In part two of the Industries to Outperform Amid COVID-19 Pandemic series, IBISWorld reviews more industries that are expected to excel during 2019-20. Despite the social distancing and quarantine measures implemented to stem the rise of COVID-19 cases, these industries are expected to benefit from unique strengths and opportunities.
Courier Pick-Up and Delivery Services
The boom in online shopping has supported the expansion of the Courier Pick-up and Delivery Services industry over the last five years. This industry has shifted away from mining, manufacturing and wholesale markets to take advantage of the opportunities within the parcel delivery services sector. As the COVID-19 pandemic persists and social distancing measures increase, demand for grocery delivery services is anticipated to increase industry revenue by 7.6% over 2019-20, to total $5.5 billion.
In addition to the increased demand for delivery services due to the COVID-19 outbreak, structural changes caused by changing conditions in downstream markets have supported industry revenue growth over the past five years. In particular, strong growth in online shopping has increased demand for industry services. This trend has also led to increased competition and spurred the proliferation of web platforms such as UberEATS, Menulog and Airtasker. These web platform-based operators have supported industry revenue growth and are well positioned to continue expanding business operations after the COVID-19 outbreak passes.
Book Stores
Demand for products from the Book Stores industry is anticipated to rise during the pandemic, helping to mitigate a decline in revenue. The largest major market for book stores is consumers, which account for approximately 95% of industry revenue. The Australian Government has implemented stricter social distancing rules and asked parents with non-essential jobs to stay home with their children. These measures are expected to significantly boost industry demand as parents look for activities, books and other products to keep their children entertained while at home. Some book retailers have even introduced free delivery to increase online sales while ensuring they remain compliant with social distancing rules to protect readers from exposure to COVID-19. The extenuating circumstances due to COVID-19 are expected to provide relief to the industry, which has declined at an annualised 7.1% over the past five years due to falling demand for books.
Online Grocery Sales
The Online Grocery Sales industry is expected to increase by a massive 56.0% in 2019-20, as the disruption of COVID-19 dramatically reshapes the way Australians shop for groceries. In response to the pandemic, the Australian Government is encouraging Australians to stay home whenever possible. A result of such isolation and social distancing will incite a shift to online shopping, particularly groceries. While supermarkets are considered essential and will remain open, many consumers are expected to convert to online grocery shopping to reduce their risk of exposure. Online searches for grocery delivery services increased by over 300% in March 2020, although this result isn’t expected to fully manifest in the industry’s revenue growth.
The largest major market to benefit from online grocery sales is expected to be Australians aged over 55. While this age group initially represented a challenge for online retailers, the demographic is among the most at-risk of severely suffering from COVID-19. As a result, many consumers in this age group are anticipated to use online grocery shopping to minimise their risk of exposure.
Sanitary Paper Product Manufacturing
Operators in the Sanitary Paper Product Manufacturing industry are experiencing unprecedented demand due to consumers panic buying sanitary paper products, such as toilet paper and paper towels, in response to the COVID-19 outbreak. As a result, Australian sanitary paper product manufacturers have had to ramp up production to meet increased demand, and to help mitigate the downward pressure COVID-19 is expected to place upon the industry.
Major players such as Kimberley-Clark Pacific Holdings, ABC Tissue Products and Asaleo Care Limited are expected to experience high product demand as consumers continually empty shelves of sanitary paper products. Kimberley-Clark’s South Australian has ramped up production and is now manufacturing around the clock. ABC Tissue, the maker of Quilton products, has recently worked with several Australian charities and donated one million rolls of toilet paper to Australia’s most vulnerable. In addition, ABC Tissue has increased daily production by 25% and added another shift to meet demand. The company is effectively manufacturing 24 hours, seven days a week.
Buy-Now-Pay-Later
The Buy Now Pay Later (BNPL) industry has grown exponentially over the past five years, with industry revenue expected to grow by 63.6% in 2019-20. Although the industry is still relatively new, the number of consumers who use BNPL arrangements increased to over two million consumers in 2017-18, according to ASIC. This increase was led by consumers shifting away from traditional credit cards and opting instead for BNPL services, which give consumers an instant loan at the point of sale. Industry revenue growth during 2019-20 will largely be supported by strong growth in online shopping as consumers continue to self-isolate and restrict their social movements. While consumers are expected to limit their discretionary purchases during this period of economic uncertainty, consumers will likely continue purchasing essential goods and services they need immediately, but cannot pay for upfront.
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Jason Aravanis
Strategic Media Advisor – IBISWorld Pty Ltd
Tel: 03 9906 3647
Email: mediarelations@ibisworld.com
