Wedding Industry - IBISWorld

Economic Environment
Flowers
December 2010–January 2011 The RMA Journal

Wedding Bells
Are Ringing
••After a downturn caused by a troubled economy
and fewer marriages, wedding-related businesses
are on the rebound.
Liquidlibrary, Hemera/Thinkstock
b y To o n va n Be e c k a n d Ge o r g e Va n Ho r n
Wh i l e n o t a n industry in itself, the wedding business is
a key revenue contributor to a diverse mix of local businesses.
Weddings are customized, and therefore not prone
to efficiency, and they often occur on an irregular timeline.
The clients (bride and groom) dream of perfection, while
someone else (their parents) usually pays the bills.
In the same way department stores rely on the holiday
season to help define the ultimate success of their year,
many small business operators depend on the number and
extravagance of wedding events to distinguish a good year
from a bad one.
This article provides a quick evaluation of the wedding
industry’s contribution to local economies and the small
army of business service providers that support it. Highlighted
here are the health of the wedding business, the
size of the market, and the reliance of key industries on
wedding-related revenue.
Going to the Chapel
Weddings are big business. From the proposal to the return
flight of a honeymoon, a typical wedding will have a direct
and indirect impact on more than 100 industries. The list
ranges from gold mining to travel agencies, but in this
article we will look only at industries directly affected by the
wedding event. While this categorization whittles down the
industry impact considerably, the wedding market remains
a sizable $47.2 billion sector.
Let’s put this revenue in perspective: If weddings were
compared to holiday-generated spending, they would rank
just behind Christmas and easily ahead of Thanksgiving.
The infrequency of weddings is more than made up for
by their extravagance. They generate more revenue than
Valentine’s Day, Mother’s Day, and Easter combined.
One cause of concern is that the number of couples tying
the knot has been in a persistent decline. Marriage rates have
tumbled over the past few decades, falling from about 10
marriages per 1,000 people in the mid-1980s to 6.8 marriages
in 2009. This decline is a result of social influences
(fewer couples looking to commit) and attitudinal changes,
as consumers hold off for financial and lifestyle reasons.
However, the fall in the marriage rate has not resulted in a
complete disaster for the industry. In fact, the decline has
led to a higher-than-average wedding spend, meaning even
greater profits for those involved (Figure 1).
The Wedding Industry and the Economy
Coming off of 2005 and 2006, two of the most prosperous
years in the wedding industry, the sector plummeted as the
economy entered recession. Revenues fell from a high of
$67.5 billion in 2005 to $42.9 billion in 2009. Industry
performance is expected to improve in 2010, expanding
an estimated 10% to $47.2 billion, but still far below the
The RMA Journal December 2010–January 2011 23
Copyright 2010 by RMA

Figure 1
Number of Weddings versus Average Wedding Spend
2,600,000
2,500,000
2,400,000
2,300,000
2,200,000
2,100,000
2,000,000
1,900,000
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Number of Weddings (LHS)
*In 2010 constant U.S. dollars
*Average Wedding Spend (RHS)
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
Source: IBISWorld estimates
years, so businesses need to put in place appropriate
strategies to capture that increasing demand.
The average engagement time in the United
States is 17 months, so long-term targeting and
retaining strategies must be implemented. Additionally,
businesses need to take proper financial
considerations into account because the product
or service in demand may be months away from
payment and delivery. Planning for the future, along
with having a good customer base, is essential for
those involved in the wedding industry. Unlike
other industries, sales are not typically day-to-day
transactions. They are sizable decisions that take
time to plan and implement, for both the customer
and the company involved.
The Wedding Industry’s Seven Core Sectors
IBISWorld has identified seven core sectors within
the wedding industry. These sectors are grouped
together because they represent key inputs to the
high of just five years earlier. As shown in Figure 2,
the wedding market is expected to remain on this
upward trend through 2015, with 2009 expected
to be the low point for the sector.
While swings in the economy greatly affect
spending per wedding, the underlying demographics
are slowly improving. The decline in population
growth of the 20- to 34-year-old age bracket
bottomed out between 1997 and 2002, and those
in that bracket
The positive revenue
outlook for the next five
years offers weddingdependent
companies
great opportunities
to build business
and increase their
competitiveness.
who are contributing
to the
rising population
totals are
quickly approaching
the
median age
Figure 2
for first marriages.
Annualized
growth
in the 20- to
34-year-old group over
the five years to the end of 2013 is projected at 1.2%,
a significant improvement over the growth rates for the
prior two five-year periods, which were 0.6% and 0.4%,
respectively (Figure 3).
The positive revenue outlook for the next five years offers
wedding-dependent companies great opportunities to build
business and increase their competitiveness. Thousands of
weddings were put on hold during the recession because
couples and their parents were financially strapped. There
will likely be a strong uptick in weddings over the next three
$Millions
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2000
2001
U.S. Wedding Market Revenue
2002
2003
2004
2005
2006
2007
2008
wedding planning process. Yet they are differentiated by
their varied products and services. Few companies in the
wedding industry actually provide services for an entire
wedding (that’s the job of the wedding planner) because
each couple has specific demands that no one company
can meet on a regular basis.
The seven sectors include reception, wedding attire,
wedding rings, photography, flowers, wedding planners,
and other (Figure 4). Within reception, wedding attire,
and other, multiple and often highly diversified industries
generate wedding revenue.
2009
2010
2011
2012
2013
2014
2015
Source: IBISWorld estimates
24
December 2010–January 2011 The RMA Journal

Clearly, all of these categories have a sizable
sensitivity to wedding demand drivers such as
number of engagements, per capita disposable
income, unemployment levels and job security,
and consumer confidence. At the same time, each
of the seven revenue sources has unique risks and
key success factors. The wedding industry cannot
be grouped into a single frame when determining
how much a lender may need to financially support
a business. Rather, each sector must be reviewed
individually and its operators evaluated in terms of
other sources of revenue and the competition from
other industries providing similar services.
Figure 3
64,000,000
63,000,000
62,000,000
61,000,000
60,000,000
59,000,000
58,000,000
Total Population 20-34 and Median Age
at First Marriage
28
27
26
25
24
23
The Reception
The reception is the biggest expense of a wedding,
generating an estimated 38% of total industry revenue
($17.94 billion in 2010). The reception sector
can be broadly classified as the “accommodation
and food services” division. Major costs associated
with the reception include venue rental, food and beverages,
food service and bartender, wedding cake, and hotel for
the bride and groom.
Customers spend a considerable amount of time choosing
the reception location and making it fit their demands.
For this reason, the reception operates with unique risks
compared to other categories. Potential customers can be
deterred from choosing a specific location or company
over minor issues, and that equates to a loss of business
opportunity.
Like all industries, firms in this area must continually
meet and satisfy their key success factors so that they remain
competitive and viable. Table 1 shows six related IBISWorld
industries that have direct influence on the wedding market
and fall into the accommodation and food services sector.
From a wedding perspective, these figures show opportunities
for new businesses. Operators within the
industries low on the list can seek to capitalize on
an improving wedding industry by directing more
of their marketing toward this potential clientele.
Developing good word-of-mouth recommendations,
fostering excellent customer relations, having a welltrained
staff, and implementing appropriate pricing
policies will help moderate the business risks associated
with this highly competitive sector.
Wedding Attire
The wedding attire category incorporates the retail,
rental, and personal services sectors. However, most
of the category is related to the retail sector, where
product and service substitutes abound. Customers
are able to move easily from business to business
in search of outfits and accessories.
57,000,000
56,000,000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Figure 4
Total Population 20-34 (L)
IBISWorld has identified eight industries with a direct
effect on the wedding attire category (Table 2). Major selling
items include the
bridal dress, groom
and groomsmen attire,
bride and groom accessories,
bridesmaid
outfits and accessories,
and hair and makeup.
This sector is estimated
to account for 12.4% of
total spending, coming
in at $5.85 billion.
Medium Age at First Marriage (R)
Substitution is a huge competitive disadvantage for wedding
firms specializing in the attire market. This factor is
particularly true for formal wear and costume rental, given
The Seven Revenue-Generating Areas
Wedding Size: $47.2 billion—2010
Wedding Planners
2.0%
Flowers
4.5% Photography
8.8%
Other
24.1%
Wedding Rings
10.2%
22
21
Source: IBISWorld estimates
The wedding industry
cannot be grouped
into a single frame
when determining how
much a lender may
need to financially
support a business.
Wedding Attire
12.4%
Reception
38.0%
Source: IBISWorld estimates
The RMA Journal December 2010–January 2011 25

Table 1
Wedding-related Accommodation and Food Services Industries
Growth
Reception: Related Industries 2007-2009 2010 2009-2012
Hotels & Motels -3.1% 1.3% 3.0%
Single Location Full-Service Restaurants -2.8% 3.1% 2.9%
Chain Full-Service Restaurants -2.4% 3.1% 2.6%
Bars, Nightclubs & Drinking Establishments -5.3% 1.1% 2.6%
Caterers -0.8% -1.1% 1.7%
Bed & Breakfast & Hotel Accommodations -3.8% 0.5% 1.3%
Table 2
Wedding Attire Industries
Related IBISWorld Industries
Growth
Source: IBISWorld
Wedding Attire: Related Industries 2007-2009 2010 2009-2012
Clothing Accessories Stores 0.7% 3.8% 5.3%
Hair & Hair Salons -3.0% 2.0% 2.6%
Lingerie, Swimwear, Uniform & Bridal Stores -10.2% 1.2% 2.3%
Women’s Clothing Stores -4.7% 1.3% 1.5%
Shoe Stores -5.0% 0.2% 1.4%
Formal Wear & Costume Rental -.07% -3.0% -1.1%
Men’s Clothing Stores -4.2% -2.6% -1.5%
Department Stores -5.3% -1.5% -2.5%
Table 3
Wedding Ring and Flower Industries
Growth
Source: IBISWorld
Wedding Rings & Flowers: Related Industries 2007-2009 2010 2009-2012
Jewelry Stores -4.6% -0.8% 1.2%
Florists -7.4% -1.4% -0.6%
Source: IBISWorld
that an estimated 30% of this industry’s revenue comes from
suit and tuxedo rentals for weddings. IBISWorld has identified
the growth in cheap imports from China as one of the
greatest threats to this industry. More men are purchasing
these imports instead of renting their attire as the price
difference between renting and buying diminishes. As a
result, risks for the formal-wear industry have heightened
over the past few years, something financial lenders need
to be aware of if they intend to serve this sector.
Consistent with most retail operations, the need to adequately
control stock on hand has become increasingly
important to the health and viability of individual operators.
Thousands of retail businesses have experienced considerable
financial losses due to deep discounting and slumping
retail profits over the past several years. The margin of error
between an oversupply of inventory during bad times and
a shortage of inventory during good times is crucial to the
financial health of any single operator.
Wedding Rings and Flowers
Two more sectors—rings and flowers—also fall within the
retail spectrum of industry analysis. The jewelry market
has long been considered one of the higher-risk industries
in the United States, receiving a very high risk rating from
IBISWorld. Over the next 18 months, however, industry risk
will fall into the medium-to-high risk band. The lowered
risk is attributable to improving economic conditions, an
expected decline in unemployment, rising per capita disposable
income, and a stronger wedding market.
The jewelry industry is characterized by very high and
increasing levels of competition, but it has a profit margin
of 10.4%, well above the 7.5% average for the retail sector
as a whole. Jewelry markets are in a strong position to
maintain and grow operations, but lenders must ensure
that profit margins are not jeopardized by the high levels
of competition in this industry.
On the other hand, the florist market is expected to have
a high risk rating in the next 18 months, given that it faces
strong competition from the supermarket and grocery store
industry. Florists will need to focus on individual retailing
segments and special occasions to improve their overall
competitive position. Accounting for about 55% of industry
revenue, cut-flower arrangements represent a major segment
for florists. For those specializing in weddings, this
segment often can generate more than 80% of revenue.
Additionally, the margins associated with a wedding are
very rewarding for businesses that can control stock levels
and implement high levels of quality control. Nonetheless,
having all your eggs in one basket is a high-risk/high-reward
approach for a florist. A look at the history of key sales and
their consistency throughout the year will help minimize
lending risk in this category (Table 3).
Photography
Weddings are the primary source of revenue within the
photography industry, generating 45.5% of industry revenue.
There are no obvious large players in this segment.
Operators generally service specific geographic regions—
from low-cost, part-time photographers to elite, high-end
service providers. These businesses have low start-up costs
and investment requirements, making them a successful
lending proposition. They do not require a great deal of cash
to finance their operations, which reduces lending risk.
Wedding photography has been one of the fastest growing
segments in the photography industry in recent years.
The average expenditure on photography for an American
26
December 2010–January 2011 The RMA Journal

couple reached about $2,500 in 2008, up from less than
$1,000 in 1999. More wedding photos are now being taken
and purchased, while improved post-production services
are a way to add value to increase revenue. This trend
bodes well for lenders, but high photography skills, wordof-mouth
recommendations, and project management ability
are all required for a wedding photographer to succeed.
Furthermore, photography is one of the highest discretionary
areas within the wedding market. During tough times,
many couples will turn to friends and family to produce
the memories of their special day.
Wedding Planners
Planning a wedding can be very daunting for some couples
and their families. For those who choose to hire a wedding
planner, this expenditure can be one of the highest costs.
Not all couples hire wedding planners, which increases the
risk for this sector because it accounts for greater discretionary
spending than many of the other wedding sectors. While
only 2% of total wedding market revenue is derived from
wedding planners, it can often be above 20% for individual
weddings because a couple may hire a wedding planner to
organize everything from A to Z.
Wedding planners experience risks similar to those faced
by other wedding sectors. After all, in arranging a wedding,
the planner deals with every one of those industries. One of
the biggest constraints for wedding planners is incorporating
their markups on top of prices quoted by third parties.
Successful wedding planners maintain strong relationships
with a wide range of service providers, have a good reputation,
and are able to provide unique solutions to meet
individual client demands. Lenders must recognize these
success factors and understand the financial responsibilities
and liabilities involved when wedding planners are managing
multiple service providers.
The “Other” Category
“Other” captures all the remaining items that a typical wedding
includes. Some are more traditional purchases (invitations,
reply cards, and rehearsal dinners), while others are
more discretionary in nature (transportation and music).
For nearly all of these services, there can be a high risk of
product or service substitution, and an operator without
significant recognition will experience low customer attainment
and sales.
Conclusion
Ranging from accommodation and food services to retail,
transportation, and professional services, the industries
involved in organizing and carrying out a single wedding
event are significant. For industries with a high revenue
concentration associated with weddings (such as wedding
planners and photographers), the success of their business
is linked directly to the economic and social trends affecting
wedding spending. For the many other service providers,
wedding-related revenues are a key variable in business
performance and profitability.
For lenders to these businesses, the high level of competition
and the ease of substitution among service providers
pose additional business risks. Since getting repeat business
from satisfied customers has its limits, the most successful
operators benefit from consistently high word-of-mouth
recommendations and referrals. Given the length of time
from engagement announcement to wedding day, operators
with a strong track record and well-established businesses
will have a distinct advantage in generating and managing
an order book consistent with their business capacity. v
••
Toon van Beeck and George Van Horn are senior analysts with IBISWorld. They can
be reached at toonv@ibisworld.com and georgev@ibisworld.com.
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The RMA Journal December 2010–January 2011 27