U.S. industries ranging from apparel manufacturing to appliance repair are still struggling to recover from the recession, with foreign competition and changing consumer preferences likely to make their future prospects bleak, according to a new report.
In a rating of the top 10 riskiest industries of 2014-15, market research group IBISWorld assigned the highest risk — a measure of the relative likelihood that an investor or creditor would receive a negative return on an investment in a particular industry over 12 to 18 months — to appliance repair.
Where household appliances were once important, expensive purchases, with most of them intended to last for a long time, the report notes, they have in recent years “generally become inexpensive and lower quality.” As a result, “households have been increasingly throwing out old appliances and replacing them with new ones” instead of investing in repair.
Demand for appliance repair services has also been reduced by the growing prevalence of manufacturer warranties that replace malfunctioning appliances and by online do-it-yourself repair information, IBISWorld says.
The report cites apparel manufacturing, computer manufacturing and small household appliance manufacturing also among the riskiest industries. In those cases, the businesses are victims of foreign competitors that have substantially lower labor costs.
Somewhat brightening the outlook for computers, the report says, is the increasing demand from data processing and hosting services and from niche markets, such as avid video game players, that want individually designed machines.
There are only dark clouds on the horizon, however, for the DVD, game, and video rental and recordable media manufacturing industries amid technological changes that, IBISWorld notes, “have dramatically altered media consumption habits.”
DVD, game, and video rental has eroded to less than 30% of its $12.9 billion peak in 2004 as consumers have switched to “convenient and inexpensive substitute services,” including on-demand and web-streaming movie and TV show rentals, the report says.
As for recordable media, the growing demand for 3D movies may “stem the decline in industry revenue to some extent, much as Blu-ray discs have done over the past five years,” but that is not expected to counteract the long-term negative trends affecting the industry.
Also among the 10 riskiest industries this year and next, according to IBISworld, are corn farming; cigarette and tobacco manufacturing; and cigarette and tobacco wholesaling.