| AM31023 |
| AMA RESEARCH MARKET REPORT : Electrical Wholesale Market Report June 2003. |
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BRIEF DESCRIPTION
| Covering the years 1996-2006, this report analyses the electrical wholesale market in terms of market size, trends, opportunities and threats. The major product sectors are reviewed in terms of wholesalers' share per product group, product mix changes and key product trends. The major wholesalers are analysed, with information on their financial results, market shares, market position, major suppliers, buying criteria and the role of the 'super distributors'. |
| Key issues covered in the report are: |
| A DETAILED ASSESSMENT OF THIS £2.8 BILLION MARKET - with a review of recent trends, interpretation of current developments and future trends alongside a long term forecast. |
| SPECIFIC AND RELEVANT INFORMATION - collated using a wide range of sources. |
| ANALYSIS BY PRODUCT GROUP:- |
| Cables Ventilation |
| Wiring Accessories Fire and Security Systems |
| Circuit Protection and Switchgear Testing |
| Measuring Equipment |
| Lighting Trunking & Cable Accessories |
| Space and Water Heating |
| Product Opportunities |
| REVIEW OF END-USE SECTORS - including distribution, renewable energy, UPS, portable accommodation, oil and gas, marine, water and sewage, air conditioning, transport, legislation etc. |
| The report is one of a series published by AMA on the electrical industry in the UK, including Electricity Generating Sets, Uninterruptible Power Supply Systems, Electrical Accessories, Lighting, Panel Builders, Building Management Systems, Electrical Contractors and Security, as well as a database of panel builders. |
| Of particular interest:- |
| Review of extensive Product Opportunities to expand the Electrical Wholesalers' range. |
| Review of competitive channels to the Electrical Wholesalers. |
| Review of key influences motivating the UK Electrical Wholesalers market and growth prospects |
| Analysis of key product segments in terms of market size, growth prospects, and key suppliers. |
| Analysis of the Electrical Contractors. |
| Key areas of coverage in the report include:- |
| THE MARKET |
| The infra-structure of the electrical products market - suppliers, distributors, panel builders and contractors. |
| The electrical wholesale market size in value terms, from 1996 and forecast through to 2006. |
| Market trends including future trends, and opportunities and threats. |
| Major factors influencing growth, competitors, construction & building prospects, product sectors etc. |
| THE WHOLESALERS |
| Major Electrical Wholesalers, number of outlets, key characteristics, regional strengths, market positioning etc. |
| Market shares of major wholesalers. |
| Large regional Wholesalers, selected local companies. |
| Wholesalers strengths and weaknesses, key competitive elements, opportunities and threats - alternative channels of distribution (Electrical Component Distributors, DIY etc). |
| Customer mix of the Wholesalers - Contractors, Panel Builders, etc. |
| Nature and operation of the electrical contracting market. |
| Buying criteria of the electrical contractors. |
| Review of panel building market and buying criteria. |
| Role of the 'Super Distributors'. |
| Role of Buying Groups in the industry. |
| PRODUCTS |
| Market size per major product area - cables, lighting, wiring accessories, circuit protection and switchgear, heating and ventilation, fire and security systems, etc. |
| Sales through electrical wholesalers by major product areas. |
| Product sectors, definition, electrical wholesalers strengths and weaknesses by product, key competitive channels per product. Trends by product group. |
| Factors influencing wholesalers' stocking policies. |
| Major suppliers by product area. |
| FUTURE PROSPECTS/HOUSING/CONSTRUCTION |
| New build, renovation, housing trends. |
| Construction prospects, manufacturing industry. |
| Future developments, implications for suppliers and distributors. |
| Economic influences, growth prospects etc |
EXECUTIVE SUMMARY
| The UK Electrical Wholesale Market is currently experiencing a period of relatively stable trading conditions with the total market in 2002 estimated to be worth some £2.8 billion at wholesaler selling prices. |
| During 2001, severe reductions occurred in telecoms and IT investment, in addition to decline in manufacturing compounded by the effects of foot and mouth disease, inclement weather for construction activities and the fall out from September 11th, led to a weaker market. |
| In general terms, in 2002 and early 2003 certain sectors of construction are performing better than others, for example roads, railways, health, and education, whilst the rate of growth of private commercial construction and housebuilding are at a low level and the decline continues in the IT, telecom and manufacturing sectors. |
| The short-term outlook for the electrical wholesale market reflects the current state of marginal and relatively flat market conditions indicating a decline in real terms. However, the medium to long-term outlook is more positive with forecast low-level underlying growth reflecting trends to increasing electricity consumption, energy efficiency, increasing legislation, a continuously expanding portfolio of 'new' products and niche sector developments such as renewable energy and certain segments of transport mentioned below. |
| In general terms, the following factors are expected to contribute to long-term low-level underlying growth in the electrical wholesaling market: |
| Increasing levels of government investment in health, education, housing etc. |
| Underlying growth in electrical load and electricity consumption due to the expansion of computer applications, air conditioning, automation, etc. |
| Growth in niche end-user markets including fire and security, lighting, site power and portable accommodation, wind farms (renewable energy), and transport (including the application of the new European-wide standard signalling system, ERTMS). |
| Impact of 'energy efficiency trends' stimulating the demand for testing and measuring devices, variable speed drives etc. |
| Trends to increasing legislation motivating the demand for a wide range of products, including higher specification items for hazardous applications, increasing building thermal efficiency, and health and safety products, etc. |
| Expanding opportunities to grow market value by developing sales for the wide range of new, innovative products in, for example, testing and measurement, etc. |
| Resumption of UK spend for major defence projects and the prospect of orders in 2003 onwards. |
| However, there are also certain negative influences, which will affect the UK electrical wholesalers' market in the short, medium and long term: |
| The continuation of depressed conditions in the manufacturing, IT, and telecommunications sectors with no immediate prospect of recovery. |
| Trends to longer product life and in certain instances lower replacement component prices tend to erode the growth of market value in overall terms. |
| Competition for increasing market share from the electronic component distributors, DIY multiples and the 'direct' channel, with regional variations in intensity. |
| Increasing business overhead costs including higher levels of public liability premiums, and the costs of complying with increasing and more stringent levels of environmental and health and safety legislation. |
| Contradictory influences in the UK power market with, on the one hand, the need to replace elements of the ageing infrastructure, and, on the other hand, the adverse impact on investment of low electricity prices. |
| The adverse effect of the Congestion Charge upon electrical wholesalers transport and delivery costs. |
| The major electrical wholesalers groups are Edmundson Electrical; Newey and Eyre and WF Electrical, (owned by the Hagemeyer Group); City Electrical Factors; Rexel Senate (including Denmans); and Routeco. |
| Cumulatively, these groups are estimated to account for some 70% of the electrical wholesalers market, and have steadily increased their market positions through organic growth and the acquisition of regional and local wholesalers. However, the latter still account for a significant segment of the market. |
| Newey & Eyre and WF Electrical (owned by Hagemeyer), alongside Edmundson, account for just under half the market, with City Electrical Factors, Rexel Senate (including Denmans) and Routeco also significant. |
| The principal competing distribution channels to the electrical wholesalers comprise the electronic component distributors, the DIY multiples, the 'direct' channel, and builders merchants, with the latter regarded as posing less of a threat. |
| The dominant position of electrical wholesalers as the leading distribution channel for electrical products is likely to be maintained due to their extensive product range, technical support, competitive pricing and the collective ability to simultaneously handle the widely differing account requirements of various types of customers extending from small contractors to large mechanical and electrical engineers. |
| The major product groups marketed by the wholesalers comprise cables, lighting and switchgear/circuit protection. These categories account for some 50% of wholesalers' turnover, the balance comprising trunking and accessories, wiring accessories, test equipment, fire and security products, electric space heating, ventilation, water heating and 'other' products. |
| Cables represent the largest sector of the electrical wholesalers' product portfolio with an estimated value of £582 million at wholesalers' selling prices in 2002 - approximately 77% of the total product market. Electrical wholesalers generally view the cables market as relatively 'stable', although the long term impact of plastic and glass optical fibres may result in some share erosion. There is little doubt that a revival in IT, telecom, and network data-cabling would result in more positive market conditions to offset the adverse effects of electrical developments such as busbars, decentralised motor starters etc. |
| Lighting has experienced positive growth, with increasing emphasis on 'intelligence', 'long-life' and 'energy-saving' features. The requirements for emergency lighting will also motivate the market, whilst in overall terms it is forecast that the health and education sectors are likely to represent medium and long term areas of opportunity. |
| Circuit protection and switchgear is viewed as a growing sector, being driven by a number of factors including the expansion of building and industrial controls, a general tightening up of health and safety procedures, the demand for intelligent communication from circuit breakers, levels of government funding, and a general increase in the complexity of electrical circuits which tends to require additional switching and additional protection. The outlook for this sector is positive in the short, medium and long term. |
| The security and fire alarm systems markets, including protection and detection systems, are driven by varying levels of perceived terrorist threats, criminal activity levels of construction activity, and legislative requirements. Strong growth in airline automated baggage checking and container freight for civilian and military applications is likely to represent one of a number of long term growth factors. |
| With regard to the space and water heating sectors, electric water heating is experiencing low-level growth driven by the increasing penetration of un-vented systems. The electric space heating sector is in general declining, due to the increasing penetration of central heating systems, and to higher levels of insulation. In addition, the heat output from computers and electronic devices tends to reduce the required levels of heat input from heaters, etc, as does improved insulation in domestic and commercial environments. |
| In general terms, the wiring accessories sector is viewed as 'stable' from the perspective of the electrical wholesalers which is surprising, given the scope which apparently exists in the socket sector for expanding sales. However, it should be emphasised that this sector in particular is experiencing severe value deflation due to the dominance of imported products from the Far East which in turn may lead to 'declining' value in the overall wholesalers' market. |
| Ventilation (mechanical air movement, not natural ventilation) is viewed as relatively 'stable', with a strong seasonal element due to climatic factors, whilst trunking, cable accessories and enclosures/cable trays are also viewed as relatively stable. High-temperature exhaust blowers for 'fast-food' restaurants are viewed as a small but growing segment of the overall ventilation sector. |
| Testing and measuring equipment, and 'other' products, represent areas of significant opportunity for electrical wholesalers with a continual stream of new, innovative items, providing the means to expand product portfolios and ultimately turnover, profit, and market share. These trends are likely to continue in the short, medium and long term driven by diverse influences such as legislation, renewable energy and security, with forecast levels of low, underlying growth. |
| As mentioned previously, a selection of wholesalers' products are expected to perform positively in the long term, contributing to low-level underlying growth. With acquisitive expansion for the electrical wholesalers becoming more restricted, due to an increasing shortage of acquisition targets within the trade, organic growth is likely to come into sharper focus, also including joint ventures with manufacturers, customer and suppliers to develop partnerships and preferential agreements, for example. |
COMPANIES COVERED
Newey & Eyre Group, WF Electrical, Hagemeyer UK, Edmundson Electrical Ltd, City Electrical Factors, Rexel Senate, Denmans Electrical Wholesalers, Routeco Plc, Tricon Automation, Rockwell Automation, William Wilson, AC Electrical Wholesale, Eyre & Elliston Holdings, Holland House Electrical Company, Gibbs & Dandy, Wiltshire Wholesale Electrical Company Limited, Lockwell Lectrics, Parmley Graham, ERF Electrical Wholesalers, Hedley & Ellis, LJB Electrical Factors, The Electric Cable Company (Great Britain) Ltd, Orion Cables, Bridgend Group, L H Evans Ltd, Swanson Mackay, GFE Electrical Wholesale, British Electrical and Manufacturing Company, Alexander McKay, A N Supplies, A & D Cartwright, Underwoods Electrical Distributors Limited, R & B Star Ltd, Moss Electrical, HT Electrical, Crosland, David Harrison & Sons, Northern Electrical Wholesale Limited, Edwards Bros (Dulwich), TN Robinson Ltd, Bonus Electrical Ltd, Cowleigh Electrical Wholesalers, Campion Electrics, Sparks Electrical Wholesalers, Harris and Russell, Scattergood and Johnson, The Wholesale Lamp Company, KMS Electrical Supplies, Bell Horswill, B. Danby, Eldis Electrical Distributors, H.J. Golding, Litelm, Metropolitan Distribution (Jersey), Russells Supplies, Scott Coppola Electrical Distributors, TEC Electrical Wholesalers, McPhail and Meridian, etc, GL Headley, Fellows and Fullwood, R Dinning, Potter & Sons (Swindon), Prescelly Electrical, Celldirect, Pendec, Teeside Industrial Controls.TABLE OF CONTENTS
| 1. INTRODUCTION 7 |
| 2. SUMMARY 8 |
| 2.1 MARKET SIZE 8 |
| 2.2 ELECTRICAL WHOLESALERS 10 |
| 2.3 PRODUCT GROUPINGS 11 |
| 3. ECONOMIC BACKGROUND 13 |
| 3.1 GDP 13 |
| 3.2 INFLATION & INTEREST RATES 14 |
| 3.3 UNEMPLOYMENT & CONSUMER SPENDING 15 |
| 3.4 CONSUMERS DISPOSABLE INCOME LEVELS AND SAVINGS 16 |
| 3.5 STERLING 17 |
| 3.6 CONCLUSIONS AND FUTURE PROSPECTS 18 |
| 4. THE MARKET 22 |
| 4.1 MARKET DEFINITION 22 |
| 4.2 MARKET STRUCTURE 23 |
| 4.2.1 Distribution 23 |
| 4.2.2 Competitive Channels 25 |
| 4.3 MARKET SIZE 26 |
| 4.4 THE EUROPEAN ELECTRICAL WHOLESALE MARKET 31 |
| 4.5 KEY MARKET INFLUENCES 32 |
| 4.5.1 Construction 33 |
| 4.5.2 The Housing Market 35 |
| 4.5.3 Manufacturing Output 38 |
| 4.5.4 Overall Trends In the Usage Of Electricity 40 |
| 4.5.5 Commercial Sector Influences 44 |
| 4.5.6 Portable Accommodation 48 |
| 4.5.7 Oil, Gas and Marine 49 |
| 4.5.8 Transport 50 |
| 4.5.9 Legislative Influences 52 |
| 5. THE ELECTRICAL WHOLESALERS 56 |
| 5.1 STRENGTHS OF ELECTRICAL WHOLESALERS 56 |
| 5.1.1 Product Range 56 |
| 5.1.2 Stock Holding 57 |
| 5.1.3 Service 58 |
| 5.1.4 Competition 59 |
| 5.1.5 Delivery 60 |
| 5.1.6 Supplier Links 60 |
| 5.1.7 Profitability 60 |
| 5.2 WEAKNESSES OF ELECTRICAL WHOLESALERS 62 |
| 5.2.1 Presentation/Media 62 |
| 5.2.2 Opening Hours 62 |
| 5.2.3 DIY Multiples 62 |
| 5.2.4 Builders Merchants 64 |
| 5.2.5 Comparison With The Electronic Component Distributors 65 |
| 5.3 BUYING GROUPS AND PRE-PACKERS 66 |
| 5.4 THE ELECTRONIC COMPONENT DISTRIBUTORS AND OTHER CHANNELS 68 |
| 5.5 E-COMMERCE 69 |
| 5.6 ROLE OF THE 'SUPER' DISTRIBUTOR 69 |
| 5.7 ELECTRICAL WHOLESALERS 71 |
| 5.7.1 Mix Of Nationals And Regionals 71 |
| 5.7.2 Market Shares Of Leading Wholesalers 73 |
| 5.7.3 Electrical Wholesale Companies 74 |
| 6. PRODUCTS 80 |
| 6.1 PRODUCT MIX 80 |
| 6.1.1 Mix Of Wholesaler Sales 80 |
| 6.1.2 Electrical Wholesaler's Product Share 81 |
| 6.2 PRODUCT GROUP TRENDS 82 |
| 6.2.1 Cables 82 |
| 6.2.2 Wiring Accessories 84 |
| 6.2.3 Circuit Protection And Switchgear 86 |
| 6.2.4 Lighting 89 |
| 6.2.5 Electric Space Heating 91 |
| 6.2.6 Security Systems and Fire Alarm Systems 93 |
| 6.2.7 Ventilation 96 |
| 6.2.8 Electric Water Heating - Domestic and Commercial 100 |
| 6.2.9 Trunking, Cable Accessories And Enclosures/Cable Trays 101 |
| 6.2.10 Test Equipment 103 |
| 6.2.11 Other Products 104 |
| 6.2.12 Product Opportunities 104 |
| 7. ELECTRICAL WHOLESALERS CUSTOMERS 110 |
| 7.1 ELECTRICAL CONTRACTORS 110 |
| 7.2 ELECTRICITY COMPANIES 116 |
| 7.3 IN-HOUSE ELECTRICAL ENGINEERS 117 |
| 7.4 PANEL BUILDERS 117 |
| 7.5 OTHER SECTORS 119 |
DIAGRAMS
| TABLE 1 THE ELECTRICAL WHOLESALE MARKET (£M) AT WHOLESALER SELLING PRICES 1996-2006 8 |
| TABLE 2 GDP PERCENTAGE CHANGE PER ANNUM 1980 - 2005 14 |
| CHART 3 INTEREST RATES AND INFLATION (RPI) FROM 1990-2005 15 |
| CHART 4 PDI & SAVINGS RATIO 17 |
| TABLE 5 EXCHANGE RATE FLUCTUATIONS 1997-2002 - DM, DOLLARS, AND THE ECU TO THE POUND STERLING, SPOT RATES 18 |
| CHART 6 DISTRIBUTION STRUCTURE 23 |
| TABLE 7 THE ELECTRICAL WHOLESALE MARKET (£M) AT WHOLESALER SELLING PRICES, 1996-2002 26 |
| TABLE 8 THE ELECTRICAL WHOLESALE MARKET (£M) AT WHOLESALERS PRICES, 2002-2006 28 |
| CHART 9 ELECTRICAL WHOLESALE MARKET 1995-2006 (REAL TERMS-1995 PRICES WSP) 31 |
| CHART 10 EUROPEAN UNION - ELECTRICAL WHOLESALE MARKET - BY MAJOR COUNTRY 2001 32 |
| TABLE 11 CONTRACTORS OUTPUT - NEW WORK AND RMI NON HOUSING - CURRENT PRICES (£ MILLION) 1995-2004 33 |
| TABLE 12 NEW ORDERS OBTAINED BY CONTRACTORS 1994-2003 CURRENT PRICES 34 |
| TABLE 13 NEW HOUSING COMPLETIONS 1990-2004 GREAT BRITAIN ('000) 35 |
| TABLE 14 NUMBER OF PROPERTY TRANSACTIONS IN ENGLAND AND WALES 1994-2002 36 |
| TABLE 15 SIZE OF HOUSEHOLDS - % OF TOTAL 1994, 1998 & 2000 37 |
| TABLE 16 LEVEL OF UK MANUFACTURING OUTPUT 1997-2003 (1995 = 100) 38 |
| TABLE 17 EXCHANGE RATE FLUCTUATIONS 1997-2003 - DM, DOLLARS, AND THE ECU TO THE POUND STERLING, SPOT RATES 39 |
| TABLE 18 SALES BY THE PUBLIC ELECTRICITY SUPPLY SYSTEMS 1994-2001 40 |
| TABLE 19 THE UK AIR CONDITIONING MARKET 2000-2005 £M MSP 47 |
| CHART 20 ELECTRICAL WHOLESALERS PROFIT % NET PROFIT ON TURNOVER 1990-2001 61 |
| CHART 21 DIY MULTIPLES - LIGHTING/ELECTRICAL PRODUCTS 2002 BY MULTIPLE 63 |
| CHART 22 MERCHANTS MARKET SHARES 2001 64 |
| CHART 23 MIX OF ELECTRICAL WHOLESALE MARKET - PERCENTAGE BY VALUE 2002 72 |
| CHART 24 ELECTRICAL WHOLESALE MARKET SHARES 2002 BY VALUE 73 |
| TABLE 25 MIX OF PRODUCT SALES THROUGH ELECTRICAL WHOLESALERS 2002 (£M AT WHOLESALER SELLING PRICES) 80 |
| TABLE 26 ELECTRICAL WHOLESALERS' SHARE OF PRODUCTS' MARKET - 2002 (£M AT WHOLESALER SELLING PRICES) 81 |
| CHART 27 UK MEDIUM/LOW VOLTAGE INSULATED CABLE MARKET 1996-2006 (£M WSP) 82 |
| CHART 28 UK WIRING ACCESSORIES MARKET 1996-2006 (£M WSP) 85 |
| CHART 29 UK LOW VOLTAGE CIRCUIT PROTECTION & SWITCHGEAR 1996-2006 87 |
| CHART 30 UK LAMP & LUMINAIRES MARKET 1996-2006 £M WSP 89 |
| CHART 31 UK ELECTRIC SPACE HEATING MARKET 1996-2006 (£M WSP) 92 |
| CHART 32 DEVELOPMENT OF THE COMBINED UK SECURITY SYSTEMS AND FIRE PROTECTION SYSTEMS MARKET FROM 1996-2006 94 |
| CHART 33 UK MARKET FOR VENTILATION PRODUCTS 1996-2006 £M 96 |
| CHART 34 VENTILATION MARKET - DISTRIBUTION 2002 BY VALUE 99 |
| CHART 35 DOMESTIC & COMMERCIAL ELECTRIC WATER HEATING MARKET 1996-2006 (£M WSP) 100 |
| CHART 36 UK MARKET FOR TRUNKING AND ENCLOSURES/CABLE TRAYS & CABLE ACCESSORIES 1996-2006 (£M WSP) 102 |
| TABLE 37 ELECTRICAL CONTRACTORS REGISTERED FOR VAT BY TURNOVER BAND 2001/2002 110 |
| CHART 38 NUMBER OF ELECTRICAL CONTRACTORS BY TURNOVER SIZE-BANDS 1991-2002 112 |
| CHART 39 COMPONENTS WITHIN THE PANEL BUILDING SECTOR £M 1995-2006 118 |
Text © 2002 AMA Research
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