Six Flags earns 80% of its revenue between Memorial Day and Labor Day, so what does the Amusement Park Industry do to generate revenue in the off-season?
The Amusement Parks industry, which consists of theme parks and water parks that provide thrill rides, animal exhibits and other attractions, is highly dependent on seasonal factors such as weather and school vacation dates, meaning the industry is subject to high revenue volatility throughout the calendar year. This is especially true in northern states where cold weather forces parks to close come October. Most amusement parks are open between late spring and early fall to accommodate the school holiday rush. For example, Six Flags, which operates 16 amusement parks in the United States and holds a 6.4% market share, earns 80.0% of its revenue between Memorial Day and Labor Day.
To mitigate the industry’s high seasonal volatility, combination indoor/outdoor parks are becoming increasingly popular. While summer will always be the most popular time to visit water parks, savvy operators learned they can earn revenue year-round with water attractions in heated, indoor environments. Indoor water parks are expensive to develop and maintain, however, the extra revenue earned through indoor attractions will more than cover the rising outlays.
Sunscreen manufacturers prepare, blend, compound and package sun protection lotion, cream, spray or other topical applications to protect the skin from harmful, cancer-causing UV rays and help prevent sunburn. In the United States, the Sunscreen Manufacturing industry earns an estimated $382.4 million annually, with multinationals Bayer AG and Johnson & Johnson representing the largest domestic sunscreen producers. Growing awareness regarding the risk of skin cancer and aging associated with UV rays has spurred an increasing number of consumers to use sunscreen over the past decade. However, customer orders for sun-care products are highly seasonal, which has historically resulted in higher sun-care sales to retailers during the late winter through midsummer months.
Convincing consumers that sunscreen is essential beyond the summer months is not an easy task. However, producers are increasingly marketing sunscreen as both a health and beauty product that helps nourish skin. Additionally, more evidence supports nonsummer months as an important time of year to continue routine use of sunscreen during outdoor activities. Studies have shown that dangerous overexposure to UV radiation can still occur during the coldest months, particularly in high-altitude areas and locations where UV rays can be reflected by the snow. For skiers and snowboarders across the country, sunscreen may soon join helmets as an essential item to grab before hitting the slopes.
Ice Cream & Gelato Store Franchises
The sluggish economy, rising competition from frozen yogurt stores and increasing health consciousness of consumers have put pressure on the Ice Cream and Gelato Store Franchises industry over the past five years. However, it is the high seasonality of demand that poses the biggest challenge for ice cream store operators. Demand usually surges during summer when consumers flock to ice cream eateries for relief from rising temperatures, but most consumers prefer to warm up with hot coffee and cookies during the colder months
As a result of seasonal demand, many ice cream stores shut down or convert their menus to sell a higher proportion of winter treats when ice cream demand falls with the first leaves in autumn. Another increasingly lucrative way for ice cream and gelato stores to quell declining sales in the cooler months is to wholesale their products to supermarket chains and restaurants. For example, restaurant chain Friendly’s, which is most famous for its ice cream sundaes, now sells its ice cream products to 7,500 supermarkets nationwide, including a new contract with Walmart. In-home ice cream consumption is rising and restaurants often prefer to sell locally produced desserts such as gourmet ice cream.
Breweries in the US
The summer season generally correlates with much higher sales for the Breweries industry. Barbecues, federal holidays, vacations and extended travel all contribute to the increased consumption of alcohol during the hot summer months. Only a few years ago, ice-cold weather was a sure sign of cooling beer sales; however, in today’s diverse market for alcohol, each turn of a calendar page marks another major marketing opportunity for US brewers. Limited-edition seasonal flavors have become serious revenue earners, particularly for brewers of craft beer. Pumpkin and cinnamon spices are popular fixtures for the fall season, cream stouts and extra bock offerings provide a thicker consistency for cold winter nights and light, citrusy beers have become spring staples for many consumers.
Home Improvement Stores
Home improvement stores generate a significant portion of sales in the warmer months, not just from home improvement materials and supplies, but also from summer retail items such as barbecue grills, outdoor pools and other leisure goods. Home improvement store operators enjoyed a prosperous summer in 2014, as homeowners in the northeast repaired damage caused by severe winter snowstorms, and the housing market rebound encouraged people to invest in their dwellings. However, sales at major home improvement stores including Home Depot and Lowe’s tend to drop off significantly during the cooler months, when severe weather causes declines in both home improvement activity and leisure time.
Home improvement stores attempt to mitigate losses in cooler months through increased holiday shopping campaigns. Black Friday deals, after-Christmas promotions and weekly circular advertisements have all become staples of the industry’s recent splurge in off-season marketing. Home improvement stores are also selling a larger array of consumer staples, such as toilet paper and cleaning supplies, to generate more foot traffic during winter.
Landscaping, maintenance, lawn care and exterior home projects are often put on ice during the colder months. . However, as the US real estate market continues to recover from its prolonged supply glut, new and existing homes are undergoing an increasing amount of landscaping services throughout the year. In particular, landscapers have increased the number of services aimed at preserving lawns and gardens over the winter months. This process of ‘winterization’ includes services such as autumn fertilization, aeration, mowing and raking services, all of which are considered investments toward ensuring the grass is always greener on your side of the street. Additionally, many landscaping businesses use their existing equipment to provide value-added fall and winter services such as snow plowing, salting, leaf clean-up, gutter cleaning and firewood, enabling operators to rake in revenue year-round.
Thanks to IBISWorld for the information in this article.