F3494B Household Appliance Wholesaling in Australia Industry Report 1 PDF

On the fritz: Strong price competition has
caused revenue and profitability to decline

This report was provided to
University of Melbourne (2134185306)
by IBISWorld on 25 October 2019 in accordance with their licence agreement with IBISWorld
IBISWorld Industry Report F3494b

Household Appliance
Wholesaling in Australia
March 2019 James Philip Caldwell
2 About this Industry 15 Major Markets 26 Miele Australia Pty Limited

2 Industry Definition 16 International Trade 26 Breville Group Limited
2 Main Activities 17 Business Locations
2 Similar Industries 27 Operating Conditions
3 Additional Resources 19 Competitive Landscape 27 Capital Intensity
19 Market Share Concentration 28 Technology and Systems
4 Industry at a Glance 19 Key Success Factors 28 Revenue Volatility
19 Cost Structure Benchmarks 29 Regulation and Policy
5 Industry Performance 21 Basis of Competition 29 Industry Assistance
5 Executive Summary 21 Barriers to Entry
5 Key External Drivers 22 Industry Globalization 30 Key Statistics
6 Current Performance 30 Industry Data
8 Industry Outlook 23 Major Companies 30 Annual Change
11 Industry Life Cycle 23 Samsung Electronics Australia Pty Ltd 30 Key Ratios
24 Electrolux Home Products Pty Limited
13 Products and Markets 24 LG Electronics Australia Pty Limited 31 Jargon & Glossary
13 Supply Chain 25 Fisher & Paykel Australia Holdings
Limited
13 Products and Services
26 Sony Australia Limited
15 Demand Determinants
www.ibisworld.com.au | (03) 9655 3881 | info@ibisworld.com

WWW.IBISWORLD.COM.AU Household Appliance Wholesaling in Australia March 2019 2
About this Industry
Industry Definition Industry organisations primarily microwave ovens, fridges and freezers),
wholesale household appliances such as vacuum cleaners, washing machines,
TVs, DVD players, air conditioners, clothes dryers, sewing machines and
kitchen appliances (e.g. stoves, ovens, stereo equipment.
Main Activities The primary activities of this industry are

Air conditioner, fan and heater wholesaling
Household floor-polisher wholesaling
Kitchen appliance wholesaling
Radios and TV (and parts) wholesaling
Refrigerator wholesaling (except commercial refrigeration equipment)
Sewing machine wholesaling
Electric shaver wholesaling
Domestic vacuum cleaner and washing machine wholesaling
DVD player and personal MP3 player wholesaling
The major products and services in this industry are

Air conditioners and heaters
Other audiovisual equipment
Other household electrical appliances
Refrigerators, freezers and dishwashers
Stoves, ovens and microwaves
Televisions
Washing machines and dryers
Similar Industries C2429 Audio Visual Electronic Equipment Manufacturing in Australia

Firms in this industry manufacture audio equipment, radios and TV receivers.
C2440 Household Appliance Manufacturing in Australia

This industry includes manufacturers of household appliances such as kettles, vacuum cleaners, heaters and
air conditioners.
F3494a Telecommunications and Other Electrical Goods Wholesaling in Australia

Firms in this industry wholesale a range of telecommunications and industrial electronic equipment products.
F3419 Mining and Industrial Machinery Wholesaling in Australia

Companies in this industry wholesale mining and industrial machinery.
G4221a Domestic Appliance Retailing in Australia

Establishments in this industry retail household appliances (except computers and software).
Provided to: University of Melbourne (2134185306) | 25 October 2019

About this Industry
Additional Resources For additional information on this industry

www.abs.gov.au
Australian Bureau of Statistics
www.airah.org.au
Australian Institute of Refrigeration, Air Conditioning and Heating
www.arctick.org
Australian Refrigeration Council
www.energyrating.gov.au
Equipment Energy Efficiency Program
IBISWorld writes over 500 Australian

industry reports, which are updated
up to four times a year. To see all
reports, go to www.ibisworld.com.au

Industry at a Glance
Household Appliance Wholesaling in 2018-19
Key Statistics Revenue Annual Growth 14–19 Annual Growth 19–24

Snapshot
$9.5bn 1.8% -0.5%
Profit Wages Businesses
$312.5m $960.0m 741

Revenue vs. employment growth Demand from domestic appliance retailing
Market Share
Samsung Electronics 10 10
Australia Pty Ltd
9.0% 5
5
Electrolux Home 0
% change
% change
Products Pty 0
-5
Limited 7.4%
-5
LG Electronics -10
Australia Pty
-10 -15
Limited 6.3% Year 11 13 15 17 19 21 23 25 Year 12 14 16 18 20 22 24
Revenue Employment
SOURCE: WWW.IBISWORLD.COM.AU
p. 23
Establishments
0.9% 0.8%
Key External Drivers 4.8% TAS ACT
Demand from domestic SA
appliance retailing 8.4% 0.3%
NT
WA
Real household
discretionary income
Demand from residential 38.9%
NSW
building construction
Trade-weighted index
16.5%
QLD
Consumer
sentiment index
p. 5
29.4%
VIC SOURCE:
WWW.IBISWORLD.COM.AU
Industry Structure Life Cycle Stage Decline Regulation Level Light

Revenue Volatility Low Technology Change Low
Capital Intensity Medium Barriers to Entry High
Industry Assistance Low Industry Globalisation High
Concentration Level Low Competition Level High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 30

Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive Summary The Household Appliance Wholesaling affected pricing throughout the supply
industry has faced a difficult trading chain. In addition, many larger retailers
environment over the past five years. of industry products are increasingly
Fluctuating consumer sentiment, a bypassing wholesalers and purchasing
depreciating Australian dollar and rising their stock direct from manufacturers.
competition have contributed to a decline These trends have led to a decline in
in industry revenue over the period. industry prices, at the expense of
However, increased demand stemming industry profitability.
from greater residential construction The industry’s performance is
activity has provided opportunities for projected to improve over the next five
some industry operators to grow. years, reflecting stronger demand for
Industry revenue is expected to decline at household appliances at the retail level.
an annualised 0.5% over the five years The release of new, innovative products,
including more energy-efficient
appliances, is anticipated to drive
Strong
price competition has contributed to domestic demand for household
appliances and audiovisual products
declining industry revenue and profitability over the period. In addition, rising
demand from residential building
through 2018-19, to $9.5 billion. This construction over the next five years is
includes an anticipated decline of 2.5% in forecast to boost demand for larger
the current year, attributable to a industry products, such as fridges and
downturn in demand from residential cookers. However, wholesale bypass
building construction. trends will likely continue to pose a
Changes in the way consumers shop significant challenge to industry firms,
have affected industry operators over the as department stores and specialist
past five years. Consumers are appliance retailers increasingly source
increasingly purchasing industry products directly from manufacturers to
products online, or using the internet to reduce costs. Overall, industry revenue
compare prices. Online shopping has is forecast to increase at an
made it easier for consumers to find good annualised 1.8% over the five years
deals at the retail level, which has through 2023-24, to $10.4 billion.
Key External Drivers Demand from domestic more on appliances. Real household
appliance retailing discretionary income is expected to rise
Demand from domestic appliance in 2018-19, presenting an opportunity for
retailing affects the industry’s industry expansion.
performance. As retailers often purchase
their merchandise from wholesalers, Demand from residential
greater demand for household building construction
appliances at the retail level typically Trends in the residential building
increases industry revenue. Retail construction market influence demand
demand for household appliances is for household appliances at the retail
expected to fall in 2018-19. level. A rise in housing construction
activity enhances the industry’s revenue
Real household discretionary income growth potential as owners and tenants
Demand for household appliance of newly built properties often purchase
products is sensitive to movements in new appliances. Demand from residential
real household discretionary income. building construction markets is expected
When average household discretionary to decline in 2018-19, posing a threat to
income is high, consumers tend to spend industry revenue.

Key External Drivers Trade-weighted index Consumer sentiment index

continued The trade-weighted index measures the Consumer sentiment indicates the way
strength of the Australian dollar against a consumers feel about their present and
basket of its major trading partners’ future financial situation, and the
currencies. As many industry wholesalers broader economy. Negative consumer
import their products, a weaker sentiment is often associated with lower
Australian dollar makes it more industry sales volumes as households
expensive to source goods from overseas. increase their savings and reduce, halt
As a result, a depreciating Australian or delay spending on household
dollar can reduce industry profitability. appliances. Consumer sentiment is
The Australian dollar is anticipated to anticipated to decline but remain
depreciate in 2018-19. positive in 2018-19.
Demand from domestic appliance retailing Real household discretionary income
10 6
5 4
0 2
% change
% change
-5 0
-10 -2
-15 -4
Year 12 14 16 18 20 22 24 Year 13 15 17 19 21 23 25
Current The Household Appliance Wholesaling

industry has faced challenging conditions
Falling per-unit prices for some
products have negatively affected
Performance over the past five years. While household industry profitability over the past five
incomes have risen over the period, years. While unit sales for various
somewhat boosting retail demand for appliances (including TVs) have
household appliances, the growing trend increased over the period, overall
of wholesale bypass has limited the revenue has fallen as many industry
positive effects of this trend for industry operators have had to heavily discount
operators. In addition, demand from their stock to remain competitive. In
residential building construction has some cases, this has meant that
fluctuated significantly over the past five wholesalers have distributed more stock
years, limiting demand for industry for a lower return. In addition, the price
products. Overall, industry revenue is of imported products has increased due
expected to fall at an annualised 0.5% to the Australian dollar depreciating over
over the five years through 2018-19, to the past five years, constraining industry
$9.5 billion. This includes an anticipated profit margins. This trend has been
decline of 2.5% in the current year, especially relevant for TVs, as product
reflecting a significant decline in demand innovations and new technologies have
from residential building construction. substantially increased per-unit costs.

Wholesale bypass The increasing prevalence of wholesale struggled to remain profitable. As a

bypass, which involves retailers sourcing result, industry enterprise numbers have
products directly from manufacturers declined over the past five years. Larger
instead of wholesalers, has negatively players that benefit from large economies
affected the industry over the past five of scale have been able to somewhat
years. Wholesale bypass, used most protect themselves from wholesale
effectively by discount department stores bypass due to their ability to offer lower
such as Kmart, has weakened industry prices. Consequently, both the industry’s
revenue growth and driven down profit market share concentration and price-
margins. Due to this trend’s rising based competition have increased over
prevalence, smaller wholesalers have the period.
Demand trends A major source of demand for household over the period, it is expected to decline
appliances and audiovisual equipment is over the two years through 2018-19.
from newly constructed homes. When This decline is largely due to a slowdown
moving into a newly constructed home, in multi-unit apartment and townhouse
consumers generally buy new household construction activity in response to
appliances such as refrigerators, oversupply conditions.
washing machines, microwaves, air Industry operators have also struggled
conditioners and TVs. New residential against fluctuating consumer sentiment
construction therefore increases over the past five years. Consumer
consumer spending on household sentiment has declined overall over the
appliances, which in turn affects period, and was negative for much of the
industry revenue. The Australian past five years. When consumer
population has steadily grown over the sentiment is negative, consumers are less
past five years, contributing to growth in likely to make discretionary purchases,
the number of new residential properties including purchases of household
constructed. Low interest rates have also appliances, or will limit spending to sale
provided stimulus for the residential periods. Negative consumer sentiment
building construction sector over the over the first half of the past five-year
period. As a result, residential building period constrained industry revenue
construction activity has increased over growth. However, consumer sentiment
the past five years, supporting demand recovered in 2017-18 and has been
for industry products at the retail level. positive since, suggesting consumers
However, while demand from residential have become more likely to purchase or
building construction has risen overall replace household appliances.
Changing retail The retail environment for household addition, strong growth in online sales by
environment appliances has changed significantly over both bricks-and-mortar and internet-only
the past five years. Despite rising retailers has further increased competition
discretionary incomes, fluctuating in the downstream retail market over the
consumer sentiment over the period has past five years. For example, online-only
curbed household spending on industry operator Kogan.com imports and sells TVs
products, causing retailers to cut prices to at highly competitive prices. Increased
clear inventory. This trend has intensified competition in downstream markets has
price-based competition at the retail level, driven industry operators to lower prices
with department stores and traditional over the period.
retailers pursuing aggressive discounting Rising price-based competition has
strategies to retain their market share. In contributed to the decline in industry

Changing retail revenue over the past five years. Many have filtered upstream through
environment traditional bricks-and-mortar retailers weaker demand for industry
have struggled to adapt to the wholesalers. As a result, industry
continued
changing operating landscape. Subdued operators have had to cut prices to
demand and tough trading conditions at remain competitive, limiting their
the retail level over the past five years ability to expand revenue.
Profitability and Rising price-based competition has also years, as less profitable companies have
participation eroded industry profitability over the past either merged their operations or exited
five years, as industry operators have cut the industry. Industry participants have
prices to remain competitive. In addition, increasingly invested in automation
industry profitability has come under technologies over the period to reduce
increasing pressure from a depreciating their reliance on manual labour and
Australian dollar over the period. Industry protect their profit margins.
operators source most of their products Consequently, industry employment
from overseas manufacturers. When the numbers have declined over the past five
Australian dollar depreciates, imported years. However, while employee numbers
products become comparatively more have fallen, wage costs have risen as a
expensive. Intense industry competition share of revenue over the period as firms
has limited the ability of operators to pass have required skilled IT professionals to
on these cost increases, which have maintain their new automated
consequently reduced profit margins. technologies. As these employees
Declining profitability has contributed command higher wages, this trend has
to the contraction in the number of pushed the industry’s average wage
industry operators over the past five higher over the past five years.
Industry The Household Appliance Wholesaling

industry’s performance is projected to Industry revenue
Outlook recover over the next five years,
10
reflecting improving demand conditions.
Residential building construction is
5
forecast to rise over the period, driving
industry growth. In addition,
% change
household incomes are anticipated to 0

rise over the next five years, and the
consumer sentiment index is projected -5
to remain positive. Upstream innovation
in household appliance technology is -10
also anticipated to be a significant driver Year 11 13 15 17 19 21 23 25
of industry revenue growth over the
period. Products that offer consumers SOURCE: WWW.IBISWORLD.COM.AU
enhanced performance, additional

convenience or improved energy and increasing wholesale bypass over
efficiency will likely benefit from rising the next five years. Overall, industry
demand. However, industry operators revenue is forecast to rise at an
are anticipated to continue struggling annualised 1.8% over the five years
with intense price-based competition through 2023-24, to $10.4 billion.

Competition and Rising household discretionary incomes

innovation are anticipated to encourage Innovativeproducts that
manufacturers to develop premium
product lines over the next five years.
offer added convenience or
Technological upgrades that introduce greater energy efficiency
new features, improve quality and make will boost demand
products easier to use are forecast to
occur across most industry products over
the period. Additionally, trendy colours, Home computing and consumer
finishes and designs are all becoming electronics products are projected to
increasingly important points of converge over the next five years.
differentiation for industry goods. Computers and audiovisual devices are
Consumers are generally willing to pay a becoming increasingly integrated into
premium for these high-end products, home networks. Household appliance
allowing for a slight increase in industry manufacturers, such as Electrolux and
profit margins over the period. However, Samsung, are introducing appliances that
growth in industry profit margins is can be remotely controlled through
anticipated to be limited by intense Wi-Fi. Sales of these products are
price-based competition at the lower end forecast to grow strongly over the next
of the market. five years.
Consumer trends Demand from residential building the type of appliances and audiovisual
construction is projected to rise over the equipment that consumers purchase.
next five years, supported by a growing Dual-income families tend to have
population. This trend is anticipated to higher discretionary incomes and are
drive industry revenue growth over the therefore likely to spend more on
period. Increased home renovation appliances. The number of dual-income
activity and a rise in capital expenditure families is projected to increase over the
on private dwellings are forecast to next five years. However, growing
further stimulate demand for industry demand for meals prepared outside the
products, particularly major appliances home and an increasing trend towards
such as ovens, washing machines, precooked meals may reduce demand for
dishwashers and TVs. some cooking and baking appliances
Broader social trends will influence over the period.
Retail spending Rising household discretionary incomes a notable shift in economic conditions
are anticipated to encourage increased could impinge on forecast industry
consumer spending over the next five growth. For example, weaker income
years. In particular, consumers are growth or a fall in the value of
forecast to spend more on higher value household assets would negatively affect
goods, such as washing machines, household incomes and encourage
refrigerators and air conditioners. Sales consumers to save, thereby reducing
of smart TVs are projected to rise over consumer spending on household
the period as online streaming sites such appliances. Spending on industry goods
as Netflix and Stan continue to increase may also be reduced if inflation rises
in popularity. and consumer prices rise at a faster rate
As consumer spending is tied to than household incomes. Any
macroeconomic conditions and the substantial increase in interest rates
performance of the Australian economy, could further reduce consumer

Retail spending spending on domestic appliances, air conditioners, refrigerators, water

continued hindering industry revenue growth. heaters, washing machines and
Increasing environmental awareness dishwashers. Appliances with new
and consumer concerns about rising features or operational upgrades are
energy and water costs are also projected typically less susceptible to price-based
to aid industry sales over the next five competition, providing growth
years. These factors are anticipated to opportunities for industry operators that
drive demand for more energy-efficient sell innovative products.
Profitability and Department stores and specialist industry’s reliance on labour. However,
participation appliance retailers are anticipated to the industry’s average wage is projected
continue bypassing wholesalers by to increase over the next five years as
purchasing equipment directly from operators retain their highly skilled
manufacturers or brand owners over the employees, such as IT professionals,
next five years, constraining industry whose expertise cannot be replicated with
revenue growth. Major retailers are technology. Nevertheless, this decline in
forecast to acquire their smaller employment numbers is forecast to
counterparts over the period, creating a reduce wage costs as a share of industry
more concentrated downstream market revenue over the period.
and giving retailers greater buying power The Australian dollar is projected to
to negotiate price discounts with appreciate slightly over the next five
wholesalers. These factors will likely years. This appreciation will likely make
discourage new players from entering the imported products comparatively
industry, which is projected to contribute cheaper, reducing purchase costs for
to a slight decline in industry enterprise industry operators. Falling purchase
numbers over the next five years. costs and a decline in wage costs as a
Industry employment is forecast to share of revenue are forecast to support a
continue falling over the period as modest improvement in industry
advances in technology reduce the profitability over the next five years.

Life Cycle Stage Product prices for many categories have
been declining due to intense price
competition in downstream markets
Industry value added is rising at
a slower rate than GDP
Many retailers are bypassing wholesalers
and dealing directly with manufacturers

Industry Life Cycle The Household Appliance Wholesaling smaller, less profitable industry
industry is in the decline stage of its participants to merge their operations or
economic life cycle. Industry value added, leave the market, contributing to a decline
Thisindustry is a measure of the industry’s contribution in enterprise numbers over the period.
in D
ecline to the overall economy, is forecast to rise Appliance manufacturing costs are
at an annualised 0.8% over the 10 years falling due to rising scale economies,
through 2023-24. This represents an standardisation of components,
underperformance relative to the overall improved supply chain management,
economy, with real GDP projected to increased automation and production
grow at an annualised 2.7% over the capacity moving from high-wage
same period. countries to low-wage countries. Some
Technological change in the industry retailers have sought to reduce inventory
has primarily focused on improving costs by sourcing products directly from
operating efficiencies. In addition, intense the manufacturer. As retailers look to
price-based competition has slowed save on intermediary costs, this
industry revenue growth and reduced wholesale bypass has somewhat softened
profit margins over the past five years. industry growth and is contributing to
Falling profitability has encouraged the industry’s declining nature.

Products & Markets

Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain KEY BUYING INDUSTRIES

G4111 Supermarkets and Grocery Stores in Australia
Grocery stores often sell small appliances, such as electric toothbrushes, electric shavers,
kettles and sandwich makers.
G4213 Houseware Retailing in Australia
Houseware retailers principally sell non-electric goods (such as china and cutlery), but many
also retail small appliances.
G4221a Domestic Appliance Retailing in Australia
Domestic appliance retailers sell appliances including audiovisual appliances and white goods.
G4231 Hardware and Building Supplies Retailing in Australia
Some hardware retailers sell appliances, including electric cooking appliances, floor-polishers
and household fans.
G4260 Department Stores in Australia
Large department stores, such as Myer and Kmart, retail appliances and electrical equipment.
G4271a Pharmacies in Australia
Some pharmacies retail small appliances, such as electric toothbrushes and shavers.
KEY SELLING INDUSTRIES

C2440 Household Appliance Manufacturing in Australia
Manufacturers in this industry supply both small and major appliances.
Products and Services The industry wholesales a range of Refrigerators, freezers and dishwashers
electrical products and appliances, Demand for refrigerators, freezers and
which can be broadly grouped into dishwashers has grown over the past five
brown goods and whitegoods. Brown years. As a result, products in this
goods account for most industry segment have been subject to less price-
revenue and include electronic goods based competition than other industry
such as TVs, audio equipment, video goods over the period. Over the past five
equipment, small appliances, years, wholesalers have expanded their
microwave ovens, coffee machines and range of high-end fridges and
games consoles. Whitegoods include dishwashers in response to consumers’
ovens, stoves, fridges, freezers, washing willingness to spend more on kitchen
machines, dishwashers, clothes dryers appliance upgrades, compared with other
and air conditioners. industry products. An increased number
of kitchen renovation projects over the
Televisions period has supported sales of products in
TVs make up the largest proportion of this segment. Consumers have
industry revenue. Several factors have increasingly sought aesthetic and
driven strong demand for TVs over the technological upgrades when purchasing
past five years, including the rapid fridges and freezers, leading to modest
advancement in TV technology that has price growth. As a result, this product
led many households to replace TVs segment has increased as a share of
frequently, the increased number of industry revenue over the past five years.
households that own multiple TVs, and
the growing popularity of smart TVs. Other household electrical appliances
However, strong price-based competition The other household electrical
has constrained segment revenue. appliances segment includes a range of
Overall, this product segment has slightly small kitchen and household appliances
increased as a share of industry revenue such as kettles, toasters, coffee
over the past five years. machines, vacuum cleaners, hair dryers,

Products & Markets
Products and Services slow cookers, sandwich presses and rice Stoves and ovens
continued cookers. Most products in this segment The stoves and ovens segment has
tend to be infrequently replaced. This increased as a share of industry
segment has slightly declined as a share revenue over the past five years. While
of industry revenue over the past five these products are replaced less
years due to significant price frequently than most other industry
competition among goods such as products, they are considered essential
kettles and toasters. Department store for all new houses and are often
retailers such as Kmart and Big W have upgraded during housing renovations.
offered heavily discounted kitchen An increase in kitchen renovation
appliance ranges, which has forced activity over the past five years has led
wholesalers into reducing prices. to greater demand for new stoves and
However, growing demand for coffee ovens. As a result, this segment has
machines has supported the segment increased as a share of industry revenue
over the past five years. over the past five years.
Other audiovisual equipment Washing machines and dryers

Other audiovisual equipment includes Many industry operators have promoted
products such as home entertainment increasingly energy-efficient products
systems, speakers, amplifiers, radios, over the period, which has boosted
set-top boxes, DVD players, Blu-ray demand from environmentally
players, CD players and other conscious consumers. However,
audiovisual parts and equipment. This increased demand for these products
product segment has declined as a share has been offset by longer replacement
of industry revenue over the past five cycles. Product improvements over the
years. As the popularity of portable long term have made washing machines
music players and smartphones has and dryers more reliable. Demand for
continued to rise, demand for CD premium products in the segment has
players and other audiovisual been strong over the period. However,
equipment has declined. Furthermore, increased price competition has
demand for DVD players has encouraged discounting at the retail
significantly declined due to the level, with a 2018 Canstar survey stating
increased availability of smart TVs and that 44% of purchasers of segment
mobile-device compatible products waited until a sales period to
entertainment services, such as Netflix. buy a new washing machine.
Products and services segmentation (2018-19)
6.9%
Air conditioners and heaters
8.8%
Washing machines and dryers
31.3%
Televisions
11.9%
Stoves, ovens and microwaves
12.3%
Other audiovisual equipment
15.9%
12.9% Refrigerators, freezers and dishwashers
Other household electrical appliances
Total $9.5bn SOURCE: WWW.IBISWORLD.COM.AU

Products & Markets
Products and Services Air conditioners and heaters systems. Furthermore, a greater range of
continued Air conditioner and heater sales have low-cost products and more energy-
increased as a proportion of industry efficient systems has become available
revenue over the past five years. The over the period. As a result, the
increase in dwelling commencements proportion of Australian homes with an
over the period has fuelled demand for air conditioner or heating device has
this segment as most new buildings risen over the past five years,
include air conditioning units or contributing to segment growth.
Demand Various factors affect demand for new household appliances to boost
Determinants household appliances, including consumer demand.
discretionary income, consumer The replacement cycle describes to the
sentiment, population growth and useful life of a product. When a
product development. Changes in real household good breaks down it is often
household discretionary income can less expensive to replace it with a new
affect the amount that consumers are item than it is to repair it. The length of a
willing to spend on household product’s replacement cycle is
appliances and electrical products. An determined by its construction (e.g.
increase in discretionary income may number of moving parts), scope for new
prompt consumers to buy more features, usage and cost of replacement.
industry products and invest in more For example, washing machines are used
expensive products. often and generally wear out in five years.
The rate and pattern of household The price of appliances and electrical
formations also determines demand for products in absolute and relative terms
industry products. An increase in new affects demand. As most goods sold by
dwellings will increase demand for the industry are imported, the value of
household appliances, such as washing the Australian dollar relative to other
machines, refrigerators, dishwashers and major currencies has a significant effect
ovens. First homebuyers are more likely on the price of industry products. Some
to purchase new items to furnish a house products sold by the industry are more
compared with other consumers. sensitive to price changes than others
The development of new products are. For example, sales of stereos and TVs
affects industry demand. Innovative are more affected by changes to prices
features and improvements to energy relative to sales of washing machines and
efficiency drive the release of new fridges. This is because washing
household appliances. Product life cycles machines and fridges are generally
are becoming increasingly shorter as necessity items that are purchased less
manufacturers continue to introduce frequently than other products.
Major Markets The industry’s markets can be broken Household appliance retailers
down according to the source of Household appliance retailers are the
downstream demand. Household largest market for the industry. Retail
appliance wholesalers typically sell their chains in this market include Harvey
products to household appliance Norman, JB Hi-Fi and The Good Guys.
retailers, department stores, and Appliance retailers typically purchase
service industries. No new markets whitegoods, domestic appliances and
emerged over the past five years but the consumer electronics from wholesalers
presence of online retailers has changed and then resell these products to final
the retail landscape. consumers. Firms in this market have

Products & Markets
Major Markets increasingly bypassed wholesalers over growing prevalence of wholesale bypass.
continued the past five years, as subdued household Discount department stores, in
spending has prompted retailers to particular, have increasingly used their
reduce intermediary costs. Despite this, size and economies of scale to source
appliance retailers, particularly small appliances directly from manufacturers
domestic firms, are still heavily reliant on overseas over the past five years.
wholesalers. Also, growth among online
appliance retailers, many of which source Other service industries
goods from industry wholesalers, has This market comprises establishments
supported demand from this market. As a such as resorts, hotels, restaurants, bars,
result, this market’s contribution to cafes and nightclubs. These businesses
revenue has remained fairly stable over tend to use large numbers of refrigerators,
the past five years. freezers, dishwashers, small appliances,
ovens, stoves, microwaves, and air
Department stores conditioners. Other service businesses like
This market includes upmarket dry-cleaners and laundromats purchase
department stores, such as Myer, and washing machines and clothes dryers from
discount department stores, such as wholesalers. The share of industry revenue
Target. These companies stock a variety derived from this market segment has
of household appliances, whitegoods and risen over the past five years, as they are
electronic goods. Department stores have less likely to engage in wholesale bypass.
traditionally obtained these products This is due to the large proportion of
through wholesalers. However, this small-scale operators in this market, who
market has shrunk as a share of revenue typically do not have the buying power to
over the past five years due to the negotiate directly with manufacturers.
Major market segmentation (2018-19)
13.0%
Other service industries
18.1%
68.9%
Household appliance retailers
Department stores
Total $9.5bn SOURCE: WWW.IBISWORLD.COM.AU
International Trade The Household Appliance Wholesaling Lower operating costs in developing
industry is not exposed to international countries and growing economies of
trade because imports and exports of scale have allowed foreign
appliances are accounted for at the manufacturers to maintain low prices.
manufacturing level. Despite this, a However, a decline in the value of the
significant proportion of products Australian dollar resulted in the relative
sourced by the industry has been price of imported goods rising over the
manufactured by foreign companies. past five years.

Products & Markets
Business Locations 2018-19
NT
0.3
QLD
16.5
WA
8.4
SA
4.8
NSW
38.9
ACT
0.8
VIC
29.4
Establishments (%)
Cold Zone (<10) TAS
0.9
<25
<50
Hot Zone (<100)
Not applicable

Products & Markets
Business Locations The industry’s geographic spread is

Distribution of establishments vs. population
closely correlated with the spread of the
national population, and location of
40
downstream markets. Most of the
industry’s products are imported from
30
foreign manufacturers. As a result, being
Percentage
located close to major ports can help
reduce transportation costs. The industry 20
is heavily concentrated in New South
Wales and Victoria, which account for 10
over 65% of establishments. Both New
South Wales and Victoria serve as 0
national transport and distribution hubs,
ACT
NSW
NT
QLD
SA
TAS
VIC
WA
with the Port of Melbourne receiving
nearly one-third of imported goods
shipped to Australia. These states have
established transport networks enabling Establishments
appliance wholesalers to easily redirect Population
products to neighbouring states. SOURCE: WWW.IBISWORLD.COM.AU
States and territories that do not

operate major ports account for smaller account for a combined 2.0% of
shares of industry activity. For example, household appliance wholesalers.
Tasmania, the Australian Capital Wholesalers located in New South Wales
Territory and the Northern Territory and Victoria often service these areas.

Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalisation
Market Share The Household Appliance Wholesaling As the industry’s product range is
Concentration industry displays low market share broad, market share concentration can
concentration, with the top four players vary by product segment. For example,
expected to account for approximately the game console segment is dominated
Level
27% of industry revenue in 2018-19. by Nintendo, Sony and Microsoft with
Concentration in Several small localised enterprises have few small players competing directly
this industry is L ow exited the industry over the past five against them. In contrast, the television
years as competition has increased and segment is more saturated, with the
profit margins have tightened. These presence of many well-known brands
enterprises have been steadily replaced and strong price competition within the
by larger globalised wholesalers and segment. Samsung is expected to hold
vertically integrated retailers, which have the greatest market share in the
expanded their share of the market over television segment in 2018-19, followed
the past five years. by LG and Hisense.
Key Success Factors Guaranteed supply of key inputs industry players that can sell a
Appliance wholesalers require access variety of goods in bulk are more
to reliable manufacturers or importers likely to capture market share.
IBISWorld identifies of the brand name products that
250 Key Success downstream markets demand. Having an extensive distribution/
Factors for a collection network
business. The most Ability to control stock on hand Industry companies require efficient
Industry firms can improve their warehouse and distribution systems
important for this
operating efficiency by monitoring to service retailers and gain new clients.
industry are: and analysing their inventory with
computerised stock controls. Provision of superior after sales service
Household appliance wholesalers that
Provision of a related range of provide efficient customer services,
goods/services (“one stop shop”) such as repairing and
As downstream retailers typically troubleshooting, are more likely to be
stock a range of household appliances, successful in the industry.
Cost Structure Wholesalers are a major distribution undertaken heavy discounting strategies
Benchmarks channel for manufacturers, and tend to in an attempt to remain competitive over
have high inventory costs and low profit the past five years, negatively affecting
margins. The Household Appliance margins. In addition, a depreciating
Wholesaling industry’s purchase costs Australian dollar has raised purchase
and profit margins depend on sales costs and placed further pressure on
volumes and inventory turnover. As the industry profit margins over the period.
industry has low market share
concentration, no company dominates Purchases
the average cost structure. Purchases represent the industry’s largest
expense. Industry operators act as
Profit intermediaries between manufacturers
Industry profit margins are thin and have and retailers, generating revenue by
declined over the past five years. This purchasing products from manufacturers
decline is primarily attributable to the and selling them on to retailers. Purchase
significant price-based competition costs can vary among industry
present in the industry. Operators have wholesalers depending on the type of

Cost Structure products stocked and the volumes dependence on manual labour. This
Benchmarks purchased. Most industry purchases are trend has led to a rise in the industry’s
sourced from overseas due to foreign average wage over the past five years, as
continued
manufacturers’ lower operating costs, skilled positions have been retained and
particularly those in Asia. However, a new IT professionals have been recruited.
depreciating Australian dollar has driven
up the cost of imports over the past five Other
years, causing purchase costs to rise as a Other industry costs include
share of revenue over the period. depreciation, rent, utility, insurance,
advertising, transport, accounting, legal
Wages and other general administrative
Industry operators employ staff to expenses. Depreciation expenses have
source, sell and distribute their products. increased as a share of industry revenue
Wage costs can vary depending on the over the past five years, largely due to the
extent of local value adding a company increased adoption of automated
provides. For example, some industry technology in inventory management.
operators have their own research and The industry’s push to improve its
development facilities, and organise online presence has also raised
offshore production. Wages have risen as depreciation expenses over the period.
a share of industry revenue over the past Most industry operators conduct
five years as industry players have hired ongoing advertising campaigns to
more skilled employees to improve promote their brands in a competitive
after-sales services. In addition, industry industry. Overall, these costs have
operators have sought to limit wage costs declined slightly as a share of industry
over the period by using more revenue over the past five years,
automation technology to reduce their reflecting stronger growth in other areas.
Sector vs. Industry Costs
Average Costs of
all Industries in Industry Costs
sector (2018-19) (2018-19)
100
1.4 3.4 3.3 n Profit
1.0 1.0 4.3 n Rent
7.6 1.9 2.9
n Utilities
80 7.6 14.5 n Depreciation
n Other
n Wages
10.1 n Purchases
Percentage of revenue
60
40 78.0
63.0
20
0

Basis of Competition The Household Appliance Wholesaling Wholesalers usually rely on

industry faces a high level of competition, manufacturers to do their part with
a trend which has increased over the past respect to generating consumer demand
Level & Trend five years. Industry participants compete for their products, such as through
ompetition
C in based on price, product range, marketing, advertising, which then drives order
this industry is size of operations and reputation. The growth for wholesalers.
Highand the trend industry is also subject to external Having an extensive product range is
competition from retailers that source an advantage for any wholesaler because
is I ncreasing
directly from manufacturers. it gives their customers a one-stop place
for supply. Large retailers tend to favour
Internal competition large wholesalers because they can
Retailers want to pay the lowest possible provide logistics support across multiple
price for a given product to maximise locations. Since retailers demand
their own profit. As a result, product accurate and timely orders, it is necessary
prices can be a major source of for a wholesaler to meet strict delivery
competition between wholesalers. dates and times, to avoid keeping a
Independent wholesalers generally have customer waiting.
varying places to purchase the same Customer service provided by a
product, which can help keep prices low. wholesaler is also important for gaining
Wholesalers also compete with each repeat sales, especially from major
other to obtain exclusive and non- customers. This can range from the hours
exclusive distribution rights with of operation and delivery, to adding value
reputable manufacturers that own to product packaging. Providing superior
strong and popular brands. Exclusivity service requires employing experienced
can limit supply of that product and store managers and technical staff.
preserve margins. Some wholesalers are
the local subsidiary of an international External competition
manufacturing firm, which can give External competition to the industry is
them exclusivity. from retailers that source appliances
Since retailers and consumers alike directly from manufacturers. This trend
identify with particular brands and towards wholesale bypass has increased
manufacturers, they can gradually in the past five years as retailers attempt
develop a habit of choosing one particular to reduce costs by making direct
brand. In this competitive market, purchases from producers. Additionally,
aggressive marketing by both some retailers or manufacturers may
manufacturer and wholesaling agent can vertically integrate the wholesale function
be a key to obtaining initial sales. into their operations.
Barriers to Entry The Household Appliance Wholesaling entering the industry.

industry has high barriers to entry. New Profit margins are low in the industry
operators will likely struggle against the and the up-front and fixed costs involved
Level & Trend industry’s existing participants. The in distribution, such as in acquiring
arriers to Entry
B established brand names, distribution warehousing and transport capabilities,
in this industry infrastructure and reputations of the can be extremely high. It can take time to
are H ighand industry’s major players will ensure any build business to a level that covers fixed
new entrant does not easily gain market costs and produces acceptable
Increasing
share. In addition, the costs related to profitability. Building a viable sales base
establishing distribution facilities, depends largely on brand recognition and
relationships with suppliers, sourcing the ability to forge supply contracts with
appropriately skilled labour and winning retailers. The cost of competing with
customers may deter some firms from other firms that are significantly

Barriers to Entry entrenched in upstream and downstream

continued markets may deter some firms from Barriers to Entry checklist
entering the industry. Competition High
The vast majority of household Concentration Low
appliances and electronics sold in Life Cycle Stage Decline
Australia are wholesaled by the Capital Intensity Medium
Australian-based wholesaling Technology Change Low
(importing) operations of overseas- Regulation and Policy Light
headquartered manufacturers or brand Industry Assistance Low
owners. Independent wholesalers need
to either offer these companies an SOURCE: WWW.IBISWORLD.COM.AU
efficient local distribution capability or

purchase goods from other brand discount retailers that are now selling
owners who do not have their own local private-label products. Many discount
distribution operation. retailers now employ staff in Asia to
The industry’s barriers to entry have source products directly from
increased over the past five years due to manufacturers, a practice that effectively
the increased prevalence of wholesale cuts out the premium received by
bypass and the market power of large industry operators as their profit.
Industry The Household Appliance industry is of their goods from overseas. In

Globalisation highly globalised, as many of the larger addition, a significant proportion of
players are Australian subsidiaries of products wholesaled by locally owned
Level & Trend the major international manufacturers. industry operators are also imported,
These companies set up distribution which contributes to the industry’s
lobalisation
G in this facilities in Australia and import most high globalisation.
industry is H
ighand
the trend is S teady

Major Companies
Samsung Electronics Australia Pty Ltd | Electrolux Home Products Pty Limited
LG Electronics Australia Pty Limited | Other Companies
Major Players
(Market Share)
Electrolux Home Products Pty Limited 7.4%
77.3%
Other
Samsung Electronics Australia Pty Ltd 9.0%

LG Electronics Australia Pty Limited 6.3% SOURCE: WWW.IBISWORLD.COM.AU
Player Performance Samsung Electronics Australia Pty Ltd is

a subsidiary of South Korean company Samsung Electronics Australia Pty
Samsung Electronics Co. Ltd. Samsung is Ltd - industry segment
Samsung the second largest technology company in
Electronics Australia the world by revenue, behind Apple.
performance*
Revenue
Pty Ltd Samsung’s Australian subsidiary markets
Year** ($ million) (% change)
Market Share: 9.0% a variety of consumer electronics, such as
TVs, DVD and Blu-ray players, cameras, 2014 793.7 N/C
Industry Brand Names and mobile phone handsets. The 2015 713.6 -10.1
Samsung
company also manufactures a range of 2016 730.8 2.4
appliances, including vacuum cleaners,
2017 830.3 13.6
air conditioners and refrigerators.
Samsung’s mobile communications 2018 840.8 1.3
division has been its strongest performer 2019 855.9 1.8
over the past five years, and now
represents over half of the company’s *Estimate **Year end December
SOURCE: IBISWORLD
revenue. The company’s Galaxy line of
phones and tablets competes fiercely with
Apple’s iPhones and iPads for market years through December 2019. This
dominance. However, sales of these represents an outperformance of the
products are not included in the wider industry over the same period.
Household Appliance Wholesaling The company’s outperformance of the
industry. In the industry, Samsung overall industry over the period can
wholesales TVs, sound systems, air largely be attributed to its strong
conditioners, vacuum cleaners, washing brand image and reputation for
machines and refrigerators. The company quality, which have somewhat protected
has been one of the main entrants into the company from price-based
the smart-fridge market. Smart fridges competition. However, Samsung’s
offer consumers new and convenient industry-related profit has declined over
features, such as ordering groceries the past five years as a depreciating
directly. In Australia, the company has Australian dollar caused purchase costs
partnered with Woolworths to allow to rise. Samsung has also faced strong
consumers to shop on their fridge using competition in the home appliances
the Woolworths shopping application. segment, which placed additional
pressure on margins. Strong sales of the
Financial performance company’s premium line of fridges have
Samsung Electronics Australia’s supported the company’s industry-
industry-related revenue is expected to specific profit over the period, despite
rise at an annualised 1.5% over the five an overall decline.

Major Companies
Player Performance Electrolux Home Products Pty Limited is

the wholly owned Australian subsidiary Electrolux Home Products Pty
of AB Electrolux, a Sweden-based Limited - industry segment
Electrolux Home
appliance maker. The Electrolux brand is
Products Pty positioned at the premium end of the
performance*
Limited market and is divided into consumer Revenue
Year** ($ million) (% change)
Market Share: 7.4% durable products and professional
Industry Brand Names products. The company’s consumer 2014 628.7 N/C
Electrolux durables segment accounts for 2015 663.2 5.5
White-Westinghouse approximately 95% of group global net 2016 672.5 1.4
Simpson sales, and includes appliances for
2017 677.8 0.8
Chef kitchens, fabric care and floor care. The
group’s other household appliance 2018 686.2 1.2
Kelvinator
AEG brands in Australia include White- 2019 701.5 2.2
Dishlex Westinghouse, Simpson and AEG.
In Australia, Electrolux leads the *Estimate **Year end December
SOURCE: IBISWORLD
market in core kitchen and laundry
appliance sales, including refrigerators,
freezers, washing machines and clothes through December 2019. The company
dryers. The company also has a strong has outperformed the wider industry over
market position in floor-care products, the past five years, supported by a rise in
including vacuum cleaners. In April dwelling commencements. While
2016, the company ceased its demand for Electrolux appliances has
refrigerator manufacturing operations in increased, price competition has
Australia by closing its production intensified, negatively affecting the
facility in Orange, NSW. company’s Australian business. Electrolux
has increased its profit margins over the
Financial performance past five years by significantly reducing
Electrolux Home Products’ industry- the size of its domestic workforce,
related revenue is expected to rise at an lowering the company’s labour costs as a
annualised 2.2% over the five years share of revenue.
Player Performance LG Electronics Australia Pty Limited is a

wholly owned subsidiary of the South LG Electronics Australia Pty Limited
Korea-based LG Electronics Inc - industry segment performance*
LG Electronics
(formerly Lucky Goldstar). The
Australia company’s Australian operations are Revenue
Pty Limited Year** ($ million) (% change)
headquartered in New South Wales
Market Share: 6.3% and the company employs just under 2014 481.7 N/C
Industry Brand Names 300 staff. LG Electronics acts as an 2015 461.4 -4.2
LG importer and wholesaler of electrical 2016 498.2 8.0
appliances, including air conditioners. 2017 549.5 10.3
Globally, LG Electronics has increased
2018 577.7 5.1
its brand awareness by sponsoring
well-known sporting teams and events. 2019 597.4 3.4
The company is currently the second
largest TV manufacturer in the world by *Estimate **Year end December
SOURCE: IBISWORLD
market share, behind Samsung. The
company has increased its focus on
improving the aesthetic of their products, such as TVs and fridges.
products, modernising the look of many The group operates in the mobile, TV

Major Companies
Player Performance and home entertainment, home 2019, representing an outperformance of

continued appliances, air conditioning and the overall industry over the same period.
commercial markets. While LG Electronics The company’s reputation for high-quality
is prominent in the mobile device market, products has contributed to steady
most of its Australian generated revenue demand in the face of strong competition.
falls within the industry. LG holds the In particular, LG TVs are renowned for
second largest market share in the TV their quality, allowing the company to
segment and its premium product lines maintain high prices and protecting
have somewhat protected the company company profitability in the segment.
against price-based competition. However, increased competition in other
product segments and a weaker Australian
Financial performance dollar, which has pushed up purchase
LG Electronics’ industry-related revenue is costs, has contributed to a slight decline in
expected to increase at an annualised 4.4% the company’s industry-related profit over
over the five years through December the past five years.
Other Companies Many major wholesalers in the industry Australia, Miele Australia, Whirlpool,
are Australian subsidiaries of and Breville. Brown goods, which
international manufacturers, and include TVs, Blu-ray players and sound
operate locally as importers and equipment, are almost exclusively
distributors. Companies working under manufactured overseas. The main TV
this model include Panasonic Australia, wholesalers in Australia include
Sony Australia, Fisher & Paykel, LG Samsung, Sony, and LG.
Player Performance Fisher & Paykel Australia Holdings as a mid-market brand, balancing
Limited is an importer and wholesaler of aesthetics and performance with price.
kitchen and laundry appliances. The The company has specialised in kitchen
Fisher & Paykel company is based in Macquarie Park, and laundry appliances, with almost all
Australia Holdings New South Wales and employs over 300 products falling within the industry. The
Limited staff. China-based Haier Group company’s industry-related products
Market Share: Corporation acquired a 100% interest in include cooktops, ovens, refrigerators,
4.0%- 5.0% New Zealand-based Fisher & Paykel washing machines and dryers. Fisher &
Industry Brand Names Appliances Holdings Limited in Paykel has increased its market share
Fisher & Paykel November 2012. Fisher & Paykel over the past five years. Haier Group,
Appliances subsequently delisted from which owns several home appliance
the ASX and its subsidiary, Fisher & brands, has leveraged its existing
Paykel Australia Holdings Limited, capabilities to improve product
became the main Australian entity. performance and aesthetics, leading to
Fisher & Paykel is typically positioned increased demand over the period.

Major Companies
Player Performance Miele Australia Pty Limited is a wholly company wholesales a range of
owned subsidiary of Germany-based appliances and whitegoods including
Miele & Cie. KG, and was incorporated ovens, cooktops, coffee machines,
Miele Australia
in Australia in 1980. The company refrigerators, freezers, dishwashers,
Pty Limited derives the majority of its revenue from washing machines and vacuum cleaners.
Market Share: wholesaling electrical appliances. The Miele Australia has established
3.0%- 4.0% company’s Australian operation relationships with architects, building
Industry Brand Names employs over 500 people and operates developers, commercial laundries,
Miele display centres, outlets and service laboratories and medical clinics to
centres across the country. The supply household appliances.
Player Performance Sony Australia Limited is a subsidiary of TVs, PlayStation game consoles and
the Japan-based Sony Corporation, a home audio and video equipment.
manufacturer and supplier of electronic Sony has lost market share in the TV
Sony Australia
equipment. Sony Australia sells sound, segment to lower-priced brands over
Limited video, TV and broadcasting equipment the past five years. In some cases, Sony
Market Share: to consumer and professional markets. has had to offer heavy discounts on
3.0%- 4.0% Other Sony Corporation brands sell products in Australia to increase volume
music, films, mobile phones, video in the crowded consumer electronics
game systems and optical discs. market, which has considerably affected
Industry-related sales mainly consist of its margins.
Player Performance Breville Group Limited is one of the brand in some regions. Breville’s
largest wholesalers of houseware Australian operations have been subject
products in Australia. Breville began in to industry-wide price competition from
Breville Group
1957 as a small importer. The company private-label brands. However, Breville
Limited grew substantially in 1997, after has performed relatively well in
Market Share: acquiring the US-based Metro comparison with other companies in the
1.0%- 2.0% Marketing. Breville Group was listed on industry over the past five years, due in
Industry Brand Names the ASX in May 1999. The company part to a very strong brand reputation
Breville distributes Breville, Kambrook and that has strengthened due to product
Ronson products, along with the Phillips recalls by its competitors.

WWW.IBISWORLD.COM.AU Household Appliance Wholesaling in AustraliaMarch 2019 27
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Capital Intensity The Household Appliance Wholesaling

industry exhibits moderate capital Capital Intensity
Capital units per labour unit
intensity. For every dollar spent on
Level
wages in 2018-19, industry operators 0.5
The levelof capital will spend an estimated $0.19 on capital
intensity is M
edium investment. The industry has 0.4
traditionally been highly labour- 0.3

intensive, with employees required to
complete tasks relating to sourcing, 0.2
logistics, warehousing, distribution, 0.1

sales and marketing of household
appliances. In addition, staff product 0.0
Economy Wholesale Household
knowledge is an important competitive Trade Appliance
Wholesaling
advantage for appliance wholesalers. Dotted line shows a high level of capital intensity
However, the industry’s capital intensity SOURCE: WWW.IBISWORLD.COM.AU
has increased over the past five years as

appliance wholesalers have increasingly storage and warehousing facilities,
invested in automated systems to computerised inventory systems and
reduce their dependence on labour and computer technology. Industry
boost efficiency. operators have increasingly sought to
Depreciation costs incurred by the reduce their reliance on labour through
industry are typically derived from long- investment in automation technology.
term assets such as delivery vehicles, Electronic data interchange technology

Capital Intensity has assisted with ordering processes paperwork. Industry firms have also
continued and increased order speed while developed websites to showcase their
eliminating the need for physical products to downstream customers.
Technology and Technological developments in the The expansion of internet commerce

Systems industry have largely centred on the provides an alternative cost-effective
computerised automation of inventory method for wholesalers to provide
Level control. A fully automated inventory services to customers. This technology
control system records inventories, picks can also provide manufacturers with an
The level
of products, determines minimum order avenue for bypassing wholesalers and
technology quantities, assesses customer credit retailers. There is considerable
change is L ow ratings, generates invoices and payment technological innovation in products sold
advice and can produce real-time reports. by the industry. Wholesalers need to keep
There has been an increase in the use of up-to-date with these changes to obtain
electronic ordering and information new dealerships, and to provide
delivery systems, including the ability to customers with state-of-the-art products.
transact business online. This has a Rapid technological and product changes
significant effect on the cost efficiency of necessitate regular training of sales and
the wholesale distribution model. technical staff.
Revenue Volatility The Household Appliance Wholesaling new features can boost discretionary
industry has exhibited low revenue spending and bring forward
volatility over the past five years. Major replacement sales. The introduction of
Level
factors affecting demand for household AI technology to household appliances,
The level of appliances include consumer sentiment, such as smart fridges, is a recent
volatility is L ow rates of new household formation, example of product enhancements
discretionary income growth, product which shorten replacement cycles.
prices, downstream demand and new Manufacturers releasing new
product releases. innovative new appliances over the past
Products with advanced features, such five years has helped reduce industry
as enhanced energy efficiency, or useful revenue volatility.

Regulation and Policy There are no industry-specific turn drives consumer demand as
regulations. Industry operators should households become increasingly
Level & Trend ensure they comply with regulations concerned about environmental issues
covering the storage and transport of and energy costs.
he level of
T goods, and occupational health and safety Energy rating labels are required for
Regulation is standards. Wholesalers should also be most home appliances sold in Australia.
Lightand the aware of government energy, labelling, The label must provide a star rating of
trend is S
teady and environmental standards and between one and ten stars, with ten stars
regulations pertaining to goods sold. representing the highest level of energy
The Minimum Energy Performance efficiency. An estimate of the appliance’s
Standards (MEPS) is a program annual energy consumption must also be
developed as part of the Commonwealth included on the label. Using this system,
Government’s commitment to reduce consumers are able to compare the energy
greenhouse gas emissions. Appliances efficiency of appliances such as
and consumer electronics wholesaled by refrigerators, freezers, washing machines,
industry firms must meet these dryers, dishwashers and air conditioners,
standards. MEPS specify the minimum with relative ease. The Water Efficiency
level of energy performance that industry Labelling and Standards scheme applies
products must meet or exceed before they national mandatory water efficiency
can be sold to consumers. These labelling and minimum performance
standards are effective in boosting the standards to water-using appliances, such
energy efficiency of products, which in as washing machines and dishwashers.
Industry Assistance The industry does not receive any major conventional ovens and washing
government subsidies or grants. A large machines. Other appliances, such as
Level & Trend number of household appliances attract microwave ovens and food processors,
an import tariff up to 5.0%, such as are tariff-free, alleviating additional cost
he level of
T vacuum cleaners, hair dryers, pressures for industry players.
Industry Assistance
is L owand the
trend is S teady

Key Statistics
Industry Data Industry
Revenue Value Added Wages Domestic
($m) ($m) Establishments Enterprises Employment Exports Imports ($m) Demand
2009-10 9,270.8 1,479.7 1,318 833 12,665 -- -- 788.1 N/A
2010-11 8,897.8 1,343.1 1,372 877 13,482 -- -- 783.0 N/A
2011-12 9,090.2 1,326.2 1,395 896 13,782 -- -- 809.0 N/A
2012-13 9,736.1 1,239.8 1,326 852 13,873 -- -- 919.0 N/A
2013-14 9,695.2 1,455.5 1,280 885 14,252 -- -- 944.2 N/A
2014-15 9,910.7 1,430.2 1,265 883 14,140 -- -- 945.4 N/A
2015-16 10,135.9 1,467.0 1,280 880 14,074 -- -- 966.9 N/A
2016-17 9,803.5 1,502.1 1,210 867 14,048 -- -- 974.4 N/A
2017-18 9,706.5 1,501.3 1,212 768 13,884 -- -- 984.1 N/A
2018-19 9,468.2 1,446.9 1,157 741 13,831 -- -- 960.0 N/A
2019-20 9,572.4 1,433.2 1,137 732 13,542 -- -- 951.4 N/A
2020-21 9,813.6 1,483.5 1,160 734 13,576 -- -- 965.6 N/A
2021-22 10,027.6 1,523.6 1,152 733 13,621 -- -- 986.6 N/A
2022-23 10,242.1 1,560.8 1,154 733 13,645 -- -- 1,007.7 N/A
2023-24 10,367.1 1,574.4 1,146 727 13,752 -- -- 1,009.7 N/A
Sector Rank 17/38 16/38 27/38 29/38 15/38 N/A N/A 14/38 N/A
Economy Rank 124/501 214/501 265/501 269/501 200/501 N/A N/A 186/501 N/A
Annual Change Industry Domestic

Revenue Value Added Establishments Enterprises Employment Exports Imports Wages Demand
(%) (%) (%) (%) (%) (%) (%) (%) (%)
2010-11 -4.0 -9.2 4.1 5.3 6.5 N/A N/A -0.6 N/A
2011-12 2.2 -1.3 1.7 2.2 2.2 N/A N/A 3.3 N/A
2012-13 7.1 -6.5 -4.9 -4.9 0.7 N/A N/A 13.6 N/A
2013-14 -0.4 17.4 -3.5 3.9 2.7 N/A N/A 2.7 N/A
2014-15 2.2 -1.7 -1.2 -0.2 -0.8 N/A N/A 0.1 N/A
2015-16 2.3 2.6 1.2 -0.3 -0.5 N/A N/A 2.3 N/A
2016-17 -3.3 2.4 -5.5 -1.5 -0.2 N/A N/A 0.8 N/A
2017-18 -1.0 -0.1 0.2 -11.4 -1.2 N/A N/A 1.0 N/A
2018-19 -2.5 -3.6 -4.5 -3.5 -0.4 N/A N/A -2.4 N/A
2019-20 1.1 -0.9 -1.7 -1.2 -2.1 N/A N/A -0.9 N/A
2020-21 2.5 3.5 2.0 0.3 0.3 N/A N/A 1.5 N/A
2021-22 2.2 2.7 -0.7 -0.1 0.3 N/A N/A 2.2 N/A
2022-23 2.1 2.4 0.2 0.0 0.2 N/A N/A 2.1 N/A
2023-24 1.2 0.9 -0.7 -0.8 0.8 N/A N/A 0.2 N/A
Sector Rank 33/38 33/38 37/38 36/38 20/38 N/A N/A 29/38 N/A
Economy Rank 386/501 409/501 472/501 456/501 270/501 N/A N/A 399/501 N/A
Key Ratios Revenue per Share of the

IVA/Revenue Imports/Demand Exports/Revenue Employee Wages/Revenue Employees Average Wage Economy
(%) (%) (%) ($’000) (%) per Est. ($) (%)
2009-10 15.96 N/A N/A 732.00 8.50 9.61 62,226.61 0.11
2010-11 15.09 N/A N/A 659.98 8.80 9.83 58,077.44 0.09
2011-12 14.59 N/A N/A 659.57 8.90 9.88 58,699.75 0.09
2012-13 12.73 N/A N/A 701.80 9.44 10.46 66,243.78 0.08
2013-14 15.01 N/A N/A 680.27 9.74 11.13 66,250.35 0.09
2014-15 14.43 N/A N/A 700.90 9.54 11.18 66,859.97 0.09
2015-16 14.47 N/A N/A 720.19 9.54 11.00 68,701.15 0.09
2016-17 15.32 N/A N/A 697.86 9.94 11.61 69,362.19 0.09
2017-18 15.47 N/A N/A 699.11 10.14 11.46 70,880.15 0.09
2018-19 15.28 N/A N/A 684.56 10.14 11.95 69,409.30 0.08
2019-20 14.97 N/A N/A 706.87 9.94 11.91 70,255.50 0.08
2020-21 15.12 N/A N/A 722.86 9.84 11.70 71,125.52 0.08
2021-22 15.19 N/A N/A 736.19 9.84 11.82 72,432.27 0.08
2022-23 15.24 N/A N/A 750.61 9.84 11.82 73,851.23 0.08
2023-24 15.19 N/A N/A 753.86 9.74 12.00 73,422.05 0.08
Sector Rank 18/38 N/A N/A 19/38 15/38 6/38 13/38 16/38
Economy Rank 459/501 N/A N/A 102/501 402/501 144/501 213/501 214/501
Figures are in inflation-adjusted 2019 dollars. Rank refers to 2019 data. SOURCE: WWW.IBISWORLD.COM.AU

Jargon & Glossary
Industry Jargon BROWN GOODSElectronic items such as TVs, stereo, WHOLESALE BYPASSA trend whereby the wholesaler is
DVD players and computers. bypassed in the supply chain, such as when retailers
WHITEGOODSMajor domestic appliances, such as purchase directly from the manufacturer.
refrigerators and washing machines.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY REVENUEThe total sales of industry goods
new companies struggle to enter an industry, while low and services (exclusive of excise and sales tax); subsidies
barriers mean it is easy for new companies to enter an on production; all other operating income from outside
industry. the firm (such as commission income, repair and service
CAPITAL INTENSITYCompares the amount of money income, and rent, leasing and hiring income); and
spent on capital (plant, machinery and equipment) with capital work done by rental or lease. Receipts from
that spent on labour. IBISWorld uses the ratio of interest royalties, dividends and the sale of fixed
depreciation to wages as a proxy for capital intensity. tangible assets are excluded.
High capital intensity is more than $0.333 of capital to INDUSTRY VALUE ADDED (IVA)The market value of
$1 of labour; medium is $0.125 to $0.333 of capital to goods and services produced by the industry minus the
$1 of labour; low is less than $0.125 of capital for every cost of goods and services used in production. IVA is
$1 of labour. also described as the industry’s contribution to GDP, or
CONSTANT PRICESThe dollar figures in the Key profit plus wages and depreciation.
Statistics table, including forecasts, are adjusted for INTERNATIONAL TRADEThe level of international
inflation using the current year (i.e. year published) as trade is determined by ratios of exports to revenue and
the base year. This removes the impact of changes in imports to domestic demand. For exports/revenue: low is
the purchasing power of the dollar, leaving only the less than 5%; medium is 5% to 20%; and high is more
‘real’ growth or decline in industry metrics. The inflation than 20%. Imports/domestic demand: low is less than
adjustments in IBISWorld’s reports are made using the 5%; medium is 5% to 35%; and high is more than
Australian Bureau of Statistics’ implicit GDP price 35%.
deflator. LIFE CYCLEAll industries go through periods of growth,
DOMESTIC DEMANDSpending on industry goods and maturity and decline. IBISWorld determines an
services within Australia, regardless of their country of industry’s life cycle by considering its growth rate
origin. It is derived by adding imports to industry (measured by IVA) compared with GDP; the growth rate
revenue, and then subtracting exports. of the number of establishments; the amount of change
EMPLOYMENTThe number of permanent, part-time, the industry’s products are undergoing; the rate of
temporary and casual employees, working proprietors, technological change; and the level of customer
partners, managers and executives within the industry. acceptance of industry products and services.
ENTERPRISEA division that is separately managed and NONEMPLOYING ESTABLISHMENTBusinesses with
keeps management accounts. Each enterprise consists no paid employment or payroll, also known as
of one or more establishments that are under common nonemployers. These are mostly set up by self-employed
ownership or control. individuals.
ESTABLISHMENTThe smallest type of accounting unit PROFITIBISWorld uses earnings before interest and tax
within an enterprise, an establishment is a single (EBIT) as an indicator of a company’s profitability. It is
physical location where business is conducted or where calculated as revenue minus expenses, excluding
services or industrial operations are performed. Multiple interest and tax.
establishments under common control make up an VOLATILITYThe level of volatility is determined by
enterprise. averaging the absolute change in revenue in each of the
EXPORTSTotal value of industry goods and services sold past five years. Volatility levels: very high is more than
by Australian companies to customers abroad. ±20%; high volatility is ±10% to ±20%; moderate
volatility is ±3% to ±10%; and low volatility is less than
IMPORTSTotal value of industry goods and services
±3%.
brought in from foreign countries to be sold in Australia.
WAGESThe gross total wages and salaries of all
INDUSTRY CONCENTRATIONAn indicator of the
employees in the industry. Benefits and on-costs are
dominance of the top four players in an industry.
included in this figure.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.

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F3494B Household Appliance Wholesaling in Australia Industry Report 1 PDF

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On the fritz: Strong price competition has

caused revenue and profitability to decline

IBISWorld Industry Report F3494b

2 About this Industry 15 Major Markets 26 Miele Australia Pty Limited

www.ibisworld.com.au | (03) 9655 3881 | info@ibisworld.com

About this Industry

Main Activities The primary activities of this industry are

The major products and services in this industry are

Similar Industries C2429 Audio Visual Electronic Equipment Manufacturing in Australia

C2440 Household Appliance Manufacturing in Australia

F3494a Telecommunications and Other Electrical Goods Wholesaling in Australia

F3419 Mining and Industrial Machinery Wholesaling in Australia

G4221a Domestic Appliance Retailing in Australia

Provided to: University of Melbourne (2134185306) | 25 October 2019

About this Industry

Additional Resources For additional information on this industry

IBISWorld writes over 500 Australian

Provided to: University of Melbourne (2134185306) | 25 October 2019

Key Statistics Revenue Annual Growth 14–19 Annual Growth 19–24

$312.5m $960.0m 741

Industry Structure Life Cycle Stage Decline Regulation Level Light

Provided to: University of Melbourne (2134185306) | 25 October 2019

Provided to: University of Melbourne (2134185306) | 25 October 2019

Key External Drivers Trade-weighted index Consumer sentiment index

Demand from domestic appliance retailing Real household discretionary income

Current The Household Appliance Wholesaling

Provided to: University of Melbourne (2134185306) | 25 October 2019

Wholesale bypass The increasing prevalence of wholesale struggled to remain profitable. As a

Provided to: University of Melbourne (2134185306) | 25 October 2019

Industry The Household Appliance Wholesaling

household incomes are anticipated to 0

enhanced performance, additional

Provided to: University of Melbourne (2134185306) | 25 October 2019

Competition and Rising household discretionary incomes

Provided to: University of Melbourne (2134185306) | 25 October 2019

Retail spending spending on domestic appliances, air conditioners, refrigerators, water

Provided to: University of Melbourne (2134185306) | 25 October 2019

Provided to: University of Melbourne (2134185306) | 25 October 2019

Provided to: University of Melbourne (2134185306) | 25 October 2019

Products & Markets

Supply Chain KEY BUYING INDUSTRIES

KEY SELLING INDUSTRIES

Provided to: University of Melbourne (2134185306) | 25 October 2019

Products & Markets

Other audiovisual equipment Washing machines and dryers

Products and services segmentation (2018-19)

Total $9.5bn SOURCE: WWW.IBISWORLD.COM.AU

Provided to: University of Melbourne (2134185306) | 25 October 2019

Products & Markets

Provided to: University of Melbourne (2134185306) | 25 October 2019

Products & Markets

Major market segmentation (2018-19)

Total $9.5bn SOURCE: WWW.IBISWORLD.COM.AU

Provided to: University of Melbourne (2134185306) | 25 October 2019

Products & Markets

Business Locations 2018-19

Provided to: University of Melbourne (2134185306) | 25 October 2019

Products & Markets

Business Locations The industry’s geographic spread is

States and territories that do not

Provided to: University of Melbourne (2134185306) | 25 October 2019

Provided to: University of Melbourne (2134185306) | 25 October 2019

Sector vs. Industry Costs