Industry trends are patterns or trends that occur within a specific industry. These trends may relate to price, cost, consumer purchasing, marketing, manufacturing, sales methodology or any number of other areas. Trends occur within every industry and can provide companies with important data to help them remain competitive in the marketplace.
While industry trends can move quite quickly and change frequently, the term is usually used to describe industry activity over time rather than sudden, brief divergences from the norm. For example, if the consumer purchase pattern of a given item has increased about two percent for each of the last five years, an analyst might say that this industry is exhibiting a slight growth trend. If, however, sales of the item remained relatively static for the first two years, saw a sharp increase in year three and then returned to the previous levels for the next two years, no trend is apparent. Instead, the sales spike would likely be considered an anomaly.
Analysis of industry trends can be very valuable to manufacturers and retailers. Understanding how consumers purchase products can help businesses make decisions regarding allocation of funds and labor. For example, if a manufacturer of scrapbooking embellishments finds that online product sales of craft supplies have increased dramatically while in-store sales are decreasing dramatically, the company may want to focus its advertising dollars on web-based ads rather than on in-store displays.
Watching industry trends can also help businesses stay competitive. For example, several years ago, video rental stores in the United States began phasing out VCR tapes in favor of DVDs. The industry trend was toward the newer media. Stores in this industry had to make a decision: They could either follow the trend and continue to compete for the business of consumers who wanted to rent DVDs or they could fight the trend and position themselves as one of the few locations where consumers could continue to access VCR tapes.
Industry trends can be influenced by a number of factors. A trend toward increased safety standards in automobiles might be tied to government legislation, for example. Likewise, a trend toward shorter hemlines in women’s fashion may be the result of the popularity of a celebrity who is known to wear short skirts. Also, a trend toward use of sustainable materials in a manufacturing sector may be the result of both public demand and a decrease in the availability or affordability of non-sustainable materials.