What is a Growth Industry?

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A growth industry is characterized by huge profits, market demand surge, soaring sales figures, and inundation of investments. All companies that are part of the industry exhibit a higher growth rateGrowth RateThe Growth rate formula is used to calculate the annual growth of the company for a particular period. It is computed by subtracting the prior value from the current value and dividing the result by the prior value.read more than their peers. They hold up against the competition and thrive in the future. Therefore, being part of such an industry or making any investment in it would most likely yield positive results.

Key Takeaways

  • Growth Industry is an economic sector developing at an unprecedented pace, much higher than other segments of an economy. Its features are massive investments, escalating demand for products/services, consistent revenue growth, and sky-rocketing sales figures. Factors like customer preferences, lifestyle changes, legal amendments, and technology revolutions stimulate a growth industry. Healthcare, remote learning technology, online retailing, OTT platforms, and pharmaceuticals are some leading growth sector examples.

Growth Industry Explained 

The notion of a growth industry stems from humanity’s ever-changing requirements and a business sector’s potential to accomplish the same instantly. Thence, an industry resilient to market fluctuations with scope for further expansion prospers more briskly than others. 

The key attributes of companies in growth sectors are:

  • High stock prices and market valueConsistent revenueRevenueRevenue is the amount of money that a business can earn in its normal course of business by selling its goods and services. In the case of the federal government, it refers to the total amount of income generated from taxes, which remains unfiltered from any deductions.read more growthIncreased production of goods and servicesEffective risk managementImproved quality of goods and servicesHigh employment rateOutstanding customer experienceProfound market knowledge

These companies are not rigid in their operations or work strategy. Rather, they put the current and future market demands at the heart of their professional endeavors. It ensures continual growth subject to technological, regulatory, and societal changes. 

Owing to the Coronavirus pandemic, there has been a vital shift in consumer demand of late. It has triggered the arrival of various growth industries like healthcare, remote learning, online retailing, virtual reality, OTT platforms, cryptocurrencyCryptocurrencyCryptocurrency refers to a technology that acts as a medium for facilitating the conduct of different financial transactions which are safe and secure. It is one of the tradable digital forms of money, allowing the person to send or receive the money from the other party without any help of the third party service.read more, etc. 

The growth industry is often a pioneering commercial sector arising from the demand for new products or services. However, that is not always the case. At times, it is a commercial sector that has been in the market for a long but just recently gets the perfect business growth opportunity. 

Let’s understand this from a recent example. Products like surgical masks, hand sanitizers, and gloves have been on the market for quite a long time. Nonetheless, the outbreak of COVID-19 spurred the growth of these healthcare items to a massive extent. Hence, lifestyle changes and consumer preferences can also catalyze a growth sector. 

Furthermore, software and information technology have long been a competitive segment, but the COVID-19 crisis has accelerated their growth further. Companies are pushed to digitization, with cybersecurity and cloud computing emerging as essential components of an organization. Thus, the market value of companies in these sectors has shot up considerably.

Though hard hit by the pandemic initially, the travel and tourism industry is also projected to expand with the lifting of travel curbs. Thus, besides societal changes triggered by unpredictable events, legal regulations also influence the rise or fall of an industry.

Growth Industry Examples

Example #1 

The electric vehicle industry is a fine example of a sector with a high growth rate. The electric vehicle industry has consolidated its market position over the past decade, catering to a niche market.

Most countries have been enforcing regulations to protect the environment. As part of sustaining the environment, governments in these countries have extensively promoted electric car usage through fiscal incentives and subsidySubsidyA subsidy in economics refers to direct or indirect financial assistance from the government to an individual, household, business, or institution to promote social and economic policies.read more schemes. As a result, the demand for electric cars has risen over time worldwide. Consequently, the electric vehicle industry has emerged as a prosperous industry in recent times. 

Example #2

As per the latest news report by Forbes, Artificial Intelligence (AI) and data-driven “smart businesses” will supposedly thrive in 2022. The adoption of private 5G, smart manufacturing and supply chains, and virtual connectivity through the cloud services are expected to revolutionize several sectors putting them in the league of growing industries.

Example #3

Another Forbes report discusses how the biotechnology industry is a force to reckon with in the future. The COVID pandemic has placed the industry at the forefront. With the increased development and adoption of biotech solutions in the field of medicine, farming, environment, artificial food, etc., its growth trajectory is to look out for in the coming years.

Fast Growing Sectors

The U.S. Bureau of Labor and Statistics predicts that five out of twenty fastest-growing industries (2019-2029) are in healthcare and social assistance. The surge is due to longer life expectancies, caring for the baby-boom population, and constant growth in the number of patients with chronic health conditions. 

The individual and family services sector currently accounts for a high growth rate, followed by computer systems design and related services and home health care services. On the other hand, sectors like tobacco manufacturing, forestry, cable, and other subscription programming register dwindling growth. 

The manufacturing sector is also losing ground due to the emergence of productivity-boosting technologies. However, computer-based industries, including information security, are expected to expand rapidly. 

Lately, IBISWorld reported the top 10 fastest growing industries in the U.S. by revenue growth (%) in 2022. Here lies the listing. 

  • Movie Theatres in the U.S. (142.8%) Concert & Event Promotion in the U.S. (101.4%)International Airlines in the U.S. (74.7%)Travel Insurance (62.1%)Cruise & Travel Agency Franchises (59.7%)Airport Operations in the U.S. (41.1%)Water Parks (41.4%)Hotels & Motels in the U.S. (41.1%)Travel Agencies in the U.S. (39.8%)Musical Groups & Artists in the U.S. (39.2%)

This has been a guide to What is Growth Industry and its Definition. Here we discuss the meaning and examples of the growth industry with explanations. You may learn more about financing from the following articles –

A – Currently, the growth sectors are health care, individual & family services, outpatient care centers, scientific and IT consulting services, etc.

A – The list of future growth industries includes Fast-moving Consumer Goods, Automobiles, Information Technology (IT), Artificial Intelligence, Electric Vehicles, and Infrastructure.

A – The current market volatility, changes in your lifestyle, technological transformations, and market-related regulations affect a growth sector to a huge extent.

A – A company in a growth industry takes calculated risks with a fool-proof plan and makes the most out of the current situation. It optimizes both customer and employee engagement. Furthermore, it continuously updates its products and services according to the existing circumstances and adapts to market needs whenever required.

  • Organic GrowthEconomic GrowthGrowth Investing