AM31024

AMA RESEARCH Market Report : UK Electrical Wholesalers : October 2004

CLICK TO BUY

Brief Description

AMA Research have published the eighth edition of the ‘Electrical Wholesale Market Report.  Incorporating original input and primary research, the report represents an up-to-date and perceptive review of the market and it’s development.

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 Opportunites

Executive Summary

The UK Electrical Wholesale Market is currently experiencing a period of relatively stable trading conditions with the total market in 2003 estimated to be worth some £2.75 billion at wholesaler selling prices.

The market has generally been declining in overall terms from around 1999 although the construction sector recovered and received motivation from Millennium Projects 2000-2001.  Subsequently the electrical wholesalers’ market experienced the continuing adverse impact of depressed investment levels in IT, telecoms and manufacturing, also the fall out from September 11th, foot and mouth disease, inclement weather conditions and the fuel crisis.

Whilst the steady performance of the UK economy has tended to impart a degree of stability to many market sectors, 2001 showed a significant slowdown in GDP although construction output grew steadily, expanding by 8% in 2002, the highest increase since 1998.

Higher government spending sustained construction growth in the face of weakening infrastructure and private sector building output in 2003 with a strong performance from housing RMI and PFI funded projects in health and education although the manufacturing sector remained weak with mixed trends across the various sectors: some softening of demand in the telecom, industrial maintenance and non-residential construction sectors was also evident.

Currently in mid-2004 the UK economy is relatively robust with strong growth in certain sectors of construction, positive growth in the housing market and some signs of recovery in the manufacturing sector.  In general terms, the following factors are likely to contribute to long term low-level underlying growth in the electrical wholesalers’ market:

Increasing levels of government investment in health, education, housing and certain infrastructure sectors.

Growth in niche end-user markets including fire and security, lighting, and CCTV, portable accommodation, wind farms and the long term development of wind farm and solar/photovoltaic applications and in addition heating functions.

Trends to increasing legislation, including energy efficiency legislation, motivating the demand for a wide range of products, including higher specification items for hazardous, building, health and safety products, disability discrimination access, signage, and lighting, etc.

Expanding opportunities to grow market value by developing sales for wide range of new, innovative products e.g. ‘Blue Tooth’ wireless communication products.

However, there are also certain negative influences, which will affect the UK electrical wholesalers’ market in the short, medium and long term:

Escalating fuel oil and steel prices impacting on steel cable management products in particular.

Trends to longer product life and in certain instances lower replacement component prices tend to erode the growth of market value in overall terms.

The continuing application of creative business strategies by the electronic component distributors, in conjunction with the winning of an increasing number of large corporate accounts, are likely to represent areas of serious concern for the electrical wholesalers in the long term.

Increasing business overhead costs including higher levels of public liability premiums.

Substantial ‘hidden’ costs arising from the relatively high levels of ‘non-productive’ administrative time incurred through compliance with EU Directives, legislation, training, etc.

Price competition represents a significant contributory factor to the present low level of return in the UK electrical wholesaling industry and does not augur well for the rapid recovery of the market as a whole.

It should be emphasised that the level of demand for wholesalers’ products varies regionally throughout the UK, reflecting government and EU investment strategies, local industry specialisation, also geographical, seasonal and climatic features.  In addition, lengthy bureaucratic planning and contract approval processes can cause considerable delays in the scheduling of projects which tends to impact adversely on wholesalers’ turnover figures and cash flow projections.  Under current industry conditions of exceptionally low profit margins, these factors can tend to be of crucial importance, particularly for ‘marginal-profit’ companies.

Electrical Wholesalers

The major electrical wholesalers groups are Edmundson Electrical; Newey and Eyre and WF Electrical, (owned by Hagemeyer UK); City Electrical Factors; Rexel Senate (including Denmans); and Routeco.  Cumulatively, these groups are estimated to account for some two thirds of the electrical wholesalers market, having steadily expanded through organic growth and acquisition of regional and local wholesalers.  However, regional and local wholesalers still account for around a third of the market.

Competing distribution channels to the electrical wholesalers comprise the electronic component distributors, trade catalogue operations, the DIY multiples, the ‘direct’ channel, and builders merchants.

The established position of electrical wholesalers as the leading distribution channel for electrical products is likely to be maintained although the continuing prevalence of exceptionally low rates of return may tend to sound a note of caution in the industry with restructuring and rationalisation already in evidence.

Product Groupings

Cables, lighting, switchgear and circuit protection account for around 50% of wholesalers’ turnover, the balance consisting of trunking, wiring accessories, test equipment, fire and security products, electric space heating, ventilation, water heating and ‘other’ products.

Cables, which are subject to significant fluctuations in the price of copper, represent the largest sector of the electrical wholesalers’ product portfolio with an estimated value of £568 million at wholesalers’ selling prices in 2003 - approximately 74% of the total product market.  The introduction of the new cable colour code regulations may add some value to the market but the prime influencing factor is the level of variation of raw material prices.

Lighting has demonstrated positive growth, with increasing emphasis on innovative products (LED’s, optics, etc.) also ‘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 Disability Discrimination Act, health and education and substantial lighting contracts (e.g. T5) are likely to fuel growth.  Trends to architectural lighting, and city beautification, will also tend to provide some low level additional motivation for the overall lighting market.

Circuit protection and switchgear is viewed as a growing sector, being driven by a number of factors including a general tightening of health and safety procedures, and electrical installation 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 CCTV and protection and detection systems, are driven by varying levels of perceived terrorist threats, criminal activity levels of construction activity, and legislative requirements.  Long term low level growth in airline automated baggage checking and container freight and military applications is likely to represent one of a number of long term growth factors stimulating the wholesale market.

Electric water heating is experiencing low-level growth driven by higher levels of showering and the increasing penetration of unvented systems.  The electric space heating sector is marginally positive, reflecting the net effect of growth in fuel effect fires and long term decline in storage heaters.

The wiring accessories sector is viewed as relatively ‘stable’.  This sector in particular continues to experience severe price erosion resulting from the dominance of imported products from the Far East.

Mechanical ventilation is viewed as ‘positive’, with trends to whole-house ventilation which may or may not ‘take off’, whilst heat recovery products are likely to gain some small share, whilst trunking, cable accessories and enclosures/cable trays are also viewed as relatively stable.  Steel cable management products are particularly vulnerable to the dramatic rises in steel prices which may impact on demand levels adversely.

‘Other’ products represents an area of significant opportunity for electrical wholesalers with a continual stream of new, innovative items, driven by diverse influences such as legislation, renewable energy and security, with forecast levels of low, underlying growth.

In summary, certain sectors are forecast to perform better than others with a robust construction market, positive housing forecasts and limited recovery in the manufacturing sector tending to influence the overall level of activity in the electrical wholesalers’ product categories and ultimately in the overall UK market.

Companies Included in this report:-

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.

List of Contents

1	INTRODUCTION
2	SUMMARY
2.1	MARKET SIZE
2.2	ELECTRICAL WHOLESALERS
2.3	PRODUCT GROUPINGS
3	ECONOMIC BACKGROUND
3.1	GDP
3.2	INFLATION & INTEREST RATES
3.3	UNEMPLOYMENT
3.4	HOUSEHOLD CONSUMPTION
3.5	HOUSING & CONSTRUCTION
3.6	CONCLUSIONS
4	THE MARKET
4.1	MARKET DEFINITION
4.2	MARKET STRUCTURE
4.2.1	Distribution
4.2.2	Competitive Channels
4.3	MARKET SIZE
4.4	THE EUROPEAN ELECTRICAL WHOLESALE MARKET
4.5	KEY MARKET INFLUENCES
4.5.1	Construction
4.5.2	The Housing Market
4.5.3	Manufacturing Output
4.5.4	Overall Trends In the Usage Of Electricity
4.5.5	Water And Sewage
4.5.6	Oil, Gas and Marine
4.5.7	Transport
4.5.8	Modular Building Trends
4.5.9	Legislative Influences
5	THE ELECTRICAL WHOLESALERS
5.1	STRENGTHS OF ELECTRICAL WHOLESALERS
5.1.1	Product Range
5.1.2	Stock Holding
5.1.3	Service
5.1.4	Competition
5.1.5	Delivery
5.1.6	Supplier Links
5.2	WEAKNESSES OF ELECTRICAL WHOLESALERS
5.2.1	Profitability
5.2.2	Presentation/Media
5.2.3	Opening Hours
5.2.4	DIY Multiples
5.2.5	Builders Merchants
5.2.6	Comparison With Other Channels
5.3	BUYING GROUPS AND PRE-PACKERS
5.4	THE ELECTRONIC COMPONENT DISTRIBUTORS AND OTHER CHANNELS
5.5	E-COMMERCE
5.6	ROLE OF THE 'SUPER' DISTRIBUTOR
5.7	ELECTRICAL WHOLESALERS
5.7.1	Mix Of Nationals And Regionals
5.7.2	Market Shares Of Leading Wholesalers
5.7.3	Electrical Wholesale Companies
6	PRODUCTS
6.1	PRODUCT MIX
6.1.1	Mix Of Wholesaler Sales
6.1.2	Electrical Wholesaler's Product Share
6.2	PRODUCT GROUP TRENDS
6.2.1	Cables
6.2.2	Wiring Accessories
6.2.3	Circuit Protection And Switchgear
6.2.4	Lighting
6.2.5	Electric Space Heating
6.2.6	Security Systems and Fire Alarm Systems
6.2.7	Ventilation
6.2.8	Electric Water Heating – Domestic and Commercial
6.2.9	Trunking, Cable Accessories And Enclosures, Cable Trays
6.2.10	Test Equipment
6.2.11	Other Products
6.2.12	Product Opportunities
7	ELECTRICAL WHOLESALERS CUSTOMERS
7.1	ELECTRICAL CONTRACTORS
7.2	ELECTRICITY COMPANIES
7.3	IN-HOUSE ELECTRICAL ENGINEERS
7.4	PANEL BUILDERS
7.5	OTHER SECTORS

Tables and Charts

Text © 2004 AMA Research

Can't find what you need? Try our "Research on Request" market report service and define your own report research! Fixed prices - £150, £450 and £1,250 - and fixed delivery of 4, 5 and 14 days

Click here for full details

---

Ariadne - working together with our customers to enhance productivity and increase knowledge
© 2004 www.the-list.co.uk Ariadne
Last updated by Amanda Porteous 2004