From IBISWorld
Although the economy is improving, there are several U.S. industries that are just too risky to expect much future growth, according to the latest report from industry research firm IBISWorld.
Stagnant technological innovation, market saturation and fierce competition from substitutes and low-cost imports are common factors that continue to cause the majority of these industries to decline in relevance.
Even with sales expected to turn around for some of these industries, negative trends are projected to offset any potential growth.
For a free copy of the full research report, see Top 10 Riskiest Industries
The global market for business and government purchases of technology goods and services will see slowing, though still positive growth in 2012, according to Forrester’s Global Tech Market Outlook For 2011 And 2012 (Premium):
Growth in 2011 will be better, because vendors have had two quarters of generally strong demand before economic weakness surfaced in July and August, and that weakness won’t lead to slower tech market growth until Q4 2011. For 2011, these conditions plus a weaker US dollar mean that global IT market growth will be 11.5% measured in US dollars), with a currency-adjusted growth rate of 7.7%.
But 2012 growth will slide to 5.5% in US dollars and 6.5% in local currencies.
Growth rates across regions will be more or less the same in 2011, with the US IT market growth of 7% near the global local-currency average growth rate. In 2012, IT markets of Western and Central Europe will have the slowest growth, with Eastern Europe, the Middle East, and Africa and Latin America growing the fastest.
Technorati Tags: information-technology
On the heels of our post earlier today in which a Harvard Working paper questions their value, voucher sites such as Groupon are found by IBISWorld to be bad for some industries.
The popularity of daily deal websites, like Groupon, LivingSocial and Google Offers, has exploded and many small businesses have used such sites to increase sales through group discounts. While the exposure and sales may be beneficial for some retailers, group discount sites can lead to profit drops for others, specifically small firms that operate in highly competitive, low-margin environments. IBISWorld has identified several industries that are most susceptible to getting the bad end of the deal:
Although some companies within these industries experience an increase in sales by offering group discounts, many face the risk of offering more discounts than they can handle. – IBISWorld industry analyst Mary Gotaas.
“Also, many of the daily deals directly compete with one another, so consumers are more likely to wait for the next hair salon or coffee shop offer than to become a regular patron of one particular shop.”
By offering deep discounts to consumers for a limited time, deal-of-the-day websites allow participating companies to increase their visibility without the upfront costs required by most marketing campaigns. For many companies, this can substantially increase the number of people coming in the door because subscribers are often unfamiliar with small locally based businesses.
Still, most consumers are only discount shopping, with no intention of returning to the retailers without a coupon. Offering group discounts often negatively affects participants’ revenue because deep discounts – even before the website takes a large cut – lead to losses on the products and services without customers returning in large numbers. Large losses are particularly dangerous for businesses in industries with low profit margins, as discount coupons lead to businesses experiencing even lower profit, and possibly closure.
Premium IBISWorld reports are available at the Alacra Store
Technorati Tags: daily deals, Groupon, supermarkets, vouchers
IBISWorld has identified what it thinks are the five hottest industries for small business startups.
By analyzing revenue figures, growth trends and profitability levels of more than 700 industries, IBISWorld identified five sectors that have start-up potential.
From drywall contractors to datamining consultants, the industries in these sectors are well-positioned for the next five years.
In addition to the predictable Internet and Technology and Green industries, IBISWorld sees big opportunities in some areas of Healthcare Services; Education and Employment Services and even some areas of Residential and Commercial Construction.
The internet and technology industries offer good growth prospects but also high levels of competition in most cases.
Among the brightest prospects, with good growth prospects, low capital costs, low barriers to entry and low levels of competition:
Trade and Technical Schools and Elderly and Disabled Services
Click image to enlarge.
Those with good prospects and Medium levels of competition:
Business Coaching, Environmental Consulting and Alternative Healthcare Providers.
For more see Hot Startups (complimentary pdf)
More IBISWorld reports on these and other industries can be found at the Alacra Store.
Technorati Tags: construction, education, employment, green, Healthcare, internet, technology
While eCommerce continues to grow and take market share from the physical retail channel, retailers also are looking to experiment with new approaches to their web businesses such as social commerce and mobile selling, according to Forrester Research.
Both of those tactics have generated only single digits in sales for most retailers but promise to capture more marketing dollars in the year to come as web retailers anticipate big gains from those channels in the coming months, writes Forrester’s Sucharita Mulpuru. Many retailers said they were planning to add custom stores on social networks and incorporate features like ratings and reviews onto their mobile sites.
Forrester Research reported that annual web sales in 2010 totaled $176 billion, an 11% increase over the previous year. Our annual survey with web retailers conducted in partnership with Shop.org exhibited that multichannel retailers and manufacturers fared particularly well.
This growth points to the Web as an increasingly mainstream retail channel. As such, the Web is also a channel that demands retailers’ attention (and budget) as it expands sales in global markets and — via mobile devices — is increasingly integrated with the physical retail store.
Traditional marketing tactics continue to capture the lion’s share of marketing budgets. More than half of marketing spend by web retailers is in fact for search and email, the online marketing workhorses. Customer acquisition tactics also remain largely the same as in years past, with search engine marketing and affiliates driving the most value for web retailers. However, this year social networks surfaced higher in the data than ever before as an investment area.
The full Forrester report The State Of Retailing Online 2011: Marketing, Social, And Mobile can be purchased at the Alacra Store.
Technorati Tags: e-commerce, mobile, online-retail, social-media
Like McKinsey, Forrester Research sees big opportunities in “Big Data,” but says companies must overcome challenges in mining and interpreting the massive amounts of information now available.
Excerpts from Big Opportunities In Big Data (Premium)
Opportunities to improve the bottom line exist in a flood of information; however, gaining insight from data becomes challenging as it grows extremely large. Emerging technology applies the power of distributed, virtual computing to the problem of large data, providing new tools and techniques that shift the way businesses use information to compete.
Big Data sets contain business value, but existing technology can’t extract it
The flood of information from the Internet, sensors, and image capture presents an untapped source of market and product intelligence and a valuable asset for businesses. Much of this data exists in large volumes or streams at extremely high data rates — 100 to 1,000 times larger than what IT systems typically handle today, and with a variety of structures — making it a poor match for mainstream database management technologies. Some of the opportunities that will push the processing of these large data sets up IT’s agenda include:
- Understanding consumer sentiment from a terabyte of social media data. Twitter provides a wealth of real-time information about people’s thoughts. People tweet about what they think, when they think of it, in enormous volume — 24 billion times a month. Big data processing applications are emerging to mine this rich source of transitory market intelligence, allowing companies to understand trends and consumer sentiments in real time.
- Tracking every sale of every product item in real time. Information about every product in every store can be tracked globally using RFID tags — producing an enormous flood of updates. Big data processing technologies can mine information about product and customer movements, providing summary information to business intelligence (BI) and predictive analytics (PA) applications. Retailers will be able to understand what is being purchased where and gain insight as to why with greater speed.
- Understanding the inner operations of complex machinery. Every detail of complex machinery can be captured and evaluated as it runs; for example, a Boeing jet engine produces 20 terabytes of data per hour, which engineers can monitor and examine in near real time or mine later for engineering improvements. Companies with this type of knowledge will be able to improve product quality and take action to correct defects before they become issues with customers.
The full report is available at the Alacra Store.
Technorati Tags: big data, information-technology, retail
Ford (F) and Volkswagen (VOW) are identified as winners in the US automobile market in IBISWorld’s latest quarterly report on the sector. Not surprisingly, Toyota is tagged as the industry loser.
Selected excerpts from Automakers in the US Quarterly Earnings Report (complimentary download)
Under the leadership of Alan Mulally, Ford was the first of the US automakers to take steps to turn the company’s operations around back in 2005. While Ford’s turnaround has been slower than GM’s or Chrysler’s, the company’s head start allows it to sell more recently refreshed vehicles. Ford’s 2010 profit margin, at 5.1%, edged ahead of rival GM even with GM’s shrunken liabilities. Ford is continuing to outperform in 2011 and is on pace to grab a 17.4% market share, its best showing since 2006.
In 2010, Volkswagen took the first steps in its US expansion plans, opening new plants in Tennessee and Puebla, Mexico, to pursue local production. High labor costs and unfavorable exchange rates have historically put a “German premium” on Volkswagen models in the United States. During the first quarter of 2011, Volkswagen’s small car sales rose 22.7% compared to 2010. Overall Volkswagen’s market share dipped to 2.9% for the first quarter, from 3.1% during the full year of 2010.
Volkswagen’s US market share is expected to build momentum as the company continues to expand local production and lowers prices, which has proven effective with the 2011 Jetta.
In the first quarter of 2011, Toyota is on pace for a US market share of 14.0%, an astonishing drop from its 2009 peak of 17.0%. The lasting effects of the Sendai earthquake and Fukushima nuclear disaster will only deepen the hole in Toyota’s sales. The disaster, which began March 10th, did not affect first quarter sales, but it is expected to cause supply shortages in the second and third quarters of 2011.
Through 2016, automakers will find the light at the end of the tunnel, with uninterrupted growth in the forecast. The consumer sentiment index is expected to rise 4.3% annually over this period, reaching 95.0, up from 76.8 in 2011. Continuous improvements in credit availability and disposable income will encourage spending on new vehicles. Rising oil prices, which are expected to increase 5.9% annually through 2016, will have mixed effects on the industry.
Higher oil prices will temper growth in demand for new vehicles, but they will also make smaller cars more appealing relative to trucks and SUVs. During the five years to 2016, industry revenue is expected to rise annually by 4.2% to $102.2 billion for the Car and Automobile Manufacturing industry and 5.3% to $140.6 billion for the Light Truck and Sport Utility Vehicle Manufacturing industry. In 2012 specifically, IBISWorld anticipates revenue to grow by 8.5% and 6.0%, respectively.
IBISWorld reports on other industries are available at the Alacra Store.
Technorati Tags: automakers, Chrysler, Ford, General-Motors, Honda, Toyota Motor Corp, Volkswagen
Big oil, big pharma, and now comes….big data?
Analyzing large data sets—so called big data—will become a key basis of competition, underpinning new waves of productivity growth, innovation, and consumer surplus as long as the right policies and enablers are in place, says McKinsey in a new report.
The research by McKinsey Global Institute and McKinsey’s Business Technology Office examines the state of digital data and documents the significant value that can potentially be unlocked.
For example, a retailer using big data to the full could increase its operating margin by more than 60 percent. Harnessing big data in the public sector has enormous potential, too.
If US health care were to use big data creatively and effectively to drive efficiency and quality, the sector could create more than $300 billion in value every year.
Two-thirds of that would be in the form of reducing US health care expenditure by about 8 percent. In the developed economies of Europe, government administrators could save more than €100 billion ($149 billion) in operational efficiency improvements alone by using big data, not including using big data to reduce fraud and errors and boost the collection of tax revenues. And users of services enabled by personal location data could capture $600 billion in consumer surplus.
McKinsey says computer and electronic products, information, finance and insurance and government are the sectors that are best placed to benefit from leveraging big data.
Click image to enlarge.
The report identified five broadly applicable ways to leverage big data:
- Make big data more accessible and timely. Transparency, enabled by big data, can unlock a great deal of value. In the public sector, increasing access to data across separate departments can sharply reduce search and processing times. In manufacturing, integrating data from R&D, engineering, and manufacturing units to facilitate concurrent engineering can cut time to market.
- Use data and experiments to expose variability and raise performance. As organizations create and store more transactional data in digital form, they can collect more accurate and detailed performance information on everything from product inventories to sick days.
- Segment populations to customize. Big data allow organizations to create ever-narrowing segmentations and to tailor services precisely to meet customer needs. This approach is well known in marketing and risk management but can be revolutionary in areas such as the public sector.
- Use automated algorithms to replace and support human decision making. Sophisticated analytics can substantially improve decision making, minimize risks, and unearth valuable insights that would otherwise remain hidden. Such analytics have applications from tax agencies to retailers.
- Innovate with new business models, products, and services. To improve the development of next-generation offerings and to create innovative after-sales services, manufacturers are leveraging data obtained from the use of products. The emergence of real-time location data has created a new set of location-based mobile services from navigation to people tracking.
Read the executive summary or download the full report here.
The New York Times has more on the potential, and also on the challenges of mining big data, including the shortage of trained staff.
Technorati Tags: big data, data mining
Most US car buyers would consider an electric vehicle if gasoline prices reach $5 a gallon, but few are prepared to pay a premium for the privilege.
A new survey from Deloitte shows that 78 percent of consumers in the United States would consider purchasing an electric vehicle (EV) when fuel prices reach $5.00 per gallon. The study, Gaining traction: Will consumers ride the electric vehicle wave?, surveyed 12,000 consumers globally, including more than 1,000 in the US, and finds that the higher the price of fuel, the more interested consumers are in EVs.
“Offsetting the fuel factor is the finding that the better the fuel efficiency of internal combustion engine (ICE) vehicles, the less interested consumers become in EVs,” said Craig Giffi, vice chairman, Deloitte LLP and U.S. automotive practice leader. “A total of 68 percent of consumers in the U.S. and 57 percent in China are less likely to consider an EV if they are able to find ICEs with a fuel efficiency of 50 miles per gallon.”
“For mass adoption, automakers in the U.S. will be challenged to price electric vehicles to meet the expectations of consumers and still make a profit on them,” said Giffi. “U.S. consumers are not likely to pay any sort of price premium for EVs. Therefore, government incentives are very important to the purchase decision.”
More than half of U.S. consumers surveyed are not willing to pay any price premium for an EV compared to a regular car (ICE) while only 8 percent are willing to pay a price premium of more than $3,000.
Moreover, the overwhelming majority of these consumers (77 percent) expect to pay less than $30,000 net of government incentives. In Europe and China however, it becomes an even more significant challenge as the majority of consumers expect to pay less than $20,000 for an electric vehicle and more than 50 percent of consumers in these markets refuse to pay any kind of price premium for an electric vehicle.
Technorati Tags: automotive, electric cars
Plunkett Research summarizes what it sees as the major trends affecting E-commerce and internet business in 2011, in this complimentary download from the Alacra Store. The 64-page report covers the following topics:
- Introduction to the E-Commerce & Internet Business
- Booking Travel Over the Internet Becomes the Norm
- Apple’s iPod Revitalizes the Music Industry/Amazon and MySpace Follow Suit
- Internet Film and TV Content Grows/Netflix Evolves to Focus on Online Delivery
- User Generated Content Drives Social Media and Generates Ad Revenues
- Car Purchasers Rely on the Internet
- Health Information Research Remains a Leading Use of the Internet
- Bricks, Clicks and Catalogs Create Synergies While Online Sales Growth Surges
- Amazon Gains Market Share
Online Advertising Becomes Targeted, Nears 17% of Total Advertising Market- Targeted Online Advertising and Social Network Advertising Boost Revenues
- Banks See Growth in Online Services
- Insurance Direct Selling and E-Commerce Grows
- Wi-Fi is Pervasive and Indispensable
- WiMAX Extends Wireless Range Far Beyond Wi-Fi
- Broadband Market Nears 1 Billion Users
- Fiber-to-the-Home Gains Traction
- U.S. Broadband Connections Rank Behind Other Nations
- VOIP Use Soars and Threatens to Revolutionize Telecom
- Telecommunications Move Online Including Unified Communications, Telepresence
- Security Needs Flourish/Firefox and Google Chrome Grow
E-Commerce and Internet Business Industry Trends, Statistics and Analysis 2011 (Summary) has been made available free of charge to Research Recap users for 30 days by special arrangement with Plunkett Research, an Alacra content partner. After 30 days, the report will revert to its regular Alacra Store price of $149.99)
Plunkett reports on other industries and companies can be purchased from the Alacra Store.
For additional free research reports from the Alacra Store click here.
Technorati Tags: Amazon, automotive, banks, broadband, complimentary research, e-commerce, ebooks, Facebook, internet, Netflix, online-retail, Plunkett, social-media, telecommunications, Twitter, wifi
