Industries ebb and flow over time, so today’s top industries experiencing strong revenue growth are different than the industries that once ruled the United States. Some were already in decline, and the coronavirus gave them a big push over the edge. Others were moving along quite well, recording strong revenue growth until the coronavirus forced businesses to shut down.
Expert analysis reveals which industries are in decline, and which probably have many years of strong growth to come.
What are Declining Industries?
Declining industries are those that once posted strong industry revenue but now are seeing falling numbers instead of revenue growth. Some of these areas have turned stagnant and are holding steady instead of displaying growth. COVID 19 changed everything for the economy, shifting some services into negative growth.
Understanding Declining Industry
An industry is in decline when it doesn’t keep up with the growth in the rest of the economy. Changing technologies or preferences of consumers, government regulations, and new competition are three possible reasons an industry can enter decline or lack growth.
There are many factors that go into whether an industry starts to decline. Sometimes dying industries rebound later and return to growth.
10 Fastest Declining Industries in the United States in 2020
Here’s a list of the 10 industries that are declining the fastest in the U.S.
Movie Theaters
Consumer spending on movie theaters plunged in 2020 because the government forced them to shut down due to the coronavirus. Movie theaters had no revenue coming in, so they laid off employees and waited until the COVID 19 pandemic was over. Unfortunately, they’re still waiting, as is almost every other industry.
Car Rentals
Car rental companies have been hit by the damage to the tourism industry. People have been staying at home during the pandemic, so there is no room for revenue growth in this industry.
Musical Groups & Artists
The entertainment industry, in general, has taken a huge hit, taking a bite out of the income of many musical groups and artists.
Hotels & Motels
The hotels and motels industry was also hit by COVID 19. This industry won’t be able to rebound until consumer confidence recovers, and people start to feel safe while traveling.
Petroleum Refining
Industry operators in the petroleum refining industry have been watching their revenue fall for the last several years. A report from IBIS stated that industry revenue for petroleum refiners was expected to fall at an annualized rate of 10.2% between 2015 and 2020. Falling oil prices have also impacted the industry.
Airport Operations
Uncertainty due to the coronavirus has also taken a bite out of airport operations. Consumers don’t want to fly because they’re worried about catching the virus on a plane. The same trend is occurring in multiple countries. Ticket sales are down, although they did tick upward a bit around the holidays.
Trade Show and Conference Planning
Trends in the trade show and conference planning industry are also negative because of the virus. Large events are on hold due to one of the worse crises in history. Declines are expected into 2021.
Laser Tag Arenas
Laser tag arenas have also seen a contraction in their industry revenue because of the pandemic. During the widespread lockdowns across the country, consumers couldn’t go to laser tag arenas. Now that things have opened back up in America, many services are back up and running as well, but customers don’t feel safe going to places that will put them into close contact with other people.
Sightseeing Transportation
Sightseeing transportation in many areas is also down because of declining tourism. Globalization has taken a huge step back because people are more comfortable staying home.
Mining, Oil & Gas Machinery Manufacturing
Oil producers in every country have struggled with low oil prices and an oversupply. As a result, manufacturers that produce equipment for mining and oil and gas production have taken a hit.
Situations That Prevail in a Declining Industry
In a declining industry, demand and profit fall, whether due to increased competition, new substitutes for goods, changing trends, digitization, or some other changes or effect.
Strategy Options in a Declining Industry
To deal with the low growth rate or lack of growth, companies have several options.
Harvesting
Harvesting involves prioritizing profitability and cash flows over market position or revenue. Investment is not made with cash flows, and the quality of products sold may be reduced. For example, product manufacturing firms use their equipment as long as possible instead of buying new equipment.
Niche or Focus Strategy
This strategy to spur revenue growth involves identifying a niche market. Every market, no matter what state it is in, has various niches that include certain industrial products. Firms that are in a declining industry can look for a niche within their industry where they can generate more sales, more attractive pricing, and a better performance result.
Divestiture
Firms can also unlock value by divesting a part of their operation. Some examples of things that could be divested include land, materials, equipment, or operating segments. The sales proceeds can then be used to improve the core business.
Low-Cost Strategy
Most firms also have the ability to bring costs down, whether that means decreasing the cost of materials for the goods they use and sell or looking for substitute products that cost less.
Management may also choose to eliminate services or product lines that are less essential to the company. They can redesign internal processes, consolidate production, or make other improvements.
Differentiation
A company can also reap benefits by differentiating itself from competitors. Taking advantage of anything that makes the company different from others can help build capital and improve the revenue growth rate.
FAQs
What are the 5 largest industries in the world?
According to Ibis World, the industry at the top of the list for 2020 by revenue was global life and health insurance carriers. The other top four sectors in order from most to least were global pension funds, global oil and gas exploration and production, global commercial real estate, and global car and automobile sales.
What are the 4 main industries?
The four main sectors of industry are the primary sector, which includes the raw materials industry, the construction and manufacturing sector, the service industry, and information services. Human services also represent an important part of the economy.
What is the least profitable industry?
Many factors go into which industry is the least profitable. According to Sageworks, which is cited by the Huffington Post, beverage manufacturing had the lowest net profit margin number in 2020 at 0.3%.
What is a declining market?
A declining market is one in which demand is falling or stagnant. Such markets have transitioned from maturity, in which sales and income are flat to slightly up, to declining due to weaker demand. Slower consumer spending and demand are the first signs that a market is in decline.
Which industry will be gone in 15 years?
Industries have always come and gone in the world’s economies due to various factors. According to MSN, telemarketing is the one industry that is most likely to die out completely. Robots have been serving as substitutes for the majority of human telemarketers for some time. This trend is likely to continue.
Other segments that are dying include print media, staffed retail services, and legal research, which has artificial intelligence as a replacement.
Summary
An industry facing declining growth due to weak demand has much work to do. Economies go through changes in technology, consumer behavior, demand and distribution trends, and other elements that create the potential for volatility in the market. A company must use all the resources at its disposal to try to spur growth. If growth isn’t possible due to the nature of the industry, then it will have to look elsewhere for appreciation.
