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MS74011

MSI CONTRACT CLEANING SERVICES: UK: 2001

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EXECUTIVE SUMMARY

MSI believe that the UK market for contract cleaning increased by some 27 percent between 1996 and 2000 in value terms. In 2000 the UK contract cleaning market reached a value of £4.92 billion (€8.27 billion) compared with £3.86 billion (€5.29 billion) in 1996.

MSI believe that the growth of the UK contract cleaning market between 1996 and 2000 was largely attributable to a number of factors, which includes:

• the increasing trend for companies to outsource their non-core activities
• contract cleaning companies increasingly offering a diverse range of activities
• the buoyancy of the UK economy
• an increase in the level of construction activity

MSI believe that the standard cleaning sector was the largest sector of the market in 2000, accounting for some 61 percent of the market. However, the specialised cleaning sector achieved the highest rate of growth during the review period, predominantly as a result of stricter hygiene regulations and market growth in areas which require specialised cleaning, for example, pharmaceuticals. Furthermore, MSI expect that the proportional importance of these sectors will increase further during the forecast period.

MSI estimate that 64 percent of the total market value of cleaning contracts is generated by the private sector, the remaining 36 percent is accounted for by the public sector. However, within the public sector, a significant 62 percent of cleaning contracts are awarded to DSOs. This is partly due to the private sector being subject to budgetary constraints.

The demand for contract cleaning in the UK is affected by a number of factors. These include:

• UK economy
• level of construction output
• PFI investment
• legislation
• price
• the extent to which companies choose to outsource non-core activities
• marketing strategies

Demand in the UK market for contract cleaning is forecast to increase by some 39 percent in real value terms between 2001 and 2005. The increase in the size of the market will reflect further outsourcing of non-core activities by companies, increased construction output and growth in the service sector. The specialised cleaning market segment is forecast to increase at a higher rate than other market segments. This is principally due to stricter hygiene regulations which will increase the demand for higher quality cleaning services.

MSI believe that there are a number of factors that are critical to the success of contract cleaning companies, including:

• meeting customer requirements
• quality of service provided
• price competitiveness
• marketing strategies

There are few barriers to entry in the UK contract cleaning industry. The proportional importance of smaller businesses in the UK contract cleaning industry is illustrated by the high number of businesses with a turnover of less than £250 000 (€420 000). The five leading companies are estimated to represent 17 percent of the total UK contract cleaning market. Other companies are believed to represent some 83 percent of the UK contract cleaning market by value, reflecting the fragmented nature of the UK contract cleaning industry.

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Text © 2001 MSI

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Last updated by Jacob van Eldik 20th May 2001