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Posts Tagged ‘IBISWorld’

Teamsters & United Auto Workers Call Toyota “A Danger to America”

In Uncategorized on January 28, 2010 at 7:33 pm

Teamsters General President James P. Hoffa and United Auto Workers (UAW) Vice President Bob King joined representatives from labor, environmental and consumer groups outside the Embassy of Japan in Washington today to call on the Japanese government to hold Toyota accountable for waging an attack on thousands of good-paying jobs in the United States.

In addition to endangering 5,000 middle class jobs in the carhaul industry, Toyota is also planning to close its New United Motors Manufacturing Inc. (NUMMI) assembly plant in Fremont, CA, which will mean a loss of up to 50,000 jobs at NUMMI and suppliers and other supporting businesses. Toyota began production in the U.S. in 1984 through NUMMI, its joint venture with General Motors at Fremont, according to industry research firm IBISWorld.

The delegation delivered a letter from UAW Vice President Jimmy Settles and Hoffa to Prime Minister of Japan Yukio Hatoyama following the speaking program. In the letter, the leaders of UAW and the Teamsters expressed concern that Toyota’s plan to abandon workers and communities will negatively affect America’s perception of Japan, and calls on the Japanese government to meet with them and with Toyota management.

King, who was representing UAW President Ron Gettelfinger and Settles, told the crowd that California led the nation in “Cash for Clunkers” sales in 2009, and that Toyota sold more cars under this program than any other auto maker.

“It’s outrageous that the number one-selling car in Cash for Clunkers was the Corolla, the car that is manufactured in the NUMMI plant. After receiving more money in this bailout program than any other company, Toyota is turning its back on American workers and American taxpayers by closing the plant in the state where they sell the most cars in the U.S., shipping these jobs to Japan, and then importing the cars back to the United States for sale,” said King.

“Toyota management is seeking to move work from auto transport companies that have delivered their new cars and trucks for decades,” Hoffa said. “The loss of this work could lead to the destruction of the largest auto transport companies in the country and the loss of thousands of good, middle class jobs. Toyota promised to support American communities; they’re instead threatening the very types of good jobs that our communities need in this time of economic crisis.”

“Toyota’s plant closure plan in California has betrayed American workers and exhibited a disdain for our federal programs like cash for clunkers that directly and handsomely benefited Toyota,” said Dr. Brent Blackwelder, President Emeritus of Friends of the Earth US. “Toyota’s decision to shift production to Japan will dramatically increase shipping miles to California for its new vehicles and is inconsistent with a worldwide effort to reduce carbon footprints.”

Toyota is likewise losing the trust of the American public by abandoning its commitment to safety and being less than forthright about some of its problematic vehicles, said auto safety advocate Sean Kane, president and founder of Safety Research & Strategies.

“The now well-publicized sudden acceleration problem with some Toyota and Lexus vehicles has actually been festering for a number of years, but Toyota neglected the issue,” said Kane. “Now it’s trying to repair its image with a series of recalls that few believe will actually repair the many vehicles affected. It’s pretty clear that there are a multitude of defects contributing to these unintended accelerating incidents that, unfortunately, have resulted in deaths and injuries.”

“The Toyota Fremont, CA NUMMI plant is where the popular Toyota Corolla and Tacoma pickup truck are made, and it has among the best productivity and quality of any assembly plant in the U.S.,” King said. “Abandoning this facility and endangering tens of thousands of jobs is a betrayal of Toyota’s promise to support communities, and a betrayal of its workers, middle class American jobs and our economic recovery.”

Related links

Car & Automobile Manufacturing in the U.S. – IBISWorld Industry Report 

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Peak Oil Reality: Industry Experts Warn About Looming World Oil Supply Constraints

In Uncategorized on November 24, 2009 at 9:48 pm

Groups and individuals speaking out about forthcoming world oil supply challenges are frequently stereotyped as a fringe element with little knowledge about the oil industry. But their warnings are increasingly supported by some surprising allies: senior petroleum industry officials, consultants and analysts. Call these serious-minded critics the Harsh Realists.

Most prominent are CEO’s from several large oil companies. Christophe de Margerie, CEO of France’s Total SA, said earlier this year, “world oil production may plateau below 90 million barrels a day (mb/day)” — marginally more supply than today’s 85 mb/day rate. Last month, CEO’s James Mulva (ConocoPhillips) and John Hess (Hess Corp.), sounded similar warnings, though with less specificity about the numbers, at the Oil & Money Conference in London. At ASPO-USA’s October conference in Denver, Ray Leonard, CEO of Hyperdynamics Corp., said, “world oil was nearing peak oil at 90 mb/day, and that isn’t changed by recent events.”

During September, ASPO-USA representatives interviewed numerous oil industry experts from the UK, Ireland and the Middle East. Links to those online videos are below. Featured is Sadad al Husseini, former exploration and production VP with Saudi Aramco and currently a consultant. Said Husseini, “There is not enough new capacity coming on line, within say the next five to six years, to make up for global declines. And that’s assuming a very moderate level of declines.” For groups that remain in fundamental denial about upcoming world oil supply constraints, Husseini said, ” these centers of information or knowledge that try to pacify people — telling them there is no challenge, with good intentions — are probably compromising the solutions. They’re not helping.”

Talisman Energy’s former CEO James Buckee wonders why major oil companies “aren’t more forthcoming on the peak oil issue.” He then opines, “if Exxon were to come out [about peak oil], it would be world-shaking, and political, and maybe they don’t want to go there.”

Jeremy Gilbert, former Chief Petroleum Engineer with BP and now a consultant, stated “I find it hard to believe that the [oil] companies cannot see that the exploration record suggests that there’s a real problem with new discoveries.”

Jeremy Leggett, former petroleum geologist and lead author of the UK’s Industry Task Force on Peak Oil and Energy Security, worries that “we’re dealing with dysfunctional culture in the energy industry in the same way the world had to deal with the really dysfunctional culture in the investment banking community. It’s different [from the financial crisis] in that this time, there are many people warning. Many people in and around the oil industry…But most governments are not listening.”

Related links

IBISWorld industry reports:

Oil Drilling & Gas Extraction in the U.S.
Global Oil and Gas Exploration and Production
Mining, Oil & Gas Machinery Manufacturing
World Production – Oil
World Price – Energy – Crude Oil

Costco Dumping Coca-Cola

In Uncategorized on November 19, 2009 at 10:35 pm

Costco customers looking for “the real thing” now have to look elsewhere: The warehouse retailer said on Monday that it’s no longer buying Coca-Cola (KO) products. Once stores run out of their dwindling supplies, they won’t be restocking.

Costco is playing hardball; negotiations between the two companies to reach a recession-ready wholesale price have apparently broken down. Costco acknowledges this problem on its Web site: “Costco is committed to carrying name brand merchandise at the best possible prices. At this time, Coca-Cola has not provided Costco with competitive pricing so that we may pass along the value our members deserve.”

Narrow Margins

It’s an uncommon move for Costco, but not a surprising one. Consumers are looking for ways to squeeze their budgets, and retailers are trying to increase profits while cutting prices. That’s been a hopeless quest for Costco this year; the 3% pretax profit margin it posted between 2004 and 2007 is now just 2.5% — a net profit margin of somewhere around one cent on the dollar after taxes, overhead, and other incidentals. With such a narrow margin, the slightest uptick translates into a major value shift.

Every 0.01% the company ekes out on its pretax profit margin translates into a one-cent increase in earnings per share, and a likely 0.5% uptick in its stock value. The superthin profit-margin model, and its major influence on stock value, follows Walmart’s (WMT) example; Walmart, with its 3.3% net profit margin, regularly strong-arms its suppliers into deals that guarantee its famously low prices.

Complicit Coke

Coca-Cola may seem like the wronged party here, but it’s complicit in its own undoing. Coke, after all, caves in to Walmart’s demand for a razor-thin profit margin by slashing its products’ prices, in return for Walmart’s massive distribution — and swamping not only Coke’s smaller competitors but Walmart’s smaller, higher-priced, higher-profit rivals.

The result of recession, unemployment, and an increasingly desperate push for profits have left Walmart, Costco, Coke, and thousands of other companies in a cannibal buffet. Having feasted on the easy pickings offered by smaller chains, these companies now find themselves eyeing each other. With unemployment still rising, retail sales won’t be getting fatter anytime soon.

In Other News: Suit Charges Coca-Cola With Profiting From Seizure of Jewish Property in Egypt

Lawyers for the Bigio family, Jewish Egyptians whose property was seized by the Egyptian government in a 1960s program to rid the country of its Jewish population, are demanding summary judgment and a jury trial to establish damages against Coca-Cola for exploiting “for immense profit” property that Coca Cola has been occupying since 1994 with the knowledge that the property was taken unlawfully from the Bigios. In a brief filed today in federal district court, the Bigios – responding to the Court’s request for supplemental briefing – spelled out the extensive web of international laws violated by the Nasser regime’s anti-Jewish campaign which included the nationalization of the Bigios’ property in 1962.

The Egyptian government has acknowledged that the property was seized illegally and rightfully belongs to the Bigios. A federal court of appeals has twice rejected technical jurisdictional contentions made by Coca-Cola. The case has been before the courts for 12 years.

“Coca-Cola is the occupier of stolen property,” said attorneys for the Bigios. “Coca-Cola has been stonewalling for years, hiding behind a veil of artificial and inapplicable legalisms and it will now be able to respond to our latest brief only by denying that Egyptian Jews were persecuted by the Nasser regime. If it makes such an argument, Coca-Cola will be engaging in the same conduct as Holocaust deniers. Such flagrant behavior will not hold up in the court of public opinion. It is time for Coca-Cola to acknowledge that the property belongs to the Bigios, was unlawfully confiscated from them, and compensate them for its occupancy and use.”

Coca-Cola was aware that the Bigios owned the land, buildings, business and machinery involved in this case because the two companies did business together for more than 20 years prior to the seizure of the properties under the ethnic cleansing campaign of Egyptian president Gamal Abdel Nasser. In 1965, the Bigio family, left destitute by the seizure of their property and business, immigrated, as stateless persons, to Montreal where they now reside.

In 1994, after it was informed by the Bigio family of the Egyptian government’s determination that the family owned the property, Coca-Cola took control of the property under various forms of ownership of Egyptian companies bearing the Coca-Cola name.

The Bigios filed a request for summary judgment September 14. Oral arguments were heard November 10. The letter brief responds to the judge’s request for legal authority demonstrating that the Egyptian government’s nationalization of the disputed property in 1962 violated international law.

Related links

IBISWorld Industry Reports
Soft Drink Production in the U.S.
Big Box Retail Stores in the U.S.

IBISWorld company profile
Coca-Cola Company
Costco Wholesale Corporation

Commodities Continue Positive Performance Across All Index Sectors

In Uncategorized on November 19, 2009 at 6:20 pm

Christopher Burton, Co-Lead Portfolio Manager for the Credit Suisse Total Commodity Return Strategy said, “The commodities market continues to perform well as global markets remain on track for recovery. Despite minor losses in equity markets, performance remains positive year-to-date. Although commodities have recovered some of their losses from 2008, we continue to believe current prices offer an exceptional entry point into the asset class, especially as central banks announce their intention to maintain low interest rates, which could lead to the stockpiling of certain commodities.”

Co-Lead Portfolio Manager, Andrew Karsh, added, “As inflation has not yet developed in terms announced by government figures, the potential for unexpected inflation remains quite high. Considering the fact that commodities are a leading indicator of inflation, we believe the time to invest in commodities is now, well in advance of lagging indicators such as in increase in CPI.”

The Dow Jones-UBS Commodity Index Total Return gained 3.28% in October as a result of positive performance from all sectors, bringing the year-to-date performance of the Index to 12.64%. Lean Hogs, continuing its positive performance from September, was the top performer in October, gaining 14.33% most likely due to the conclusion of China’s ban on U.S. pork products. Gasoline also demonstrated strong performance this month, up 10.51%, because of a larger than expected reduction of stored gasoline. Sugar was the worst performer in October as it reversed its recent gains, declining 10.16% in October, but is still up significantly, 57.63%, for the year.

Related Links

Credit Suisse Report
Clarifying Misconceptions About Commodity Indexing

IBISWorld industry reports
Commodity Dealing and Brokerage in the U.S.
Cattle & Hog Wholesaling in the U.S.
Excise – Petroleum Product Wholesaling – Federal
Global Sugar Manufacturing
World Price – Agriculture – Sugar

Investors Driving Gold Price To All-Time Highs

In Uncategorized on November 10, 2009 at 11:37 pm

42-16219665Inflation concerns have been put on the backburner over the past year as the credit crisis intensified and inflation expectations declined – allowing global central bankers and political leaders to aggressively address more pressing deflationary impulses. In response to the combination of last week’s Fed announcement that its zero-interest rate policy would continue “for an extended period of time,” and the weekend’s G20 meeting in which policy makers renewed their commitment to stimulus initiatives, investors drove the gold price to all-time highs. There is a growing contingent of inflation hawks that view the colossal efforts to avoid global deflation through massive increases in the money supply by the world’s central bankers as destined to lay the foundation for a period of widespread and intractable inflation.

In spite of a strong recovery in asset prices, a contraction of credit spreads and a marked drop in volatility, the Bank of England disclosed on Friday that it was increasing the money supply by an additional 25 billion GBP ($41.9 billion USD) after the UK economy posted an additional 0.4% decline for the third quarter. Like the Fed, the Bank of England cited continuing spare production capacity as one of the factors that prompted the action.

The aggressive expansionary policies of central bankers has caused investors’ risk appetites to increase as the perception that governments will be there to step in at the first sign of any turbulence becomes entrenched. The inflation in asset prices is partly a result of investors being pushed out on the risk curve due to the fact that rates of return on capital in traditional savings accounts has been driven to zero. Although holders of risk assets have responded to these moves by driving all assets classes higher, the increase in the gold price portends an inflationary outcome as a result of the easy money policies being undertaken.

Although inflation is more popularly defined as an increase in the price levels of goods and services, it is technically a decline in the value of money caused by an increase in the money supply.  An increase in the price of goods and services that is caused by a fundamental shift in supply and demand factors – say, an increase in oil prices due to the increase in aggregate demand caused by economic development in emerging economies – is not an example of inflation. However, an increase in the money supply caused by central bank policy – such as the Fed’s direct purchase of Treasury bonds or open-market purchases of mortgage-backed securities – fits the classical definition of monetary inflation. Price increases usually attend inflation because as the supply of paper money increases – without a commensurate increase in production – the excess demand manifested by a greater money supply causes the price of goods and services to rise. More currency chasing fewer goods will eventually lead to price inflation.

Although the adjusted monetary base in the United States has been growing at an increasing rate since the dollar was taken off the gold standard, it has grown by more in the last 14 months than it has in the previous 80 years to $1.96 trillion. In percentage terms, growth since August of 2008 is a staggering 125%. The next-highest period of monetary growth took place during the depression and World War II – but year-over-year growth never exceeded 28%.

Inflation doves insist that deflation still remains the primary threat to the global financial system and discount any notion of inflation, saying that there has been no credible sign or threat of an increase in prices in any of the data released over the past year despite the massive injections of liquidity undertaken by the world’s central banks. The flaw in this conclusion is that while inflation has not yet been manifested in price levels, the seeds have already been sown, awaiting germination in the form of nascent economic recovery. When recovery begins, the liquidity that now sits dormant as reserves in the banking system will flow as banks begin to redeploy reserves and increase lending. In the aggregate, this lending activity will increase monetary velocity, the factor currently missing in the inflation equation. Central banks must precisely gauge this activity, and divine the correct moment and apply the exact pressure required on the stimulus brake or inflation will sprout like weeds after a drenching rain.

Even without hard evidence of inflation, policy makers must tread cautiously. It is inflation expectations – as much as inflation itself – that central bankers must carefully manage. The threat of inflation is almost as powerful as the phenomenon itself. Business decisions become more difficult to make without stable money, hence investment often declines. Inflation distorts the economy. It causes capital to be misallocated and it destroys purchasing power. Inflation and inflationary expectations can lead to hoarding out of concern that purchases must be made now because prices will be higher in the future. It is this terrain of threatened inflation that gold investors have been eying as they push the gold price to new record highs.

According to industry research firm IBISWorld,  over the five years to 2008, the price of gold has increased at an annualized rate of 19.1%. The predominant reason for the high level of growth is attributed to higher demand for gold as investors attempted to hedge themselves against inflation or a possible depreciation in the US dollar. Also contributing to the upward pressure on prices over the last five years was the increase in gold jewelry consumption, particularly as disposable incomes rise in many parts of Asia.

Related Links

World Price – Metals – Gold in the US – Business Environment Report

Pet Health Insurance Growing In Popularity

In Uncategorized on November 5, 2009 at 9:14 pm

pet-health-insurance-imageTo most of the nation’s 70 million pet owners, pets are family too. And when pets get sick or injured, many owners are willing to spend almost whatever it takes to get them back on all four feet. But the price of increasingly sophisticated veterinary care does not come cheap. According to the American Pet Products Association, vet bills last year in the U.S. topped $11 billion.

According to industry research firm IBISWorld, pet-related businesses are recession proof. The Los Angeles-based firm projects pet-related businesses will generate $51.6 billion for 2009 – that’s up 1.3 percent from 2008.

“Pet healthcare is a big business, as awareness in health is driving growth in this area” said George Van Horn, senior analyst at IBISWorld. Veterinary practices are now expanding their range of services in order to cater to the health-related needs of animals. Chiropractics, ophthalmology, dentistry, and dermatology, to name a few, are becoming more readily available.

To control costs, more pet owners than ever are signing up for pet health-insurance plans. Pet insurance industry experts say the offering has become so popular they expect pet premiums to top $328 million by year’s end.

Kroger Personal Finance, a Kroger joint venture that brings together a wide array of quality financial products and services from preferred providers for Kroger customers, is making pet health insurance information available in the check lanes of more than 2,400 supermarkets operated by Kroger, the nation’s largest traditional grocery store operator.

“Kroger shoppers include pet owners and non-pet owners alike,” Kathy Kelly, president of Kroger Personal Finance said. “With 62 percent of U.S. households owning a pet – and 70 percent of those with multiple pets, affordable pet insurance can help pet owners manage their expenses. It can cover everything from routine costs associated with veterinary expenses like annual check-ups and vaccinations all the way to surgeries, x-rays and hospitalization.”

The newest product offered by KPF is its lowest priced — an “accident only” policy for $9.95 per month per pet.

Today, pet health insurance can cover accidents and illnesses, as well as routine care for dogs and/or cats. Depending on the coverage level and the number of pets insured, prices can range from $9.95 to $79.00 per month. The range of service covered by the premiums, as Kelly describes it, is nearly as broad as procedures covered by human insurance.

To pet owners, the appeal of insurance comes down to peace of mind, and hopefully not having to explore the limits of unconditional love.

“By paying monthly premiums there is no need to worry about suddenly struggling to come up with unbudgeted veterinary expenses down the road,” Kelly added. “It allows pets to receive expert care and helps their human families manage costs, now for less than 40 cents a day.”

Construction Market to Increase 11% in 2010

In Uncategorized on October 16, 2009 at 7:08 pm

McGraw-Hill Construction, part of The McGraw-Hill Companies, released its 2010 Construction Outlook, a mainstay of business planning for construction and manufacturing executives, which forecasts an increase in overall U.S. construction starts for next year. Due to improvement for housing from extremely low levels and broader expansion for public works, the level of construction starts in 2010 is expected to climb 11% to $466.2 billion, following the 25% decline predicted for 2009.

“The U.S. construction market in 2010 will be helped by growth for several sectors, following three straight years of decline that brought total construction activity down 39% from its mid-decade peak,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction, addressing more than 300 construction executives and professionals at the 71st annual Outlook 2010 Executive Conference in Washington today. “The benefits from the stimulus act will broaden in scope, lifting not just highway construction but also environmental public works and several institutional structure types. With continued improvement expected for single family housing, after reaching bottom earlier this year, the overall level of construction activity should see moderate expansion in 2010.”

Highlights of the 2010 Construction Outlook:

•Single family housing for 2010 will advance 32% in dollars, corresponding to a 30% increase in the number of units to 560,000 (McGraw-Hill Construction basis).
•Multifamily housing will improve 16% in dollars and 14% in units, after steep reductions in 2008 and 2009.
•Commercial buildings will drop 4% in dollars, following a steep 43% drop in 2009. The weak employment picture will further depress occupancies, making it even more difficult to justify new construction.
•Institutional buildings will begin to stabilize after losing momentum in 2009. Square footage will retreat another 2% after sliding 23% this year. The dollar amount of construction for this sector will edge up 1%, helped by a growing amount of energy-efficiency upgrades to federal buildings and continued strength for military buildings.
•Manufacturing buildings will drop 14% in dollars and 3% in square feet, hampered by the substantial amount of slack manufacturing capacity.
•Public works construction is expected to rise 14%, given more wide-ranging strength across all project types.
•Electric utility construction will slip 3%, continuing to settle back after a record high in 2008.
 
The 2010 Construction Outlook was presented at the McGraw-Hill Construction Outlook Executive Conference in Washington, DC, which brought together top management from all parts of the construction industry including firms involved in building product manufacturing, architecture and design, contracting, engineering, industry associations and other industry professionals. At the event, Frank Giunta of Hill International and George Pierson of Parsons Brinckerhoff offered insights to an industry emerging from the crisis:

“The stimulus funds are meant to be just that, a stimulus, not the be-all-end-all answer to infrastructure financing,” said Frank J. Giunta, senior vice president and managing director of Hill International. “Both public and private sectors need to be innovative and rewrite the rules of project finance to address tremendous construction needs with minimal financing options.”

“The efforts of the federal agencies at transparency and their willingness to engage with private industry is refreshing,” said George J. Pierson, chief operating officer, Parsons Brinckerhoff. “We have to work together to meet the challenges of infrastructure and this economy.”

Related Links
McGraw-Hill Construction full report: 2010 Construction Outlook.
IBISWorld industry report: Heavy Infrastructure Construction in the U.S.

Consumers Would Embrace Email Communication With Their Doctor

In Uncategorized on October 15, 2009 at 9:49 pm

051409coverstoryA study released by Lightspeed Research carried out August 19-21, 2009  from 1000 respondents shows that consumers are willing to use email and doctors’ websites to communicate with their doctor in the hope of saving time and money.

Over half of respondents would be willing to use e-mail communication to do a variety of routine interactions with their doctor such as receive routine test results (59%), request a repeat prescription (53%), confirm an appointment (53%) and update their doctors on an existing condition (51%). Using a doctor’s website for these activities was also popular, but the majority were unwilling to use mobile SMS (text messages) or live online chats for the same activities.

In spite of this willingness, most respondents said their family doctor didn’t have the option to communication by email, website, text or online chat.

When it comes to emailing their primary care physician specifically about an illness or condition, the key advantages were that it would save time because they didn’t have to go and see the doctor (59%), there was no waiting for an appointment (56%), and being able to avoid other sick people in the waiting room (51%). Women were more likely than men to see each of these as an advantage, however the older generation (55+) were the least likely to see any advantages in emailing their doctor about an illness or condition.

46% of respondents said they were unwilling to pay for an email consultation, and a further 31% were willing to pay only if it was covered by insurance. As a result, email is unlikely to pose a threat to the standard face-to-face consultation in the near future.

Buying drugs online

When it comes to medications, however, many are already embracing the web to buy their drugs. One in five have already bought drugs online, with the older age group (55+) the most likely to have done so at 30% of respondents. Of those already buying drugs online, half said they were buying drugs for which they have a prescription from their physician. Vitamins, minerals and herbal supplements were also popular medications to buy online.

As with many other kinds of web shopping, convenience and cost were the main reasons people chose to buy drugs online with 61% choosing the convenience of home delivery and 59% stating the price was lower than their local pharmacy. Many were also attracted by the ability to receive up to three months’ supply of their medications. Only 5% of those who had bought drugs online had ever experienced a problem.

In general, consumers are wary of buying drugs or medications online: 68% worry about the drugs being counterfeit; 49% that the online pharmacy is not legitimate and 46% that the drugs they received would not be FDA approved. Insurance also presents a barrier with 38% saying they worry they would not be reimbursed if they use an online pharmacy.

Commenting on the results, Chris Urinyi, CEO of Lightspeed Research, The Americas, said: “There are clearly a number of benefits that consumers believe they would receive if they could access their doctor by email – particularly convenience and cost-saving. Interestingly, while older respondents were not convinced that email would be a good alternative to a consultation in person with a doctor, they were the most likely to have bought drugs online.”

Related links:

Lightspeed Research – company website.

Specialist Doctors in the U.S. – IBISWorld industry report.

Record-Breaking Halloween: Sales To Reach $6 Billion

In Uncategorized on October 13, 2009 at 10:22 pm

Despite economic gloom casting a spell on consumer confidence this year, America’s darkest holiday is looking bright for retailers.  According to industry research firm IBISWorld, Halloween sales are expected to reach a record-breaking $6 billion in 2009, up 4.2 percent from the $5.77 billion generated last year. That’s contrary to the National Retail Federation’s prediction, which forecasts sales will decline to $4.75 billion.

“Economic recovery appears to be around the corner and consumers are enthusiastically looking to escape their recessionary woes,” said Toon van Beeck, senior analyst with IBISWorld.  “Even last year, when the outlook was much worse, the Halloween spirit remained unhindered as we saw total sales actually jump 5.1 percent from 2007.”

Halloween retail sales are comprised of a wide range of consumer goods, aimed at adults, children, and even pets.  These goods include costumes, scary make-up, wigs, Halloween decorations for inside and outside, and of course, pumpkins and candy, among other things.

In projecting this year’s total sales, analysts at the Los Angeles-based firm aggregated the retail-dollar performance of the following four traditional Halloween categories:

Category 2008 Revenue
(Billions)
2009 Revenue(Billions) % Change
Candy $1.77 $1.89 6.8%
Decorations $ 1.58 $1.65 4.4%
Costumes $2.07 $2.12 2.4%
Greeting Cards $0.35 $0.35              0.0%

It appears an increasing number of people are buying treats this year, making candy the fastest growing holiday category. The average person is estimated to spend about $22.50 on Halloween treats in 2009.

It appears an increasing number of people are buying treats this year, making candy the fastest growing holiday category. The average person is estimated to spend about $22.50 on Halloween treats in 2009.

Also fuelling this year’s record-breaking sales is the demand for holiday decorations.  With Halloween falling on a Saturday this year, more adults are expected to join the fun.  In fact, 32 percent of people celebrating the holiday will either host or attend a party. For this reason, IBISWorld expects decorations to reach its highest level yet at $1.64 billion.

“Halloween-related festivities are a growing trend and this is driving sales of decorations and candy,” adds van Beeck.  “Dollar and variety stores stand to benefit from the 4.4 percent increase in decoration sales, as consumers look to purchase cheap and disposable thrills to make a memorable evening.”

Call it escapism or just good, old-fashioned fun, Americans of all ages show the desire to go all out when it comes to dressing-up.  Costumes are expected to generate the greatest amount of revenue this Halloween, but growth is slight (2.4 percent) as consumers will apply more frugal but creative approaches when shopping.

”Despite more people participating in festivities, money is still tight and consumers will look to cut corners when it comes costume purchases,” said van Beeck.  “Instead of buying a packaged costume, which can cost up to $60 on average, people will get more eclectic and opt for cheaper individual items.”
But given the lack of growth for the card category, not all cheaper items will fare well this year. While cards did well last year, as consumers chose to cut back on pricier categories, 2009 expenditures will revert back to traditional shopping habits.

“Although unemployment is still very high, the overall outlook is far rosier today than it was this time last year,” adds van Beeck.  “For this reason, IBISWorld expects the upward trend in Halloween expenditures to continue its course for 2009, which despite economic conditions will prove to be the best year yet.”

The 2009 Verdict

America’s largest retailer of party goods, today announced its retail sales results for the five-week Halloween season ended November 7, 2009. Amscan’s retail sales include sales under its four retail banners, Party City, Halloween USA, Party America, and Factory Card & Party Outlet.

Retail sales for the five-week period ended November 7, 2009 totaled $257.4 million and were $11.6 million or 4.7% higher than the retail sales for the five-week period ended November 1, 2008, principally due to the growth and performance of the Company’s network of temporary Halloween USA stores.

During the five-week period ended November 7, 2009, the Company operated 247 temporary Halloween USA stores, as compared to 149 in 2008. In addition to its network of temporary stores, the Company operated 387 Party City and Party America “Big Box” retail stores (stores generally greater than 8,000 square feet), 59 smaller outlet stores and 161 FCPO stores during the 2009 Halloween season, as compared to 391 Big Box, 86 outlet and 171 FCPO stores during the 2008 season.

During the five-week Halloween season of 2009, the average sales for temporary Halloween USA stores increased by 7.5%, while the same-store net sales for the Company’s Big Box stores decreased 1.5%. Same store net sales at FCPO stores decreased 1.2%.

Commenting on these results, Gerry Rittenberg, Amscan’s Chief Executive Officer, stated: “In light of the current economy, the dire pre-Halloween predictions of the National Retail Federation and aggressive competition from other temporary Halloween stores, we are extremely pleased with these key holiday results.”

Additional links 
Candy Production: http://www.ibisworld.com/industry/retail.aspx?indid=234&chid=1
Gift Shops & Card Stores: http://www.ibisworld.com/industry/retail.aspx?indid=1099&chid=1
Greeting Cards & Other Publishing: http://www.ibisworld.com/industry/retail.aspx?indid=1235&chid=1
Formal Wear & Costume Rental: http://www.ibisworld.com/industry/retail.aspx?indid=1369&chid=1

UV Tanning Beds Becoming A Thing Of The Past; Shifting Industry Demand

In Uncategorized on October 1, 2009 at 5:10 pm

In addition to being a discretionary service in a troubled economy, public concerns over ultraviolet (UV) tanning bed usage and the rise of a more health-conscious society are causing headwinds in the $2.7 billion tanning salon industry, which industry research firm IBISWorld expects will decline by 5.1 percent this year. But despite the seemingly gloomy forecast, the ray of hope for tanning salons shines in a relatively new growth segment: spray-tanning booths – the safe alternative to getting bronzed.

“Growing awareness about the high cancer risk associated with UV tanning beds will invariably diminish market share,” said George Van Horn, senior analyst with IBISWorld. “In order to stay in the game, tanning salons are not only incorporating innovative tanning solutions, but are diversifying their menus to offer health and beauty related services.”

IBISWorld projects these newer revenue streams will help deflect current negatives in the industry, where 72 percent of revenue is still being attributed to UV tanning beds:

tanningSalonsRevenue

“The new shift in the industry is arguably good for its image, and profits can still be reaped for salons that quickly adopt,” said Van Horn. “In contrast with the UV tanning segment, spray-on tanning booths are more profitable for operators in that they can offer slightly better margins. And as trends in health and beauty infiltrate their way into products and services, the public perception of tanning salons can start to take on a whole new light”.

With over 24,100 tanning salon businesses operating in the United States, IBISWorld expects the industry will generate $2.72 billion in 2009 – representing a 5.1 percent decline from last year. But despite compromising market conditions, the Los Angeles-based firm forecasts slight industry growth, at an average annual rate of 2.5 percent over the next five years, with spray-on tanners and services providing the bulk of this growth.