The state of various industries in Australia can be very unpredictable as they are subject to changing market conditions. Achieving success for your business will depend on the health of these industries, and how you adapt to the current situation to gain a competitive advantage.
A Snapshot of Australia’s Industrial Topography
Last year, professional services firm Deloitte identified various industries in Australia that would enjoy continuous growth in the coming 20 years. And in the months since the study was conducted, market changes have already forced some industries to change course. Those that found favour with the economy are considered “winners,” while those that didn’t are labelled as “losers.” Depending on where your business sits, you may need to apply certain strategies to be successful.
1. Tourism – The tourism industry is expected to reach its 2020 growth target of AUD 115 billion after an influx of tourists from Asia alone last year. Apart from the shopping sprees and beach holidays, international tourists are visiting Australia for its arts and culture, according to the Arts Nation study. Realising the strong demand from one side of the world, Tourism Australia and Virgin Australia teamed up and produced an ad showcasing the country’s best spots in the recent Oscars awarding ceremony in the U.S. to target more American tourists.
For professionals and businesses in tourism, these market conditions offer an opportunity to leverage the power of their networks and create strategic connections to expand their business as well as explore new markets while the industry is booming.
2. Tech Start-ups – The tech start up industry continues to show potential as several businesses have branched out to other countries, while others have launched themselves in the stock market. In fact, Google Australia and PricewaterhouseCoopers predict that the start-up industry could add 4% to the GDP by 2033. The growth of tech start-ups has not gone unnoticed by Salesforce, who is now working to equip tech entrepreneurs with tools to keep their businesses strong.
It is therefore advisable for owners of tech ventures to keep their eyes and ears open on the developments in the industry that will help predict the impact on their business. When opportunities similar to what is offered by Salesforce emerge, it is advisable to take advantage of them to maximise growth.
3. Broadcasting Industry – Amid the prevalence of short-form video content, the traditional sources of screen-based entertainment will remain a strong player in the market, according to Deloitte’s 14th annual Technology, Media & Telecommunications (TMT) predictions. For media companies, this provides assurance for their businesses, but this does not mean they will stop at their efforts to win younger customers using various devices. This is especially crucial as Netflix rolls out its services in Australia. Shaun James, CEO of IPTV provider Presto, said that they are not yet concerned with the impact of Netflix on their business, but they are studying how it has expanded its business overseas.
Others in the industry may need to adapt products and/or services to changes in technology to broaden their customer base and prevent losing market share.
4. Retail – In the retail industry, the competition is tight among players, resulting in continuous cost-cutting to win more customers. Supermarket chains Woolworths and Coles are trying to outlast each other in offering lower prices as the industry faces the a recent entrant from the U.S.: Costco Wholesale. Meanwhile, retailer David Jones plans to build more boutique stores to reach a wider net of customers, and take advantage of an uptick in retail spending. Aside from this, online retailers are also reporting a surge in sales. Local online retailers, in particular, are enjoying a strong demand as they are able to maintain great customer service and meet clients’ expectations.
Faced with a competitive landscape, retailers are becoming more creative in how they provide a greater shopping experience for their customers. For instance, Woolworths teamed up with eBay to provide a “click-and-collect” service for its clients. With this program, people can shop online at participating retailers and have their package delivered at a nearby Woolworths store. Aside from adding convenience to online shoppers, the initiative can help boost in-store sales.
To stay afloat in this industry, retailers will need to have a broader perspective of their customers’ needs. With online shopping being more popular nowadays, retailers need to leverage the power of technology to provide an optimum shopping experience online or in-store. You may also need to be attentive to the other needs of your patrons, to differentiate yourself from the competition. For instance, offering an array of financial products, exemplified by Coles and Woolworths, provides customers with one more reason to do business with you.
5. Wealth Management – Due to local and international demand, the wealth management sector in Australia is poised for growth. The need for financial management will become more crucial as the country’s population ages and more people consider retirement and elderly care. Meanwhile, the middle class population is growing exponentially in Asia, and people there can turn to Australia as a hub for financial services. As such, the wealth management industry has received the lowest risk rating in the Industry Rating Report of IBISWorld.
Companies and professionals within the financial management sector may take this opportunity to expand their training or build their skills to prepare for future growth. Consider putting systems in place to manage local customers while preparing for international demand. With Asia being the next, big clientele, you need to study the trends and cultures within this region to design the appropriate financial plans to maximise growth.
1. Mining – For 20 years, the mining industry has enjoyed rapid growth, mainly due to the strong demand of iron ore in China. Unfortunately, the demand has slowed down, and has adversely affected the industry. Crippling it further are the high royalty payments and taxes, which have discouraged mining investors. As a result, mining companies are vastly reducing their workforces.
With the mining sector at a standstill, it is advisable for businesses and professionals in this industry to re-examine their organisations to improve efficiency. There may be a need to shed redundant positions to reduce costs. Human resources personnel should focus on employees that have talent and develop them, to help the mining industry gear up for growth opportunities in the future.
2. Manufacturing– The manufacturing industry is struggling due to global competition and weak domestic demand. Cheap and imported goods from China are reducing the market share of local manufacturers, leading them to reduce their workforce. Apart from this, the demand from households and domestic businesses has declined, hurting the industry further. Though the weak Australian dollar drove exports, the weak domestic demand reversed its effect.
With weak market conditions, those in the manufacturing industry may need to adjust their operations and make it leaner to avoid major losses in profit. For instance, steel maker Bluescope Steel had to restructure its operations and shutter a blast furnace to maintain its business. On the other hand, furniture manufacturer Jimmy Possum had to establish its own stores after retailers stopped carrying its products in favour of cheaper, imported goods from China. It differentiated itself from the competition by using locally-sourced timber for its Australian-made chairs, rather than importing chairs from China.
3. Electricity and Fossil Fuels – Due to climate change, energy-efficient sources of electricity are gaining popularity. Of course, this threatens the market for fossil fuels and centralised electricity, making it a risky industry. More households are starting to turn toward solar panels and energy-efficient appliances to lessen their reliance on the grid, according to IBISWorld senior industry analyst Lauren Magner.
With energy-efficiency being the trend, businesses and professionals in the electricity industry should use this opportunity to expand the services they offer. This means including energy-efficiency technologies in the list of your services, to address the needs of your clients. Develop your knowledge on them, or partner with other businesses or energy-efficiency experts to gain a foothold in this relatively new market.
If you want your business to succeed in a changing economy, you need to have a mix of hindsight, creativity and resilience to make it work. You need to pay close attention to the trends within your industry to ensure that your company keeps up or ahead of competitors. Anticipate your customers’ ever-changing needs and address them, as this will help you set your business apart from your competition. To open new growth opportunities, be creative in harnessing technology to reap returns for your company, similar to how Woolworths involved eBay in its strategy. For entrepreneurs facing tough times, you may need to consider altering your operations to reduce costs, and focus on core business.