|The Borders books chain is bankrupt, but bookstores in general are doing better than many industries, thanks to changes in their business model that answer how consumers are finding and buying books now.|
Blockbuster ( BBI), its woes reflected in the state of the DVD, game and video rental marketplace, could be a poster child for dying industries. "In 2000, Blockbuster was a thriving business and the most dominant player in the $12.2 billion industry. Today, Blockbuster is bankrupt, and the industry is 35.7% smaller than it was a decade ago," van Beeck wrote in his analysis. Demand for the sort of media Blockbuster built its one-time empire on is as strong as ever, he says. What changed is that the company, and many like it, weren't prepared for how the Internet, digital cable, satellite TV, big box stores and mail-delivery services such as Netflix ( NFLX) would change consumer habits. What was once a weekend night at home can now be an everyday occurrence without the need to drive to a specialized, bricks-and-mortar location. The industry's revenue of roughly $7.8 billion last year is down nearly 36% since 2000, with a 20% drop-off projected over the next six years.
Proms and weddings may be joyous occasions, but there isn't much smiling these days for those in the business of formalwear and costume rentals. The old-school business model was fairly simple. Important events demanded expensive attire few would wear often enough to afford and, therefore, rented the outfit instead. There are new ways these days to go black tie, however. "China and other low-cost apparel manufacturing countries have been able to produce lower-cost suits and costumes for the U.S.," van Beeck says. As the cost is driven down, consumers are increasingly weighing the value of renting an outfit or, for slightly more, buying one to keep and reuse. Not everyone is suffering equally. Men's Wearhouse ( MW), with about 50% of the market, is the largest in the marketplace, and that scale gives it a leg up on the competition, according to van Beeck. "But the industry as a whole, when you include all of the smaller players, is getting hit pretty hard," he says. IBISWorld says the industry pulled in roughly $736 million in revenue last year, a decline of 35% from 2000. It forecasts a further revenue drop of 14.6% through 2016.
Textile mills, and companies that create socks, carpeting and knitted apparel, have faced a difficult time due to overseas competition. Because facilities outside the U.S. can make these products more cheaply, domestic demand has plummeted. The industry, with nearly $55 billion in revenue last year, has lost 50% of that income stream since 2000, with another 10% reduction unraveling by 2016, according to IBISWorld. There is one bright spot. U.S. companies producing nonwoven fabrics still have a global upside because other countries have not yet perfected the technology to produce flame-resistant or moisture-absorbing fabrics. This niche area is good news for such companies as Hanesbrands ( HBI) and Warren Buffett's Berkshire Hathaway ( BRK.A), a major player in the mill space.
Sounding a similar story, apparel makers have been squeezed out of their profits by the cheap labor and materials offered offshore. The $13 billion industry saw revenue falling 77% over the past decade, bottoming out so badly IBISWorld foresees an additional 8.5% drop by 2016. Like mills, the news isn't all bad. In addition to the prominence U.S. manufacturers have in making certain specialty fabrics, there are competitive strengths in apparel design and brand development, the IBISWorld report says. U.S.-based operators possess advanced advertising and promotional skills and have access to a large consumer market.
Manufactured-home dealers stand out from all industries in IBISWorld's database, van Beek says, for having some of the steepest declines. "The coming forecast period is demonstrating no signs of anything positive," he says. This industry saw a 73.7% revenue decline since 2000, according to IBISWorld. It is forecast to see its revenue, now about $4.5 billion, drop another 62% by 2016. Multiple pressures are hurting this industry and, in turn, companies such as Berkshire Hathaway subsidiary Clayton Homes. Demand is dwindling, sustaining profit is very difficult and there has been stagnation. "It hasn't really just been the past few years that they have declined," van Beek says. "It has been many years now. They are quite possibly the hardest hit of all. The industry has just been getting smaller and smaller each year because demand has been dwindling." "During the past decade, operators have experienced very little product change," the IBISWorld report says, singling out a self-induced factor for the decline. "Manufacturers have made cosmetic changes to manufactured homes, but they have not been significant enough to alter their life cycle stage." "The industry just hasn't been able to evolve and is ultimately dying a slow death," van Beek says. >To submit a news tip, email: email@example.com. E-Mail This Article to a Friend >>
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