Wedding Industry - IBISWorld

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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
Page 1 and 2: Economic Environment Flowers Decemb
Page 3: Figure 1 Number of Weddings versus

Wedding Industry - IBISWorld

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