Want to start a new business? Ditch the book shop idea and start an eBay store
I was wondering – if I was to start a new business that sells stuff, what industry should I be looking at? The much maligned Australian retail sector has copped a hammering since the global financial crisis. But surely some parts of the sector are still doing OK.
I am always impressed by the vast collection of useful and timely data made available by the Australian Bureau of Statistics . For this analysis I am using the monthly retail figures (seasonally adjusted) and I am presenting them as a relative growth within each sector or sub-sector so that I can compare them.
Firstly, consider the main retail sectors (Figure 1). Department stores are clearly struggling, household goods retailing and clothing are making a comeback in the last couple of years. Food retailing (grocery stores and liquor) is a strong consistent performer. Other retailing (a collection of newspapers and books, other recreational goods, pharmaceutical and other) looks to be doing well. Cafes, restaurants and takeaway seems to be a strong and growing performer.
Figure 1: Cumulative growth in retail sectors since the GFC
Whilst the overall categories are interesting, if I am going to open a shop, I want to look at the data in a little more detail. The best performing (annual growth>5% since 2007) sub sectors are (Figure 2):
- Pharmaceutical (sub sector of “Other retail”)
- Liquor retailing (sub sector of “Food retail”)
- Other retailing n.e.c (includes stationary, antiques, flower retailing, non-store retailing, retail commission-based buying and selling) (sub sector of “Other retail”)
- Cafes, restaurants and catering services (sub sector of “Cafes, Restaurants and Takeaway”)
Figure 2 also shows that the best way to become a poor retailer was to start off as a wealthy bookshop owner with an almost 20% decline in the newspaper and book retailing industry since 2007.
Figure 2: Winning and losing retail sectors since the GFC
So on the face of it, you could do worse than open a Café.
However what is really interesting is what is going on for the “Other retailing n.e.c.” (the Light blue in Figure 2) which is really kicking on. This group appears to be a collection of hard to categorise retail sectors and interestingly includes “non-store retailing”. Non-store retailing captures those retailers without a shopfront like market stall holders and internet based businesses.
The idea of internet based retail is relatively new and isn’t really captured well in the basic categories reported by the ABS. The ABS has estimated online retail turnover since March 2013. The year on year growth for the last 12 months for pure online sales retail (stores that only operate online) has been 45% (Figure 3). However there are some wild fluctuations in the monthly growth rates for online retail trade (from -28.9% growth in January 2015 to 31.6% growth in September 2014), so the numbers should be used with caution. Even so, a sales growth of 4 times the nearest rival is a pretty compelling reason to think about starting an online business rather than a traditional bricks and mortar store.
Figure 3: Best performing retail sectors 2014-2015
The source data is available from the ABS. The wrangled version of the data which I used here (e.g. aggregating the data to change the time step from monthly to annual) is available in Truii. Just log in and join the ‘Example data’ library and look under ‘blog data’ public library. You will find the data wrangling tools for manipulating data like this are part of the Truii data wrangling functionality.
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