The Australian coffee industry is expected to grow in revenue by an annualised 5.3 per cent over the five years through 2013-14 – a substantial amount of growth.

This expansion can be attributed to an Australian love of coffee, according to research firm IBISWorld – one that stems from an influx of European immigrants after the Second World War. The population surge resulted in mass coffee shop production with distinctly European styles and flavours, popularising the drink.

These European influences continue to this date, with independent, uniquely styled cafes populating the market. These niche coffee shops have raced ahead of franchises and chains, becoming the preference for buyers.

This growth will likely continue, with chains having to change retail branding in order to remain current. Other factors play a part too, and impact how a coffee shop is received.

“An establishment’s success can often be determined by the level of customer service, the price and quality of produce and the overall cafe experience,” said Stephen Gargano, an IBISWorld industry analyst.

Consumer understanding will continue to be vital for both independent coffee shops and chains, especially as competing independent stores open. Over the next few years, retail research will be required in order to understand the market.

Failing to do so could result in loss of business to competitors and market irrelevance – as well as potential financial damage if too big of a loss is taken.

“The ability to understand and cater to the specific characteristics of consumer demand has driven the success of some players, and proved to be an obstacle for those that fail to incorporate them into business operations,” said Mr Gargano.

An understanding of retail trends will go a long way throughout the next few years for coffee shops – especially in an increasingly crowded marketplace.