Biotechnology in Australia 2022
Biotechnology involves applying science and technology to living organisms, and parts, products and models, to alter living or non-living materials to produce knowledge and biotechnology products and services. The industry includes biotechnology research and development, licensing, product manufacturing and product wholesaling. Companies that focus on medical devices are not included in the industry.
Industry Report
Biotechnology in Australia
Biotechnology involves applying science and technology to living organisms, and parts, products and models, to alter living or non-living materials to produce knowledge and biotechnology products and services. The industry includes biotechnology research and development, licensing, product manufacturing and product wholesaling. Companies that focus on medical devices are not included in the industry.
Industry revenue has grown at an annualised 2.4% over the five years through 2021-22, to $8.9 billion
EXECUTIVE SUMMARY
Biotechnology is becoming an increasingly important part of product development in a variety of sectors, with businesses using biotech applications to address many social and economic issues such as human health, food security and alternative fuels. Several companies have reached commercial readiness, with robust product pipelines and the support of international partners improving their attractiveness to investors. While human therapeutics companies continue to dominate the industry, agricultural technology and food technology companies are gaining momentum.
New funding sources have driven industry growth over the past five years. However, ongoing uncertainty due to changing government policies has dampened the industry's performance, particularly regarding changes to Australia's R&D tax incentive (RDTI) regime. The COVID-19 pandemic has also influenced the industry's operating environment with several industry operators at the frontline regarding COVID-19 research, prevention and treatment.
OUTLOOK 2022-2027
The Biotechnology industry is forecast to continue growing over the next five years, driven by increased demand for, and greater acceptance of, biotech products. It is anticipated to derive revenue from a wider range of sources and it is expected to increase at an annualised 3.0% over the five years through 2026-27, to $10.3 billion.
Employment is projected to slowly increase, although a potential shortage of STEM graduates may continue to limit this growth.
Enterprise numbers are anticipated to grow modestly, however, pharmaceutical companies are anticipated to continue acquiring biotech start-ups to gain access to product pipelines and innovative technology platforms and there for consolidation trends will continue.
Source: IBISWorld | Biotechnology in Australia, Feb 2022
Private Equity in Australia 2022
Sound investment: Industry operators have benefited from a record-low interest rate environment.
Concerns regarding inflation have prompted the RBA to increased the cash rate target three times over the four months through August 2022 to limit spending and tame inflation. Rising interest rates are likely to increase the cost of borrowing and subdue business confidence, while simultaneously taming inflation.
Industry Report
Private Equity in Australia
Sound investment: Industry operators have benefited from a record-low interest rate environment.
Concerns regarding inflation have prompted the RBA to increased the cash rate target three times over the four months through August 2022 to limit spending and tame inflation. Rising interest rates are likely to increase the cost of borrowing and subdue business confidence, while simultaneously taming inflation.
EXECUTIVE SUMMARY
Private equity firms manage investments in private companies. They may invest their own capital, raise funds from external investors to invest on their behalf, or do both. Investments can include venture and growth capital for emerging companies, as well as buyouts, which involves purchasing a publicly traded company to take it private. Firms earn revenue from external capital management fees and from any gains made on their own investments.
Firms in the Private Equity industry pool investment funds to purchase companies. Industry firms then attempt to implement managerial and operational changes to improve the company's performance before selling it for a profit.
The industry has benefited from record low interest rates over the past five years, which have allowed for cheap financing and increased buyout activity. However, fluctuations in business confidence, primarily stemming from the COVID-19 pandemic, have limited the willingness of investors to select private equity asset types.
Industry revenue is expected to grow at an annualised 3.3% over the five years through 2022-23, to $585.5 million. The gradual easing of restrictions relating to the COVID-19 pandemic and positive business confidence are anticipated to benefit industry players in the current year. However, lingering unfavourable trading conditions will limit the industry's expansion. Increases to interest rates are expected to subdue the ability of private equity firms to secure funding for buyouts and other ventures.
OUTLOOK 2023 - 2028
Private equity is projected continue growing over the next five years, as investors diversify their portfolios. A forecast rise in the value of managed funds and a strong share market performance will likely benefit industry revenue.
Growth in specific investment areas, such as financial technology (fintech), healthcare, and education and training are forecast to underpin private equity expansion. Despite remaining positive, a projected decline in business confidence in addition to forecast interest rate rises will likely limit the industry's expansion. In particular, interest rate rises are forecast to limit performance fees earned by private equity firms on exiting the industry. Industry revenue is projected to grow at an annualised 1.4% over the five years through 2027-28, to $628.8 million.
Source: IBISWorld | Private Equity in Australia, July 2022
Finance in Australia 2022
The RBA has increased the cash rate target three times over the four months through August 2022 to limit spending and tame inflation. Rising interest rates are likely to increase the cost of borrowing and subdue business confidence, while simultaneously taming inflation.
Industry Report
Finance in Australia
The RBA has increased the cash rate target three times over the four months through August 2022 to limit spending and tame inflation.
Rising interest rates are likely to increase the cost of borrowing and subdue business confidence, while simultaneously taming inflation.
EXECUTIVE SUMMARY
The Finance subdivision covers firms that provide banking and finance and investment trusts in Australia. The most significant industries in the Finance subdivision are domestic banks, foreign banks, non depository financiers and financial asset investors. The subdivision excludes auxiliary finance and insurance service providers.
The Finance subdivision's operating environment has been challenging over the past five years, due to falling interest rates. Residential property prices have risen over the period, supporting demand for mortgages. However, volatile business confidence has limited growth in capital expenditure from the private sector and overall demand from commercial clients.
Revenue is expected to decline at an annualised 2.4% over the five years through 2022, to $185.1 billion, however is anticipated to rise by 2.1% in 2022, as most operators have wound down deferrals on loan repayments that were offered at the height of the COVID 19 pandemic.
The RBA's efforts to stimulate economic growth have helped drive down funding costs to support profitability for lenders. However, more recent higher capital requirements and remediation costs for the major banks following the Financial Services Royal Commission have weighed on net interest margins and caused subdivision profit margins to fall.
In addition, operators made provisions to cover the cost of the COVID-19 pandemic due to the financial hardship faced by borrowers. The major players have also offloaded or are seeking to sell their less profitable ventures overseas, along with businesses generating lower returns (such as wealth management and life insurance businesses), to refocus on core banking operations.
OUTLOOK 2022 - 2027
The industry’s outlook is forecast to be positive over the next five years, with revenue forecast to grow at an annualised 7.8% over the five years through 2027, to $269.5 billion. The major banks account for a large proportion of the subdivision, and their performance will heavily influence movements in the subdivision's revenue.
The economy's recovery from the COVID-19 pandemic, business confidence, consumer sentiment, property market conditions and global economic growth will also influence the subdivision's performance. Interest rates are projected to rise over the next five years, helping banks capitalise on the loan books built up over the past five years. However, the subdivision faces challenges in higher capital requirements and tighter lending standards.
Source: IBISWorld | Finance in Australia, March 2022
The Whiteark Guide to Strategy & Execution
THE GUIDE | The key building blocks to guide the process of strategy to execution. Answering strategic questions will form the basis of the key components to the Company Strategy building block. Constantly monitoring the industry, market and economic trends is critical for setting and achieving your strategic objectives.
The key building blocks to guide the process of strategy to execution.
Answering strategic questions will form the basis of the key components to the Company Strategy building block.
•What is your current situation?
•Where do you want to go from here?
•What do you want to accomplish?
•How do you get from where you are today to where you want to be in the future? What are the steps do you need to take?
•What obstacles will you have to overcome? What problems will you have to solve?
•What skills and capability do you require to achieve your strategic objectives?
•What problem does your company seek to solve?
•Why do you believe this problem needs to be addressed?
•Does this problem matter to others?
•What are your offerings to solve this problem?
•What is the nature of your products and services?
•What specific customer/consumer needs are you addressing?
•Who are your ideal/target customers?
•What is your unique selling proposition?
•Are there other comparable offerings in market?
•What differentiates you from your competitors?
In today’s unpredictable environment strategic planning needs to be adaptive.
Covid-19 has been the catalyst for companies to reset their business strategy. In a time of such uncertainty, executive leaders need to be increasingly reliant on adaptive strategies so that they can set long-term goals but still flex with evolving conditions.
Contents of the Guide.
Key building blocks for strategy to execution
Considerations for each building block
Adaptive strategy
Building block one - market and industry trends
Building block two - companies strategy
Building block three - build the plan
Building block four -manage performance
Looking for help with your strategy? Reach out.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes. We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. So, if you’re looking to transform, reimagine or upgrade your strategy, then give us a call on 1300 240 047 for an no-obligation conversation.
Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
General Insurance Australia
The industry is forecast to improve over the next five years, as local and global economies are projected to record stronger growth. Interest rates are expected to rise too, which will likely boost investment income for insurers. The industry includes general insurers and reinsurers. General insurers underwrite insurance policies to cover individuals and businesses' financial loss associated with property, casualty, liability and other risks. Underwriting involves assuming risks and assigning premiums. ]
Industry Report
General Insurance in Australia
The industry is forecast to improve over the next five years, as local and global economies are projected to record stronger growth. Interest rates are expected to rise too, which will likely boost investment income for insurers.
The industry includes general insurers and reinsurers. General insurers underwrite insurance policies to cover individuals and businesses' financial loss associated with property, casualty, liability and other risks. Underwriting involves assuming risks and assigning premiums. Reinsurers assume all or part of the risk associated with existing insurance policies underwritten by other insurers.
The occurrence of natural disasters has resulted in a rise in the number of claims, forcing industry operators to raise premiums. The COVID-19 pandemic has also led to a shift in types of insurance claims.
DEMAND DETERMINANTS
OVERALL ECONOMIC ACTIVITY | CONSUMER WEALTH | DEMOGRAPHICS | BUSINESS AND CONSUMER CONFIDENCE | RISK PROFILES | PREMIUMS
Demand for products from the General Insurance industry is affected by many factors including: overall economic activity, consumer wealth, demographics, business and consumer confidence, risk profiles and premiums. Wider economic activity affects insurance demand through exposure to risk. Higher employment leads to more risk associated with workers' compensation. A strong economy and labour market increases disposable income, driving household consumption and wealth and therefore, generates greater demand for insurance. Similarly, any decrease in overall economic activity can reduce household coverage, as wealth and consumer expenditure decline. Demographics also influence insurance demand, with individuals' coverage and expenditure increasing as they age. Premiums affect coverage levels and the volume of policies offered. Premium increases can constrain demand and reduce coverage as consumers self-insure when insurance costs outweigh potential payout gains.
OUTLOOK 2021 - 2026
Industry revenue is projected to grow over the next 5 years; driven by the anticipated economic recovery from the recession which is likely to generate demand for general insurance products, providing insurers with the opportunity to grow premium revenue. Additionally, forecasted growth in the cash rate and bond yields will enable operators to generate higher investment returns. Adversely, strong industry competition is forecast to put pressure on profit margins as well as the effects of the 2019 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services which is to come into effect as at 1 July 2021.
The major players are projected to continue to dominate the industry, intensifying price competition and increasing policy coverage. Strong competition is likely to impact Small/Medium Enterprises the most. Large insurers hold more capital, so they can bear higher pricing risks and are better placed to add further coverage to existing policies. Online aggregators have driven a rise in competition, as greater price transparency has generated additional pressure on firms to compete on price.
Larger insurers have a history of aggressive expansion through M&A, and further activity is projected which is expected to reduced industry enterprise and establishment numbers. Employment numbers are also anticipated to drop marginally, as key players continue to acquire smaller operators.
External competition is likely to increase as non-traditional insurers and large technology companies, such as Google, Facebook and Amazon, are anticipated to push into the industry. These companies have been making inroads into online user experience and customisation, and have demonstrated an ability to quickly enter and disrupt new markets. However, the pandemic has forced insurers to accelerate the adoption of digital technology.
The industry will likely face some technological disruption. While technological developments could increase competition within the industry, it also creates opportunities for industry players to to expand, given the growing popularity of cloud computing and business being conducted online.
Cyber insurance is becoming an increasingly popular area of general insurance, which typically covers losses from data theft and other IT-related risks. This market remains largely untapped and presents an opportunity for operators, given the complexity and risks of the cyber landscape.
Source: IBISWorld | General Insurance in Australia, March 2021
LOOKING TO CREATE VALUE IN YOUR ORGANISATION? LET US HELP.
Whiteark is not your average consulting firm, we have first-hand experience in delivering transformation programs for private equity and other organisations with a focus on people just as much as financial outcomes. We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business.
Our co-founders have a combined experience of over 50 years’ working as Executives in organisations delivering outcomes for shareholders. Reach out for a no obligation conversation on how we can help you. Contact us on whiteark@whiteark.com.au
The Whiteark Guide to Supply Chain Optimisation
The coronavirus pandemic highlighted the need for companies to focus on transforming their traditional supply chain models to digital supply networks, in order to better manage supply chain risk and disruption. Digital supply networks, breakdown functional silos and allow companies to become connected to their complete supply network to empower end to end visibility, collaboration, agility, and optimisation. Organisations that deploy Digital supply networks will be equipped to deal with unexpected events.
The coronavirus pandemic highlighted the need for companies to focus on transforming their traditional supply chain models to digital supply networks, in order to better manage supply chain risk and disruption.
With the growing emergence of new supply chain technologies, organisations can invest in enablers that will support their supply chain network in resisting unexpected disruption. These technologies significantly improve visibility across the supply chain and are designed to anticipate and meet future challenges.
Some of these enablers include:
Artificial Intelligence (AI)
Intelligent, self-correcting AI will make inventory monitoring more accurate and reduce material waste.
Blockchain
Will verify authenticity, improve traceability and visibility, and improve transactional trust.
Quantum Computing
Unprecedented computational power will solve previously unsolvable problems.
Internet of Things (IoT)
Data from IoT sensors will provide insight into inventory location and status.
Intelligent Order Management
Supply chains will master inventory visibility with improved demand forecasting and automation.
Digital Twins
Virtual representations of complex creations — let you track objects through entire lifecycles.
Digital supply networks, breakdown functional silos and allow companies to become connected to their complete supply network to empower end to end visibility, collaboration, agility, and optimisation. Organisations that deploy Digital supply networks will be equipped to deal with unexpected events.
Supply chain optimisation.
Supply chain optimisation makes the best use of technology and resources such as blockchain, AI and IoT to improve efficiency, responsiveness and performance in a supply network so that companies can provide customers with what they want, when and where they want it – in a way that positively contributes to the organisation’s profitability and sustainability. An organisation’s supply chain is a critical business process that is crucial for a successful customer experience.
Goals of Supply Chain Optimisation
Top supply chain trends for 2021.
Contents of the Guide.
Mitigating supply chain disruption.
Supply chain optimisation.
The process for optimising your supply chain.
Key features of effective supply chain optimisation.
The importance for supply chain optimisation.
Supply chain trends.
Looking to transform your Supply Chain? Reach out.
Our team has extensive global experience leading large scale Supply Chain Transformations from Factory to Customer across multiple industries. We have in depth capabilities around designing and delivering value in the Physical, Financial and Information (Digital) Supply Chain and can help your organisation create competitive advantage and value centred on the global supply chain.
We understand that execution is the hardest part, and so we roll our sleeves up and work with you to ensure we can deliver the required outcomes for the business. So, if you’re looking to transform, reimagine or upgrade your supply chain then complete the form below or give us a call on 1300 240 047 for an no-obligation conversation.
Technical & Vocational Education and Training in Australia
The restrictions on travel imposed by the federal government in response to Covid-19 is expected to result in a sharp drop in international students in the current year, and adversely affect revenue growth. The industry consists of registered training organisations that offer…
Industry Report
Technical & Vocational Education and Training in Australia
The restrictions on travel imposed by the federal government in response to Covid-19 is expected to result in a sharp drop in international students in the current year, and adversely affect revenue growth. The industry consists of registered training organisations that offer technical and vocational education and training, including TAFE institutes, dual-sector institutions and other private and community providers.
OVERVIEW
Major players in the industry are: Department of Education and Training (19%), TAFE NSW (16%), TAFE Queensland (6%), Other 59%). There is medium level of concentration.
The increase in government funding reduced financial barriers for students seeking to access vocational education and increased the number of private vocational education providers entering the market. The depreciation of the Australian dollar increased international student enrolments, and the increasing casualisation of the Australian workforce encouraged many students to enrol in VET courses to boost employment prospects. However, course quality concerns and budgetary constraints led to changes to industry funding, which significantly constrained student demand.
The number of students accessing VET FEE-HELP rose from about 55k ($323M in loans outstanding) in 2012 to more than 272k ($2.9B in loans outstanding). This dramatic increase in loans raised concerns about the conduct of some industry operators. In 2015, the Government implemented new reforms to reduce unethical marketing and limit the amount of revenue received by each provider. The government took further action in January 2017, cancelling the VET FEE-HELP scheme entirely. The replacement scheme, VET Student Loans, aims to protect students from taking unnecessary loans and to ensure educational services are of a high quality by introducing stricter eligibility conditions. The scheme has significantly reduced the number of courses eligible for loans, and requires current private and community VET FEE-HELP providers to apply for provisional approval to maintain registered training organisation status.
Many VET providers have reduced expenses by steadily increasing online course delivery, which has reduced operational expenses. Overall, industry profit margins have increased over the past five years. Industry employment has contracted over the period, as larger VET providers have reduced their workforce to control costs in an increasingly competitive market.
OUTLOOK 2020 - 2025
Changes to the regulation and funding of vocational education are anticipated to influence the Technical and Vocational Education and Training industry's performance over the next five years. The introduction of the VET Student Loans scheme has reduced the number of government-funded courses and is likely to limit increases in the number of student enrolments. While the Australian dollar is projected to appreciate over the next five years, it will likely remain weak, and is expected to boost demand from international students.
Government funding regulation is projected to intensify over the next five years. Continued concern about the conduct of private providers in the industry has led to various inquiries and changes to industry legislation. The VET Student Loans scheme is forecast to continue to affecting industry revenue by reducing the funding available for industry operators.
Regulatory requirements regarding loans will likely affect the industry's structure. The percentage of industry revenue generated by large public institutions is anticipated to increase over the period. More students are forecast to enrol in industry courses as the industry adapts to the new funding model and regulations and offers higher quality courses. New regulations that require more trade and technical workers to have formal VET qualifications are also anticipated to boost industry enrolments.
Tighter regulations in the construction and healthcare sectors are forecast to make practical work experience through apprenticeships and other placements more important for employment in these sectors over the next five years. The need for experience will likely increase the popularity of vocational qualifications, supporting enrolment numbers and industry revenue over the period.
The new User Choice program, under which the state and territory governments provide funding to registered training organisations to reduce the cost of placements and apprenticeships to students and employers, is anticipated to further this trend over the next five years.
Industry employment is anticipated to decline as operators seek to reduce operating costs, and further their focus on online methods of course delivery. Industry profitability is anticipated to fall slightly over the next five years, as some private for-profit providers exit due to more difficult operating conditions.
Source: IBISWorld | Technical & Vocational Education & Training in Australia, April 2020
Finance in Australia
Profitability is expected to rise over the long term with less pressure on net interest margins. The primary activities of this industry are: building society operation, financial asset investment service provision, credit union operation, banking service provision, money market dealing, and non-depository financing.
Industry Report
Finance in Australia
Profitability is expected to rise over the long term with less pressure on net interest margins.
The primary activities of this industry are: building society operation, financial asset investment service provision, credit union operation, banking service provision, money market dealing, and non-depository financing.
OVERVIEW
The Finance industry has had a challenging operating environment over the past five years, due to falling interest rates and declining private capital expenditure.
Ongoing macro-economic and geopolitical changes have led to uncertainty surrounding the global economy and financial system over the past five years. Slowdowns in several economies across the globe and concerns about Chinese economic sustainability have affected Australia's economic performance.
Domestically, declining private capital expenditure has led to lower demand for credit, and a downturn in the residential property market in 2018-19 put further pressure on industry revenue. Falling interest rates have been the key reason for revenue declines. Due to the economic impact of COVID-19 revenue is forceast to drop 4.6% in 2020.
The big four banks account for c.60% of total subdivision revenue in the current year. Hence, the finance industry’s performance reflects the performance of national banks, which is linked to the cash rate and market interest rates. To stimulate the economy, the RBA has lowered the cash rate to historic lows. The RBA has made five cuts to the cash rate since June 2019, and further quantitative easing may occur as the effects of COVID-19 persist.
Demand for credit has varied across different parts of the economy. In the retail market, the large value and volume of mortgages has significantly increased industry’s assets. While the commercial market has been reluctant to make significant investments, contributing to weakened demand for credit.
The banks have started offloading divisions with lower returns, and exiting businesses abroad and streamlining operations to focus on core banking operations in Australia. Changes in the regulatory landscape, have prompted this renewed focus for the banks. These events have led to the major banks selling or seeking to exit their wealth management and life insurance divisions due to weaker returns and high regulatory costs for these businesses. The four major banks have also sought to reduce their branch numbers as banking and financial services are increasingly delivered through digital channels. This trend has led to subdivision employment numbers falling over the past five years, despite enterprise numbers increasing.
OUTLOOK 2020 - 2025
Revenue is forecast to grow by 4.3% over the five years through 2025, to $241.1B. Enterprise numbers are forecast to rise due to growth in the number of mutual organisations, neobanks and foreign banks. Foreign banks, along with the emergence of neobanks and other financial technology providers, are expected to contribute to growth in wage costs.
Profitability is anticipated to rise slightly, as lenders recover from COVID-19 related credit impairments, and pressure is reduced on net interest margins. The big four banks' strategic focus is expected to continue shifting due to potential developments across several of their key products and markets, including residential property lending, and divesting wealth management and insurance segments. The banks have streamlined their operations and focused on core banking operations. This shift in focus, and a projected rise in interest rates and lending activity post COVID-19 is expected to support recovery in the lending sector. Capital expenditure by the private sector is also anticipated to rise.
APRA has introduced a range of measures to ensure banks and other financial institutions are more resilient and compliant, with more reforms expected over the next five years. The Basel III reforms were set to come into effect in January 2022, but will be delayed due to COVID-19 as regulators relax requirements to promote credit availability and lending in the economy.
The big four banks currently hold a large portion of the residential mortgage, consumer and business lending markets, emphasizing the financial system's reliance on major banks. APRA amplified the capital requirements on residential mortgage exposure for major banks and those using the internal ratings-based approach in July 2015. Capital adequacy will likely increase further as APRA seeks to bring capital benchmarks to an indisputably strong level, while also making changes to risk weights to discourage banks from issuing higher risk loans.
Post the findings concluded by the Financial Services Royal Commission, consequences are anticipated to continue weighing on revenue growth. Lending activity and credit growth may slow due to changes to the mortgage broking landscape, while financial institutions will likely implement tighter lending standards.
Tighter lending standards are forecast to affect retail consumers through mortgage lending, and loans provided to small and medium businesses.
Source: IBISWorld | Finance in Australia, July 2020
Online Shopping in Australia
Online retailers are forecast to increasingly expand into other sales channels over the next five years. This industry includes retailers that operate websites enabling consumers to purchase a range of products. Industry participants are either pure-play online retailers or bricks-and-mortar stores with an online presence.
Industry Report
Online Shopping in Australia
Online retailers are forecast to increasingly expand into other sales channels over the next five years.
OVERVIEW
Online retailing has flourished due to changing consumer attitudes over the past five years. Declining discretionary incomes has resulted in consumers fostering a bargain hunting trend, increasing the demand for online shopping.
Improvements and increases in internet connectivity has helped drive industry growth. Online retailers have attracted greater demand as consumers have become more tech savvy and computer literate. Improvements in the security and reliability of online payment systems have changed perceptions of ecommerce, transforming it into a credible shopping medium.
Online retailers allow consumers to search, compare and evaluate options from a variety of providers. Trust, reputation, warranties and add-on services increasingly influence consumers. Furthermore, offering a high standard of customer service on shopping websites is a key issue for the industry. Consumers are demanding greater transparency regarding delivery charges and enhanced information about products.
Industry operators face intense competition from traditional bricks-and-mortar retailers, department stores and international online operators.
Consumers can only undertake online shopping through devices connected to the internet, which means that digital technology is an essential aspect of the industry. The rapidly increasing use of smartphones and tablets has prompted the development of mobile-optimised websites and applications. Mobile commerce enables retailers to connect and interact with customers through social media, messaging and marketplace platforms.
OUTLOOK 2020 - 2025
Consumers seeking convenience and competitive prices are expected to drive demand for online goods and services. Industry firms are anticipated to reach broader audiences due to faster broadband speeds, rising internet penetration and increased transaction security.
The industry is projected to benefit from further technological change. Operators are anticipated to use advancements in computer programs and website design to allow consumers to virtually try on clothing, footwear and accessories. These advancements may include using cameras to take precise body measurements.
New payment platforms such as Afterpay have gained significant momentum and are forecast to continue driving sales. These new payment platforms have gained popularity among younger consumers.
Online retailers are anticipated to increasingly expand into other sales channels. Pure-play online retailers are increasingly using multiple channels to engage and connect with customers, and some are opening flagship bricks-and-mortar stores that typically act as showrooms for their products. Hybrid retail models are projected to grow in popularity, increasingly blurring the line between traditional and online retail.
Industry players are expected to continue facing external competition from department stores, traditional retailers and foreign websites.
Industry profit margins are forecast to rise as operators focus on reducing overhead costs, improving supply chain processes and inventory management, and upgrading warehouse and fulfilment distribution.
Online retailers are likely to increase their operational efficiency as they become more established in their respective markets. The nature of online retail typically allows firms to boost sales volumes as online traffic increases, without an equivalent increase in staff. However, the industry is projected to rely on highly skilled labour to retain market share in an increasingly competitive environment, increasing wage costs over the next five years.
Online enterprise numbers are projected to grow slightly over the next five years as companies increase their online operations and bricks-and-mortar retailers develop online platforms. However, firms are likely to increasingly outsource their IT operations, limiting growth in employment over the period.
Source: IBIS World | Online Shopping in Australia, May 2020
Note: The industry does not include the sale of goods or services by agents that do not take ownership of the goods and services, or the sale of goods by individuals.
Pulp, Paper and Paperboard Manufacturing in Australia
The Pulp, Paper and Paperboard manufacturing industry is anticipated to continue experiencing difficult trading conditions over the next five years. Industry revenue is influenced by demand fluctuations from domestic downstream markets in the following industries: paper product …
Industry Report
Pulp, Paper and Paperboard Manufacturing in Australia
The Pulp, Paper and Paperboard manufacturing industry is anticipated to continue experiencing difficult trading conditions over the next five years.
OVERVIEW
Industry revenue is influenced by demand fluctuations from domestic downstream markets in the following industries: paper product manufacturers, printing industries, paper product wholesalers, food and beverage manufacturers and publishing industries.
Demand for printed reading materials has declined over the past decade due to the availability of electronic and online alternatives, this has limited demand for major players supplying this market.
Increased awareness of environmental issues can negatively affect consumer demand for paper products. Industry operators have responded by upgrading facilities to reduce water usage, increase renewable energy usage and reduce the industry's carbon footprint. Major players Visy and Opal have embraced the use of recovered materials such as pulp and recycled paper and paperboard products to replace inputs that would otherwise be purchased from third parties. These efforts help to create a positive image for operators and the industry, supporting demand for industry products manufactured from recycled materials.
The value of the Australian dollar influences industry demand in international markets. A depreciation of the Australian dollar reduces the cost of industry products for overseas buyers, typically leading to a rise in demand for industry exports.
OUTLOOK 2020 - 2025
Slowing domestic demand and ongoing product substitution in downstream markets are projected to place further downward pressure on industry revenue. The industry’s operators are expected to increase their focus on export markets and produce higher value-add products, such as recycled paper and paperboard, to help offset declining demand.
Demand from newspaper and book publishers will continue to fall as circulation and readership continues to decline due to rising competition from digital media and ongoing pressure from electronic devices. Additionally, demand from printing services is projected to decrease as Australian offices continue to shift towards paperless operating models.
Food and beverage manufacturers represent an important downstream market and demand from this market is anticipated to increase. The construction sector is forecast to grow, boosting demand for paperboard used to produce gypsum plasterboard products and other paper-based construction materials.
Recovery from COVID-19 is anticipated to support profit margin growth, as operators can increase output in response to higher demand from downstream markets, reducing per unit costs of production. Increased investments to reduce energy consumption is also expected to support industry profit margins.
International paper manufacturing sectors are anticipated to expand, which represents both an opportunity and a threat to industry operators. Export volumes are projected to increase as China, New Zealand and the United States are anticipated to continue to generate significant demand for industry exports. A projected appreciation of the Australian dollar is forecast to support rising import penetration, challenging local players. Additionally, the quality of imported products is expected to improve over the period, as paper-producing countries upgrade their technology and increase capital investments. As a result, competition from imports is expected to rise.
The industry's major players are anticipated to upgrade facilities to increase productivity and efficiency. These developments are anticipated to deliver greater economies of scale to the firms and strengthen production output over the next five years. Furthermore, both companies have announced plans for further expansion over the period. Visy announced that it intends to invest $2.0 billion over the ten years through 2027-28 in the domestic market, creating approximately 5,000 jobs.
Source: Ibis world | pulp, paper and paper board manufacturing in Australia, June 2020
Real Estate Services in Australia
The Real Estate Services industry is forecast to expand over the next five years by 2.4% to $29.7B. Demand is mainly influenced by the level and value of property sales and leasing activity. Factors influencing the number of property transactions include property values and yields, interest …
Industry Report
Real Estate Services in Australia
The Real Estate Services industry is forecast to expand over the next five years by 2.4% to $29.7B.
OVERVIEW
Residential housing prices are expected to rise, driving an increase in the number of housing transfers. However, forecast increases in loan rates and growing competition from digital competitors are anticipated to constrain revenue growth.
Strong consumer demand and higher sales prices will boost operators' commissions, although this increase will likely be offset by increased investment in technology to enhance their operations. Online listings are anticipated to increasingly compete with the industry's services, as they allow vendors to bypass real estate agents.
The commercial property market is anticipated to strengthen. Demand for office space is projected to increase as Australia continues to transition to a service-based economy. In addition, demand for industrial real estate is anticipated to grow marginally. Demand for retail space affiliated with food consumption, such as restaurants, cafes and bars, is likely to remain higher than demand in the wider retail property market.
Technological advancements are likely to increase the popularity of virtual property tours. Operators are also anticipated to adopt new application processes that incorporate customers' smartphones and dedicate more of their marketing budget to online initiatives.
External competition trends that have developed over the past five years, primarily relating to the digitisation of real estate services, are expected to continue. Several real estate advertising websites have caused controversy by using their increasing market power to raise advertising costs, using their data for free property valuations and approaching vendors directly to upsell advertisements. Some property operators have responded by withholding price advertisements from their websites, which has affected property valuation data. The industry's new operating environment will require firms to reassess their business models to ensure they retain a significant role in selling and managing property.
Employment is forecast to rise over the next five years, with many operators responding to rising competition by employing additional staff with greater expertise and technical knowledge to retain or win customers.
Retail Industry in Australia
We talk Department Store and Consumer Goods. Revenues are forecast to grow marginally over the next five years by 1.4%, as consumer goods retailers will continue to face strong competition from pure-play online stores that stock similar items at low prices.
Industry Report
Retail Industry in Australia
Consumer Goods Retailing in Australia: Revenues are forecast to grow marginally over the next five years by 1.4%, as consumer goods retailers will continue to face strong competition from pure-play online stores that stock similar items at low prices.
Department Stores in Australia: Revenues are forecast to decline over the next five years by 2.1%, as department store retailers will continue to face strong competition from online stores and the expansion of international retailers.
CONSUMER GOODS RETAIL Overview
Subdivision revenue is forecast to grow 1.4% over the next five years to $161.2B. Increasing disposable incomes and improvement in the retail trading landscape are projected to support greater demand over the next two years as the economy recovers from COVID-19. Continued advances in technology will also drive demand for a range of technology-based goods. However, big-box retailers, international retail chains and department stores are anticipated to increase competition for specialised retailers.
While this trend is forecast to encourage greater demand from bargain hunters, increasing price-based competition will put pressure on profit margins. The popularity of online shopping is forecast to continue increasing, negatively affecting traditional retailers. The number of subdivision establishments per enterprise is anticipated to rise, as smaller players exit the industry and major players expand strong brands. Industry employment numbers are projected to rise, with firms anticipated to offer improved customer service to better compete with online stores.
Online shopping and auction websites will continue to influence sales across individual product categories. Although price competitiveness is important, choice and convenience are also projected to drive consumers to shop online. In addition, the popularity of smartphones is expected to fuel demand for mobile ecommerce. Growth in the number of consumers opting to use mobile devices for transactions and payments is anticipated to boost online sales. Consumer demand for cosmetics and toiletries, computers and software, and pharmacy goods is projected to grow. Consumer electronics will likely benefit from new products entering the market as a result of constant technological advances.
Cosmetic and toiletry retailers benefit from consumers' ability to inspect and test products in-store, making them better able to compete against online-only retailers. Pharmacies are also projected to perform well. Giant one-stop shops will likely cater to diverse range of consumers, and niche operators will focus on servicing smaller markets. Businesses are anticipated to roll out new formats and concept stores over the period. Operators will focus on lowering the cost of doing business, driven by productivity improvements; enhanced technologies; improved distribution strategies; and more efficient product sourcing. In addition, wage costs are forecast to decline as firms increasingly employ part-time and casual workers.
Department Store RETAIL Overview
Due to rising competition, industry revenue is forecast to decline 2.1% over the five years through 2024-25, to $16.2B. intensifying competition from specialist retailers, online stores and international retailers is projected to constrain revenue growth. Aggressive store expansion strategies of major international clothing labels is also anticipated to present increasing competition.
Existing players are forecast to continue re-evaluating their store footprint and close underperforming stores. This decision will allow players to better reinforce their brand image and grow market share. High competition is anticipated to continue forcing operators to lower prices to attract customers. However, a strong focus on refining supply-chain efficiencies and inventory management is forecast to minimise profit declines.
Department stores are predicted to bypass wholesalers and source products directly from manufacturers in countries with lower manufacturing costs, allowing operators to streamline supply-chain processes and eliminate intermediary costs.
Retailers are forecast to continue investing in staff to differentiate themselves from online competitors, as companies focus on enhancing their customer experience, and making the stores an interactive and unique environment. This is anticipated to place upward pressure on average wages, however, the number of employees per store is forecast to decline, as technological developments reduce the industry's reliance on staff to complete manual tasks.
The increasing popularity of online shopping, especially on overseas websites, is forecast to intensify the competitive pressures. Ongoing cautious consumerism, which is driving the preference for online bargain hunting, is projected to support demand for the goods that foreign retailers sell.
The rapid store expansion of several international players is forecast to significantly change the clothing retail market. Industry operators are projected to face fierce competition from these companies as they have access to significantly larger supply chains that can give them higher quality brand positioning and allow them to offer lower prices.
Cakes & Pastry Manufacturing in Australia
The industry is forecast to grow marginally over the next five years by 0.8% . Volatile input prices and strong external competition have been challenging for industry operators. Over the next five years, industry players are expected to face challenging operating conditions due to …
Industry Report
Cakes & Pastry Manufacturing in Australia
The industry is forecast to grow marginally over the next five years by 0.8% . Volatile input prices and strong external competition have been challenging for industry operators.
OVERVIEW
Over the next five years, industry players are expected to face challenging operating conditions due to increasing competitive pressures and changing food consumption trends. In response, operators will have to innovate new products and meet changing dietary and lifestyle trends.
Health and nutritional concerns are anticipated to drive consumption choices, while trends in product convenience, durability and portability will also be important.
Operators will need to cultivate relationships with customers in alternative distribution channels, to offset many consumers moving away from traditional pre-packaged cakes and meat pies. These new markets, product line extensions and higher priced premium products will contribute to projected industry revenue growth.
Profit margins are forecasted to be constrained by Input costs, rising development costs associated with introducing innovative foods and Intensifying competition from instore supermarket bakeries and hot bread shops.
Higher spending on product innovation, advertising and marketing is anticipated to partially offset gains from production efficiencies. However, an increased focus on higher margin functional foods will likely help offset some of these pressures on profitability. Additionally, a focus on high-priced premium products will likely help operators deal with increasing competition from private-label products.
Imported products will represent another competitive threat, with imports forecast to account for just over one-third of domestic demand in 2025.
Due to these trends, industry restructuring will likely continue over the next five years and key players could change hands.
Due to intensifying competition, both industry establishment and employment numbers are projected to decline over the next five years.
Private Equity in Australia
Although Private Equity revenue is forecast to decline 3.5% in 2020-2021 due to COVID-19 disruptions, it is projected to grow 2.6% over the years through to 2025-26 to $725.3m. Private equity firms are responsible for investment management in private companies. They may invest their own capital and/or raise funds from external investors to invest on their behalf.
Industry Report
Private Equity in Australia
Although Private Equity revenue is forecast to decline 3.5% in 2020-2021 due to COVID-19 disruptions, it is projected to grow 2.6% over the years through to 2025-26 to $725.3m.
Private equity firms are responsible for investment management in private companies. They may invest their own capital and/or raise funds from external investors to invest on their behalf. Generally an investment period is 4-5 years, during which they commit resources to maximising the company’s enterprise value, before selling it for a capital gain.
OVERVIEW
Over the years, successful industry players have built their market share based on their reputation to raise larger pools of funds. Market share is based on the size of funds managed by each of its participants. Assets are more indicative of the investment power and size of a fund, and therefore better reflect the size of a private equity firm relative to its competitors.
The industry’s life cycle is in Growth phase. The industry is growing faster than the overall economy, increases in superannuation are flowing through to private equity, boosting funds under management; and sectors such as technology and health (candidates for early-stage investment) are growing.
The pressure for Private Equity firms to achieve profitable returns is critical, even more so in today’s economic environment. In order to be certain they can achieve consistent returns in the fund they must focus on purchasing the investment at the right price and focusing on accelerating value creation initiatives to ensure that they can sell at a significant increase in multiple.
Value Creation in the Private Equity Industry
Private Equity firms must have a clearly defined playbook which contains value creation initiatives to support the investment thesis. This provides an advantage in knowing what to pay and the level of risk. The playbook should be refreshed and prioritised for each investment. An asset’s full potential is realised through a holistic approach that explores optimising operational performance, enhancing strategic capabilities and effective capital management. The efficient use of capital is also a critical component of valuing an asset’s full potential. Capital deployment is an important foundation to support strategic and operational initiatives.
Software Publishing in Australia
With tech constantly evolving, the industry is expected to continue to grow. The demand for industry services is forecast to surge post the recovery of COVID-19 as businesses are likely to expand their remote working capabilities. Businesses are anticipated to expand their current software solutions in-line with the growing reliance on cloud computing and other tech advances…
Industry Report
Software Publishing in Australia
The Software Publishing industry in Australia is expected to grow +9.4% in the years 2020-2025. Primary activities of Software Publishers: funding software development, developing computer software for mass production, distributing computer software and software marketing.
Note: this industry report only contains players that develop software locally in Australia
OVERVIEW
With tech constantly evolving, the industry is expected to continue to grow. The demand for industry services is forecast to surge post the recovery of COVID-19 as businesses are likely to expand their remote working capabilities.
Businesses are anticipated to expand their current software solutions in-line with the growing reliance on cloud computing and other tech advances, placing increased pressure on businesses to upgrade their software to maintain efficient business operations.
Larger players' profit margins are likely to grow, as they build economies of scale and leverage their reputations to charge higher prices. Employment is forecast to increase as publishers require more staff to meet demands for developing and maintaining current and new applications. However, the number of businesses in the industry is anticipated to decline as rising regulations raise the industry's barriers to entry.