As Australia enters a new decade, IBISWorld analysts have outlined the key industries that are set to fly and fall by 2030. In this special edition of the IBISWorld Fly and Fall, several new industries feature among the Australian economy’s risers and fallers.
Over the next decade, technology-intensive industries like Ridesharing Services and Online Grocery Sales are forecast to outperform overall economic growth, said Tom Youl, IBISWorld Senior Industry Analyst. Established industries such as Newspaper Publishing and Free-to-Air Television Broadcasting are projected to decline, as disruptive technology erodes their business models.
Australian Industries Set to Fly
Organic Farming
Revenue in the Organic Farming industry is forecast to grow at an annualised 15.1% over the five years through 2024-25, to $3.7 billion. Rising health consciousness and increasing concerns surrounding environmental issues and treatment of animals are anticipated to boost demand for organic products.
‘As organic products gain traction among a larger share of the population, demand for a wider range of products is likely to increase. Exports of organic produce are also projected to grow significantly, at an annualised 14.6% over the five years through 2024-25,’ said Mr Youl.
‘Profit across the organic farming product range is significantly higher than their non-organic counterparts. Over the next five years, an increasing supply of organic produce is forecast to place downward pressure on prices’.
Ridesharing Services
The Ridesharing Services industry is anticipated to rise at an annualised 15.0% over the five years through 2024-25, to total $2.1 billion. The projected growth in Australia’s population, as well as growing demand for convenience will likely drive this strong growth.
‘Demand for ridesharing will almost certainly increase, as rising urbanisation worsens traffic congestion, and reduces the attractiveness of car ownership. The on-demand nature of ridesharing services and improved usability of ridesharing platforms are projected to contribute to revenue growth,’ said Mr Youl.
‘Ridesharing profitability is forecast to rise over the next five years, as the market continues to mature. Additionally, the Ridesharing Services industry is anticipated to expand throughout Australia’s regional cities, driving revenue growth’.
Online Consumer Electronics Sales
The Online Consumer Electronics Sales industry is projected to expand at an annualised 12.3% over the five years through 2024-25, to $4.0 billion. Ongoing electronic product innovation and the introduction of new consumer gadgets with increased functionality are likely to drive industry growth.
‘The rollout of 5G mobile networks is forecast to support industry revenue growth. Consumers are likely to upgrade their devices, and use a greater number of devices, when this technology becomes available,’ said Mr Youl.
‘Despite the strong forecast growth in industry revenue, industry profitability is anticipated to only improve marginally over the next five years. Strong revenue growth is projected to encourage increased participation and lead to a rise in internal competition, subsequently limiting growth in industry profit margins’.
Online Grocery Sales
The Online Grocery Sales industry is projected to expand significantly over the next five years, with revenue increasing at an annualised 21.6%, to total $6.2 billion. While revenue growth over the past five years was driven by click and collect services, true online grocery shopping is likely to be the focus of the next decade.
‘Online grocery sales have been booming in Australia as major supermarkets, Coles and Woolworths, have boosted their digital capabilities. However, Australians have been slow to adopt online grocery shopping compared with overseas markets, such as the United Kingdom,’ said Mr Youl.
‘There is significant scope for adoption-driven growth over the next 10 years. Coles and Woolworths have been investing heavily in supply chain automation and optimisation. These investments are anticipated to support industry demand over the next decade, as stocking and delivery efficiencies improve. Amalgamation of in-depth customer data is an added bonus for these companies’.
Salt, Lithium and Other Mineral Mining
The Salt, Lithium and Other Mineral Mining industry is anticipated to grow at an annualised 11.6% over the five years through to 2024-25, to $4.6 billion. Lithium is one of the key inputs used in most batteries, the demand for which is projected to increase significantly over the next five years.
‘The rising adoption of electric vehicles and energy storage infrastructure is forecast to drive demand for lithium, supporting Australian mining activity. The large size of batteries used in these applications will likely drive significant industry growth,’ said Mr Youl.
‘The industry's revenue and profit margins are projected to rise due to greater spodumene concentrate output volumes, high spodumene export demand and favourable export pricing due to the Australian dollar remaining relatively weak’.
Australian Industries Set to Fall
Fibre Optic Cable Installation
The Fibre Optic Cable Installation industry is anticipated to fall at an annualised 33.2% over the five years through 2024-25, to $668.0 million. The expected completion of the NBN rollout in 2020 is the primary contributor to this decline.
‘The outlook for the industry depends on government policy. Most premises connected to the NBN are on a mixed-technology model, which provides lower speeds. Upgrading to a faster connection could cost in excess of $40 billion over a number of years, potentially injecting a significant sum of revenue into the industry,’ said Mr Youl.
‘Neither the government nor the opposition has signalled any intent on investing in a full upgrade in the near future. However, as internet usage and data consumption continue to grow, an upgrade to the NBN may be unavoidable’.
Men’s and Boys’ Wear Manufacturing
Revenue for the Men’s and Boys’ Wear Manufacturing industry is projected to continue declining over the next five years, due to fierce import competition and high domestic manufacturing costs. Industry revenue is forecast to decline at an annualised 8.0% over the five years through 2024-25, to $111.0 million.
‘While economic conditions are projected to improve, this trend is unlikely to lift the performance of menswear manufacturers. Online shopping is projected to erode the market share of industry firms,’ said Mr Youl.
‘However, industry profit margins are anticipated to improve marginally over the next five years, as the industry focuses more on producing premium quality goods not available online’.
Book Stores
The Book Stores industry is forecast to decline at an annualised 2.8% over the five years through 2024-25, to total $1.2 billion. Industry operators face tough retail conditions and rising rent costs, while competition from discount department stores and the online market is likely to keep book prices low.
‘Opportunities are available for some specialist bookstores that target niche markets, such as specialist language bookshops. These operators offering a dedicated product range are likely to be better positioned to withstand competition,’ said Mr Youl.
‘The growing adoption of new technology and changes in consumer preferences are also anticipated to support demand for ebooks across several digital platforms, which places added pressure on the industry’.
Free-to-Air Television Broadcasting
The Free-to-Air Television Broadcasting industry is anticipated to decline at an annualised 2.7% over the five years through 2024-25, to $3.7 billion. Industry operators are forecast to continue facing intensifying competition from digital media platforms.
‘The prevalence of online TV and film streaming platforms is anticipated to remain the biggest threat to the industry’s performance. Industry profitability has fluctuated over the past five years due to intensifying competition from subscription video on demand (SVOD) providers and other online media sources,’ said Mr Youl.
‘SVOD providers offer a range of content at low prices, which will likely reduce advertising demand for free-to-air TV programs over the next five years as consumers move away from traditional TV broadcasts’.
Newspaper Publishing
The Newspaper Publishing industry is forecast to decline at an annualised 2.1% over the five years through 2024-25, to $2.3 billion. The circulation of printed newspapers is projected to continue falling, as most newsreaders continue accessing content online via smartphones and tablets.
‘Newspaper publishers, both national and regional, will increasingly transition to digital media over the next decade. Revenue generated from online advertising is far less lucrative than traditional methods of publishing, which will likely to reduce industry profitability over the coming years,’ said Mr Youl.
‘Newspaper publishers are anticipated to place greater focus on commentary, lifestyle articles, articles on personal and emotive subjects, and celebrity news over the decade through 2030. These articles often focus on public issues that generate discussion through page comments, increasing reader interaction and generating repeat visits’.
