Los Angeles, CA (PRWEB) October 23, 2012
Escalating external competition from online and mainstream adult product retailers, which increasingly carry vibrators and other erotica, has reduced the stigma from shopping at adult stores. As consumers see more sex paraphernalia featured on TV and in stores like Walmart, such items shift from taboo toward more of a social norm, says IBISWorld industry analyst Agata Kaczanowska. For example, she points to Fifty Shades of Grey, an international best-selling book that features erotica that popularized certain sex-enhancement products and, thus, helped industry sales spike an estimated 11.6% in 2012 to $ 253.6 million. This one-year jump has pushed annualized revenue growth to 13.8% annually on average since 2007. Countercyclically, the Adult Stores industry performed especially well when disposable income dipped during the Great Recession because consumers were less likely to spend on substitute entertainment, like eating out or going to the movies.
Nonetheless, tighter consumer budgets did result in more sales of cheaper items during the past five years. Heightened consumer price sensitivity and external competition also pressured adult store operators to offer promotional pricing. Although this boosted sales volumes, profit contracted. Furthermore, underperforming retailers exited the Adult Stores industry during the Great Recession as a result of escalating competition, a dip in profitability and tight lending conditions, Kaczanowksa says. Consequently, the number of enterprises expanded at a slower rate than revenue over the past five years. The industry is highly fragmented, with a large number of small players that are privately owned and operated. During the past five years, market share concentration has risen due to external competition from e-commerce sites that sell sex toys and pornographic material. As a result of this increased demand from online retailers, some small independently owned adult stores have been forced to close down. This trend has forced poorly performing establishments to consolidate or exit the industry completely. Social trends have boosted demand for industry stores, though, and name-brand stores such as Adam & Eve and Hustler Hollywood are becoming more desirable.
Through 2017, the industry and revenue growth is anticipated to benefit from rising disposable income and growing social acceptance of sex paraphernalia. Higher demand and disposable income are also estimated to facilitate profit expansion. Nonetheless, adult stores will continue to compete with an increasing number of mainstream retailers and will have to rely on superior staff and a wide selection of specialty products to entice consumers to return to their establishments. For more information, visit IBISWorlds Adult Stores in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes companies that primarily retail sex paraphernalia, or erotica, including pornographic DVDs and magazines and sex toys and enhancement products. Stores that primarily sell movies are excluded from the industry. It also excludes revenue from all goods sold off-premises, such as online, through mail-order catalogs or over the phone.
Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
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Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios
About IBISWorld Inc.
Recognized as the nations most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
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