Top 10 Business Industries In Australia Recovering From High Price Inflation ⛑
Everyone in business is feeling the pinch of price inflation, even those in the top and highest-growing industries. This can result in higher labour, material, and energy prices. The truth is that businesses’ profits will rise if they can pass on these increased costs to customers using higher prices for their products and services. But it’s not going to be that simple.
Many of the negative effects of inflation are caused by buyers’ emotional responses which organisations usually find difficult to foresee. This is the challenge that businesses must face. They require a strong pricing team to guide them in properly establishing their product price to deliver the most profitable offerings in the face of inflationary upheaval.
In this article, we will discuss Australia’s top ten highest-growing industries and sectors as we recover from the pandemic.
We explain the root causes of their difficulties and why raising prices is necessary. Then, we provide advice and guidance on how these leading business segments can maintain profitability and progress in the face of inflation.
At Taylor Wells, we believe that businesses can look into inflation as a positive opportunity to improve their branding, pricing, and product development strategies. By the end, you will know the highest-growing industries and how they can deal with price inflation while growing their respective businesses.
The Top & Highest Growing Industries in Business Sectors in Australia Facing Rising Prices
What is new in the industry and business sector?
A business sector is made up of production, commercial, or service companies that have a similar primary business in terms of the economic activity classification under consideration. It is made up of a number of multiple organisations. Some are small, while others are much huge.
The past two years have dictated that outdated operations, processes, and pricing models are inapplicable for the next phases of modern business. Especially as the landscape for different business sectors become more competitive and as market trends and buyer behaviour change. The past year has shown that adopting a reliable and digitalised operation, thanks to technology, helped many industries cope with drastic and unexpected changes.
However, the business sector is now facing greater challenges with rising prices brought on by geopolitical tensions, and supply disruptions resulting in shortages due to the delay of shipments from across the globe. Inflation is rampant and no business is spared from these challenges.
To help companies and customers prepare, let us explore the highest-growing industries facing inflationary pressures. This way, they can make efforts to remain competitive without damaging their partnership and relationship with customers, suppliers, and shareholders.
What are examples of the top growing industries in Australia’s business sectors impacted by price inflation?
It’s not surprising to see so many individuals out and about, eating out, running errands, and touring now that life is slowly returning to normal. Some industries have rapidly expanded in recent years as a result of new societal and political changes. However, all industries are struggling to deal with one of the most difficult challenges, price inflation.
1. Food Industry
Supermarket grocery prices continue to rise, with a 3% increase on average. Take, for example, processed meat. The average selling price for a pound is now just over $7, a more than 25% increment from a year ago. Even so, it is not the only protein that is more expensive. Steak and eggs are both seeing a 20% price jump. Soda beverages and coffees are also becoming more pricey due to supply chain and labour issues.
As pandemic restrictions ease and more people go out, takeaway food has been one of the top-growing industries in Australia. Customers, however, may find that prices aren’t fair.
Prices in restaurants and takeaways are also rising as a result of transport and raw material shortages. Starbucks, for example, has noted difficulty obtaining various menu items. Furthermore, labour conditions have compelled businesses to increase salaries. Several diners are also incurring new costs, such as purchasing personal protective equipment (PPE), collaborating with third-party delivery services, and managing al fresco dining areas.
2. Medical Sector
Some medical devices, such as defibrillators, rely on raw materials such as metal, plastic, and circuit boards, which are now in low supply and more expensive. Even ambulances are scarce. Furthermore, the prices of some home healthcare commodities are rising. Diaper, sanitary products, and toilet paper makers have confirmed price hikes to resolve supply problems.
3. Electronic Devices and Technology Sector
Microchips are used in computers, filmmaking and video surveillance cameras, televisions, kitchen equipment, and a lot more. However, there is currently a very severe shortage of such microchips around the world. Manufacturers have struggled to meet demand since the pandemic began and factories were forced to close.
4. Automobile Industry
Vehicles also contain microchips and semiconductors. Regrettably, when the pandemic began, many car manufacturers presumed a sales drop and cancelled microchip orders. Once restrictions began to ease and sales were reinstated, factories really can not meet the growing demand. Ford, General Motors, as well as other automakers will likely produce up to 5 million automobiles this year, with prices rising by about 8%.
Typical customer buying tactics, such as shopping at the end of a month or quarter when salespeople are under a deadline to meet targets, will most likely be insufficient to avert price hikes. Even used cars are not always the best option. Based on the CPI, second-hand car costs have risen by 31.9%.
Nevertheless, experts believe that consumers are prepared to pay more if they really need a car. According to some analysts, inventories may begin to replenish late this year. But the shortage will continue to be felt throughout the year.
Even rental car companies are in the business sector examples of the top & highest growing industries in Australia that aren’t exempted from price rises.
When the pandemic restrictions were just beginning and almost no one was travelling, rental car providers managed to sell off large portions of their automobiles for profit. Normally, this only happens when a company intends to shut down. At present, with the scarce supply and high demand, the average cost of renting a car is roughly 75% higher than last year. This is amplified in part by a shortfall of drivers willing to drive in confined spaces with their clients.
5. Fuel Gas Industry
Several economies that generate crude oil, which is used to make gasoline, lowered output when travelling was restricted. Prices rose as people take road trips since they think it was the safest way of transportation. However, producers weren’t ready for the renewed demand and prices were lifted to offset the challenge posed by the low supply. Gasoline prices have risen by 43% in the last year.
6. Housing and Real Estate Sector
7. Home Furnishing Sector
The Christmas season is approaching fast. A time when many families redecorate their homes. They may, however, have a more difficult time securing enough funds for Christmas decorations. The American Christmas Tree Association forecasts that both live and synthetic trees will be in low supply this year.
Global temperature incidents such as fires and drought have harmed tree crops, while a transhipment shortage could raise artificial tree prices by up to 25%. Additionally, decorations to style up decorative trees may be more pricey and difficult to find.
8. Clothing and Fashion Industry
Clothing prices have risen more than 4% in the last month. Why? One of the primary reasons is the rise in cotton prices. Retail employees are also demanding higher pay. And, as sportswear has become a trend, its prices have risen. While the cost of dresses has increased by 12%, men’s suits have increased by 5%. Prices rose 1.4% for boys’ clothing and 2.8% for girls’ as children went to school.
9. Toys and Gaming Sector
Huge toy companies have expressed concern that the supply of some of the most favourite products will be limited. The international freight recession is once again to blame. Even companies that have pre-arranged cargo containers intend to raise prices by up to 10% to compensate for the additional shipping costs.
Video games are also among the top and highest-growing industries impacted by price inflation in Australia.
In the last year, the amount of money spent on video games increased by 35%. However, Nintendo and Sony have stated that due to a shortage of microchips, they won’t produce as many Switch and PlayStation 5 consoles as much as they would like. Prices are likely to rise as a result of scarcity. The games have also risen in price. Game developers are citing increased costs as games become more advanced.
10. Publishing Industry
Publishing houses are warning about the limited supply of printed books. Adult and young adult fiction drove the uptick in book sales, which recently rose by 19%. Conversely, due to paper shortages, labour issues, and shipping difficulties, booksellers are finding it hard to print as many books as readers want to read. Due to the price increase, some bookworms who are not used to reading online copies may have to opt for e-books.
So, how do the highest & top-growing industries in the business sector handle rising prices in Australia?
Although inflation is commonly regarded as a stressor, businesses can view it as a time to initiate organisational and corporate development rather than an unpleasant issue to overcome. Here’s what to do:
1. The business sector may choose to restructure its product and service lines which serve as examples for the top growing industries in Australia.
Companies can either develop offerings or introduce customers to lower price points for best-suited items. How are they going to do it? They can gather ideas from behavioural findings to direct customers towards more profitable options. Moreover, they can present less pricey plans or higher-end products to make it seem like the other product line is more affordable.
2. The top growing industries can also realign their brand to define what is new in the business sector in Australia.
Inflation can actually be an opportunity for companies to assess and realign their product price positioning for the better. When a product is overpriced, the company can cut marketing costs while also lowering the price to facilitate a more viable positioning.
What about low-cost items? The unpredictability caused by inflation, coupled with customers’ preconceptions of having to pay more, creates a chance to shift messaging and position a product at a higher price level. This is especially appealing for businesses that previously relied on low prices to remain competitive.
3. More than ever, the business sector must collaborate with its pricing teams to model good examples of driving value.
Companies have to fully comprehend pricing prospects throughout products and services. Only then they can commit to priorities for passing through price rises while protecting or expanding margins.
Our findings show that with the right setup and pricing team in place, incremental earnings gains can begin in as little as 12 weeks. The team can capture at least 1.0-2.25% more margin after 6 months using well-researched price management techniques. After 9-12 months, organisations are frequently generating 3-7% higher profits every year as they find more complex and previously unrealised possibilities, efficiencies, and risks.
With innovative methods and strategies, the highest growing industries can be more aware of margin risks. This can also be translated into clear pricing objectives and communicate it to customers. Research findings have already demonstrated that despite the many financial obstacles, pricing is still the most powerful profit margin driver. And industries that rely on old-fashioned pricing techniques, detached from input prices or customers’ willingness to pay, will fall well behind as their profits decline.
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Are you a business in need of help to align your pricing strategy, people and operations to deliver an immediate impact on profit?
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