumers. "This phenomenon will lead to a greater increase in the convenience provided by online retail," Dobie said.

Online education 

IBISWorld anticipates revenue for Australia's online education industry to increase by 10.5 per cent in 2013, to reach just under $5.6 billion. Growth has been supported by the continued uptake of high-speed internet services, growing acceptance of online education, government support for students and efforts to expand access beyond the typical school-leaver demographic.

"We are seeing an increase in demand for convenient education, particularly among working adults who wish to gain new skills and qualifications, but are too time poor to attend classes full-time or in person," Dobie said.

"The NSW Department of Education is also assisting industry growth, with technologies expanding at a rapid rate to deliver education to remote parts of Australia."

Multi-unit apartment and townhouse construction

Strong population growth in the late 2000s has fuelled underlying demand for housing, in particularly for the multi-unit apartment and townhouse construction industry, which is forecast to grow 9 per cent over the coming year to reach $16.6 billion.

"IBISWorld is seeing an urban shift towards medium to high density residential developments as occupants opt to remain close to the CBD, transport and commercial hubs," Dobie said.

"Property investors – primarily funded from Asia – kick-started new apartment projects in 2010 and 2011. This, coupled with several interest rate cuts since November 2011 and the flow through of government assistance to both homebuyers and investors, is projected to have a buoyant effect on the industry," Dobie said.

Oil and gas production

Forecast to grow by 15.9 per cent to reach $44.4 billion in 2013, the oil and gas production industry has been highlighted by IBISWorld as this year's top industry performer, with growth driven by higher output and substantially higher global prices.

IBISWorld general manager (Australia), Karen Dobie, said: "Australia's liquefied natural gas production and exports are expected to increase significantly over the coming year. This reflects a switch in favour of gas for electricity generation, which will be driven by more volatile demand and carbon pricing on oil, and an expected increase of 8.4 per cent in US dollar crude oil prices."

With abundant reserves in Queensland and New South Wales, LNG output is rapidly growing and is expected to reach 6.8 billion cubic metres in 2013. "Most of this production is expected to come from Queensland, where coal seam methane is already used in electricity generation, and where a number of export-oriented LNG plants are currently under construction," Dobie said.

"Strong growth in export demand for LNG is expected to increase world price by 15.7 per cent over the next year," she added.

Organic farming

Organic farming has grown at a compound annual rate of ten per cent since 2008, and is expected to continue to rise as consumers factor in the health benefits and environmental impact of their food choices. IBISWorld forecasts an increase of 12.5 per cent across the industry over the coming year, boosting revenue to $617 million.

"Consumers are becoming increasingly eco and health conscious. This means they are more willing to pay a premium price to prevent environmental degradation caused by conventional farming methods and to ensure the products they consume are free from added chemicals and hormones," Dobie said.

"Major retailers, such as Coles and Woolworths, continue to respond to this trend, increasing the convenience in which these foods are purchased."

Dobie also identified income growth – forecast to rise 3.4 per cent over the coming year – as a key factor driving demand for organic products.

"As Australian incomes rise, we are seeing consumers move away from conventionally farmed produce towards natural, chemical- and hormone-free counterparts."

Industries to fall

Newspaper printing or publishing

As advertisers and consumers opt for other types of media, the newspaper printing or publishing industry continues to lose advertising market share – with revenue forecast to decrease by 4 per cent in 2013. Printed newspapers' share of advertising – which accounts for 75 per cent of newspaper revenue – is expected to fall to under 30 per cent of total advertising revenue in 2013, down from a 41.8 per cent share in 2000.

"Declining circulation over the past five years, caused by time restraints, the rising popularity of new media like the internet, pay-TV, and mobile devices, and competition from consumer magazines has continued to have an adverse affect on the industry," Dobie said.

"In the coming years, environmental concerns are also expected to affect demand for printed newspapers."

Gaming and vending machines manufacturing

The gaming and vending machines manufacturing industry is set to follow suit in the overall decline of manufacturing in Australia, with revenue expected to fall by 6.4 per cent in 2013.

"The replacement cycle for gaming machines in Australia has increased from 12 years in 2005 to 35 years since 2008. This, along with legislative limits on the number of poker machines, has restricted demand for new machines," Dobie said.

"With high labour costs and the Australian dollar remaining strong, production is increasingly moving offshore, with hardware going to Asia and software to the US."

Wired telecommunications carriers

Intense competition in the mobile space continues to have a negative effect on wired telecommunications carriers. The industry is expected to fall by 5.5 per cent in 2013, bringing total revenue down to $9.7 billion, from its peak of $21.5 billion in 2002.

"Competition in the mobile sphere is driving prices down to the extent that it is now cheaper for some consumers to disconnect their landlines and rely solely on mobile services," Dobie said.

"Increased wireless broadband penetration and strong growth in the number of naked DSL internet subscribers are also eating into industry revenue."

Prices for the industry's services continue to be cut in attempts to retain clientele. "Consumer confidence with email and SMS has grown significantly over the past five years, causing customers to move away from the traditional home phone. Branding and cross selling are becoming increasingly vital to the industry, with product bundling being a popular strategy to reduce customer turnover rates," Dobie said.

Mineral exploration

Revenue for mineral exploration is expected to fall to $3.7 billion over the coming year, a decline of 5.1 per cent from 2012 – driven by falling investment (forecast to decrease by 6.5 per cent) in the sector as firms shift their focus to production.

"The combination of generally lower commodity prices, weak global growth, slowing demand from China and economic uncertainty is expected to result in reduced spending on mineral exploration over 2013," Dobie said.

Recorded media manufacturing and publishing

Recorded media manufacturing and publishing, including CDs and records, has declined steadily over the past five years. IBISWorld expects this trend to continue – forecasting a decline of 2.8 per cent in 2013.

Physical format music sales have dropped by an estimated compound annual rate of 15.9 per cent since 2007, compared with a compound annual rise of 32.6 per cent for digital music.

"Consumers have turned away from purchasing physical media in favour of paid online subscription services, such as Spotify and Pandora, and limited free services such as YouTube and VEVO," Dobie said.

"The industry also has been dramatically exposed to high levels of music and video piracy."

Online distribution of media has allowed companies to cut bottom line costs, and has resulted in a variety of new products on the market for consumers to view new media.

"Licensing and publishing services have provided some reprieve for industry participants as the use of music, sound effects and video in advertising and marketing has increased, particularly with the rise of social media," Dobie said.

Source: IBISWorld