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In 1996 the Electrical Wholesale Market was worth some £2.35 billion at wholesaler selling prices.
Following good growth to a peak in 1990, the market exhibited a significant decline in the early part of the decade due to reduced levels of new build and RMI throughout the domestic and non-domestic sectors during the recession. This resulted in a reduced requirement for the majority of electrical products, although a number of product areas traded by the wholesalers, such as security, continued to show some underlying growth.
An improvement in the economic situation has contributed to a modest growth since 1993. Whilst an upturn in commercial and industrial construction over the last few years has produced a greater requirement for electrical products, sales have continued to be adversely affected by a highly competitive electrical contracting market and the depressed state of the housing market.
The outlook for the Electrical Wholesaling market is one of more significant growth, reflecting an upturn in the housing market in 1996 and 1997 which is expected to continue, continued growth in non-domestic construction, particularly in the commercial sector and an upturn in public sector investment. In addition, it will benefit from a number of underlying trends including:-
These factors are expected to contribute to good growth in the Electrical Wholesaling Market, particularly in the medium to longer term.
The key Wholesaler groups are Edmundson, Newey & Eyre, CEF, Senate, WF Distributors, Otra (incorporating BCE, J Dyson and Electrical Trades Supply), William Wilson, Denmans and J & N Wade. These groups have progressively increased their market dominance throughout the 1990's, largely through acquisition and now account for some 78 percent of the industry.
The balance, accounted for by a number of regional and local wholesalers, has been reduced not only by the acquisitions made by national groups, but also by a significant number of smaller wholesalers being forced into liquidation both during the recession and subsequently.
Edmundson are now the leading Wholesaler group following a number of significant acquisitions during the mid 1990's including Bennett & Fountain and Walsall Conduits, and have a market share of some 25 percent. Other market leading companies include Newey & Eyre, CEF and Senate, with these 3 companies accounting for a further 40 percent.
The larger wholesaling groups continue to take share from the smaller independents due to their greater ability to negotiate bulk purchasing discounts from manufacturers, operation of central stock warehouses which enable reduced stock holding and greater resources to invest in services including sophisticated IT systems, product catalogues, telesales facilities etc. This has driven a number of smaller wholesalers to specialise in niche product sectors in order to maintain a competitive stance.
The Electrical Wholesalers remain the dominant distribution channel for the majority of electrical products. Their key strengths include the wide product range offered, the service offered to their customers in terms of credit, payment facilities, delivery, product knowledge etc, strong supplier links and their well established and loyal customer base.
Traditional weaknesses of the Electrical Wholesalers including trade-orientation and poor presentation, continue to discourage use by the general public, whilst restricted opening hours encourages contractors to use the DIY outlets in some emergency repair situations, particularly at weekends.
Profitability was eroded during the recession influenced in particular, by falling demand for electrical products and an increasing degree of price competition. Subsequently a number of moves made by the wholesaling groups including closing less profitable outlets and reducing staff numbers have enabled some increase in margins, although profitability continues to be adversely affected by the highly price competitive nature of the electrical contracting market.
Small wholesalers are unable to negotiate the bulk purchasing discounts available to the larger groups and in an effort to increase their profitability an increasing number have joined buying groups, such as AED, ANEW, EMMA, AWEBB, MIDA and REWARD, over the last few years.
The major product groups marketed by the Wholesalers are cables, wiring accessories, lighting and switchgear/circuit protection. These categories account for some 73 percent of Wholesalers turnover, with the remainder being accounted for by cable and trunking accessories, test equipment, security products, electric space heating, ventilation, water heating and other miscellaneous products.
In general, the products which constitute the bulk of the Wholesalers business are expected to perform well in the short to medium term future contributing to growth in the overall Electrical Wholesaler market. In addition, the wholesalers have the opportunity to capitalise on the increasing use of electronics within the electrical industry by stocking a wider range of products including Programmable Logic Controllers, Data and Telecommunications Cables etc.
This comprehensive report represents a detailed assessment of the market, reviewing major trends, key factors influencing developments and future prospects for the sector. Analysis is both quantitative and qualitative, based on our substantial experience of the building and home improvement markets.
Text © 1997 AMA Research
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Last updated by Duncan Nottage 1st February 1999