Friday, April 29, 2016

Internet sales of plumbing products in the UK increased by 28% in 2015

The internet is the fastest growing distribution channel of the overall UK plumbing and heating products market and has experienced strong growth levels in the last 5 years. In 2015, the internet distribution market for plumbing products increased by 28% on the previous year. Shower controls and bathroom taps represent the largest sector of the internet plumbing market, followed by bathroom furniture and accessories, baths & sanitaryware, heating products such as boilers and standard radiators, shower enclosures and screens & trays.
It is estimated that in 2015 around 80% of plumbing products transacted on the internet are through specialist online plumbing retailers, of which a majority are pure-play retailers that do not have a showroom and only trade online. There are now some very large online specialist distributors that account for significant shares. Non-specialists account for around 20% of the total internet plumbing market and include merchant/trade outlets, DIY multiples, marketplace websites such as Amazon and eBay, and other retail outlets. Non-specialists also include plumbing manufacturers that may make specific products available for consumers to buy online.
Key drivers include the increasing availability of internet access, increasing usage of mobile internet using smartphones and tablets, and the rise of online review sites and blogs, which is now considered the most trusted form of advertising among potential buyers. The UK is Europe’s leading e-retail economy and now has around 39 million adult users accessing the internet every day, and trade sources report that around one third of UK shoppers also now regularly check their mobiles devices for better prices whilst in a physical store. Other trends include an increase in ‘Click and Collect’ purchases, and an expectance of shorter delivery times with next day delivery often required, free shipping and free returns.
Own-label products sold on the internet are performing particularly well, and some leading specialist online plumbing retailers are exploiting this opportunity by exclusively supplying own-label lines. Other online retailers, however, have expanded the number of plumbing brands they offer in order to capture a wider audience. It is likely that the number of specialist internet plumbing suppliers will continue to consolidate as this market sector matures. An increasing number of pure-play online retailers may also offer a showroom facility in order to grow and compete with store-based specialist plumbing suppliers and non-specialists.
“While the level of internet access in households is likely to reach saturation point in the near future, online purchasing of heating and plumbing products is far from mature” said Keith Taylor, Director of AMA Research. “Consumers are already using the internet for purchases of individual items, in particular replacement products, but future growth is largely dependent on the uptake of online purchasing among plumbers and installers. This is likely to grow significantly as a result of the increasing use of mobile internet, improving quality of suppliers’ mobile websites or apps as well as the ability of installers’ existing supply chain to adapt to this behaviour and offer services such as Click and Collect.”
Even though the internet plumbing market has continued to increase as a result of an improving UK economy and housebuilding levels and the added convenience and low prices offered by online purchasing, forecasts indicate that the pace of growth will gradually start to slow down as this market matures. The timing of this change of pace is difficult to estimate, with ongoing technological developments influencing buyer behaviour, however, it is estimated that the UK internet plumbing and heating market will increase by over 52% between 2016 and 2020.

The ‘Internet Plumbing and Heating Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at or by calling 01242 235724.

Thursday, April 21, 2016

Good growth in the UK Window and Door Fabricators market despite challenging market conditions

UK door and window fabrication market has turned from steady decline over several years to growth since 2013, with prospects of further growth over the next 5 years. According to a new report from AMA Research, the market for door and window fabricators increased by around 3% in 2015, following good growth of 5% in the previous year. The report reviews all sectors of the glazing market, including doors, windows, entrance systems in both residential and commercial applications.
As a result, general trends in the economy and construction in particular all influence the sector, and it is important to emphasise that the door and window fabrication sector is dependent on the performance of a number of markets, often moving in very different directions - private home improvement, public sector housing renovation, housebuilding, and commercial new build and refurbishment etc.
‘Residential windows’ is the largest sector, driven primarily by replacement demand, though new housing volumes have increased in recent years. However, a strong growth area in the last few years has been the ’home extension’ sector which is driving the growth of bifold doors in particular. Commercial windows and curtain walling have a total share of over 20% of the market and have enjoyed good growth on the back of a recovery in the office construction sector.
While generally a mature sector, the product ranges offered by window and door fabricators have been influenced by the use of composite & hybrid materials, more use of colours (eg: greys), improved thermal performance and locking systems, growth of bifolds/rooflights etc.   
The supply structure remains very fragmented, comprising a mix of vertically integrated retail glazing companies, PVCu trade fabricators and fabricator/installers, aluminium systems fabricator/installers, bespoke glazing contractors, composite door manufacturers, commercial glazing specialists, roof light manufacturers, steel window manufacturers and major joinery companies etc.
The sector has seen some restructuring – particularly in more difficult periods -  but the diversity of products, materials and applications etc, provide opportunities for major groups operations and small niche suppliers alike.
“Steady improvement in the glazing market in the medium term is anticipated, given sustained growth in construction activity – particularly housebuilding and key non-residential sectors such as offices, leisure, education” comments Jane Tarver, AMA Research. “This in turn will lead to steady if modest growth for door and window fabricators with value growth likely to be constrained by high levels of price competition”.
The UK market for residential windows is very competitive and is likely to remain so, though within the next few years we expect capacity and demand to become more balanced as demand from the housebuilding sector continues to expand, resulting in less pressure on supplier prices and profitability. Ultimately, the industry is mature and, in the longer term, heavily dependent on replacement demand in the residential sector, supported by new build activity in key non-residential markets. The market will continue to develop in response to legislation and building regulations, and will continue to focus on ‘green’ building materials and thermal efficiency in particular.
The ‘Door and Window Fabricators Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years experience within the construction and home improvement markets.  The report is available now and can be ordered online at or by calling 01242 235724.

Tuesday, April 19, 2016

UK data centre construction market worth around £1bn in 2015

The market for data centre construction is estimated to be valued at just over £1bn in 2015, following 3 years of market consolidation. The performance has been variable in recent years, with construction demand affected by an oversupply of data centre resources in the co-location sector, followed by a period where the surplus capacity has been used to soak up modestly increasing demand. The effects of the government’s data centre consolidation programme are also contributing to the variable market performance.
Output in 2015 was generally relatively poor as the economy faltered somewhat and the government started the process of streamlining their estate, while the wholesale and co-location sector came under pressure from having too much available space. The private data centre construction market has also been relatively subdued in recent years, though since 2014 there have been greater levels of confidence in investing in business infrastructure. The increase in political stability and the improvement in the economy coupled with more projects getting underway in the latter half of 2015, have led to a more positive outlook for 2016.
The government owns a large amount of data centres and as such has a significant influence on the replacement and maintenance sector of the market. While commercial developers, such as co-location providers, account for a significant share of new builds due to their large scale and the high specifications, the majority of the existing data centre estate belongs to private businesses.
The largest geographical UK data centre cluster remains in the London and M25 area, though there is growth outside of this region, with large campus style data centres established in areas such as Wiltshire, Leicestershire, South Wales and Cambridgeshire. There is a trend of migration from London to regional areas as the data centre pricing varies by geographical data centre cluster, with London & M25 area average pricing significantly higher than the UK average.
Energy efficiency is a key driver of market performance. The effects of improving energy efficiency in data centres can be seen immediately, bringing the additional benefit of substantial savings on operational costs, and this has driven demand for modular solutions, from rack-based solutions to complete data centre pods and containerised solutions. Ever increasing levels of online activity, and changes in the way online services are delivered with a growing interest in cloud computing technology, are also driving demand. However, increasing ‘cloud’ take-up might shift the emphasis on data centre construction to the commercial and co-location sector away from the privately owned sector.
Data centre construction is emerging as a significant sector in its own right, and one key trend seen in recent years is that of integrated service offerings. While most large M&E contracting businesses are key players in this market, companies involved in data centre construction range from major building contracting groups and commercial developers, to data centre specialists and operators, modular building manufacturers and IT equipment suppliers. It is likely that further consolidation will take place among operators, specialists and construction/ engineering firms in the near future, as the market remains extremely fragmented and characterised by a large number of new entrants and small market shares, even among the leading players.
“Recently, there have been growing concerns about data sovereignty and the ‘safe harbour’ ruling, something which is likely to lead to greater levels of storage of data in the UK and Europe by large scale US corporations.” said Keith Taylor, Director of AMA Research. “At the end of 2015 a number of major projects have been announced which will be implemented across 2016 and 2017, in particular the large scale data centres for Amazon Web Services and Microsoft, and these together with other major programmes should provide some impetus to the market in the next year or two.”
Indications are that construction output within the data centre sub-sector will rise from 2016 onwards driven by a general improvement in the economy and the improved performance of certain end use sectors as well as the underlying factors driving greater IT and internet usage. That said, the high levels of vacant space and the trend towards data centre consolidation, particularly in the public sector, are likely to lead to relatively modest overall growth. Consolidation is likely to remain a continuing theme, something which will lead to larger contract sizes and may affect the market for replacement and maintenance negatively in the longer term. By 2020, the data centre construction market is forecast to have increased by 9% overall, though there is likely to be volatility within the forecast period.

The ‘Data Centre Construction Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience within the construction and home improvement markets. The report is available now and can be ordered online at or by calling 01242 235724.

Friday, April 15, 2016

Positive outlook for construction following new peaks in quarterly output in late 2015

Total GB construction output has been positive throughout most of 2015, with output to Q3 being 5% ahead of 2014, with the quarterly value of £37bn representing a new output peak.

The outlook for the overall market remains positive into the medium-term with indications of potentially good recovery for both residential and non-residential sectors. AMA Research’s forecasts indicate overall output growth of 5-6% in 2015-16, followed by annual growth rates of 4-6% to 2020 when total construction output is forecast to reach around £179bn.

The short-term forecast for the residential sector has been amended downward due to the volatile nature of output in 2015 with growth of 4-5% currently forecast for 2016, followed by annual growth rates of 3-7% to 2020, when total residential output is forecast to reach £73.8bn. 

Housing completions should grow by around 10-15% in 2014-16, as the sharp increase in housing starts 2012-14 feeds through. Into the medium-term completions are forecast to reach a volume of around 201,000 in 2020, though the issues of mortgage affordability and increasing prices of new houses could negatively influence sectors of the house buying public. The likely phasing out of mortgage assistance schemes from 2019-20 onwards could also influence the affordability of some new housing.

The non-residential sector has seen output forecast amended to take into account the ONS realignment of infrastructure output in 2015. This means that short-term forecasts have growth of around 6% for 2015 rather than 3-4% indicated previously. This will then be followed by annual growth rates of 3-5% to 2020. Overall growth of 23% is forecast to 2020, when total output is expected to reach around £105bn. Both new work and RMI should show significant positive growth over the forecast period.

Infrastructure will remain the largest of the non-residential sectors into the medium-term with 30% output increase currently forecast 2015-20, and key to this growth will be the contribution from the electricity sector as well as larger-scale transport projects. Increasing levels of consumer and business confidence, spending and investment are likely to provide the drivers for the continued recovery of the private commercial sector, which will be the focus for growth into the medium-term. The performance of the public sector will be dictated by the continuing austerity programmes and limits placed on capital spending by both central and local government. However, impetus for the education sector will be focused on the Priority Schools Building Programme and investment from the University sector following the recent scrapping of the limit on student numbers.

The above information has been extracted from AMA Research’s quarterly bulletin ‘Construction and Housing Forecast Bulletin’, which is sold as a subscription covering 4 quarterly issues. To subscribe, click here.

Technology developments drive growth in the UK Electronic Security and Access Control Market

The market for electronic security and access control products has improved following several years of relatively poor performance. According to a new report by AMA Research, the market grew by around 4% in 2015 at installed prices. The upturn in 2015 has been driven by improvements in the construction sector, but the market remains very competitive, with high levels of cheaper imports and competitive prices in the technology sector.
CCTV sales accounts for the majority of sales in the market with a share of around 50% by value, with intruder alarms and access control accounting for the balance. The intruder alarm market is mature and increasingly reliant on replacement purchases, but competition also remains high between intruder alarms and other security products. Intruder alarms as standalone products in the commercial sector are now in decline. Overall, the access control market has remained fairly stable during recent years, with price deflation being less of an issue compared to video surveillance products. New technology, along with a gradual shift from mechanical to electrical locks, are forecast to continue to drive replacement sales.
The mature nature of the CCTV market should support a steady shift towards digital replacements using IP technology, with industry sources suggesting that IP-based products now account for the majority of all CCTV sales, particularly in new installations. The ongoing threat of terrorism continues to drive demand for CCTV products in a wide range of sectors, particularly transport and infrastructure.
There is a trend towards greater involvement of IT software and system providers within the electronic security industry, with smart phone and tablet interfacing for remote access to security systems a growth area in all sectors of the market. Competitive pricing and a greater focus on manufacturing efficiencies has also meant that high quality 4K and HD megapixel systems are more affordable, facilitating a shift away from analogue to digital products. Specifiers are continuing to focus on the whole life cost, including replacement, add-on and management costs.
“Technological developments have continued to drive the replacement market in particular, as companies upgrade their systems to incorporate remote monitoring – including wireless technology and cloud-based solutions” said Keith Taylor, Director of AMA Research. “As a result, several key players in the market have formed collaborative partnerships with IT suppliers to facilitate the integration of different products in response to end users increasing requirements for integrated systems combining video surveillance, access control and intruder alarms.”
Competitive pressures within this market has also led to diversification, for example, many of the major manufacturers and installers of video surveillance equipment now also offer services such as web-based video data storage solutions and monitoring.
In the short to medium term future, the prospects for the overall electronic security market are positive, with commercial and public sector applications each accounting for over 15% of installed value. Recent Government announcements outlined increases in capital spending on infrastructure and education, with a consistent level of spend committed on health. Student accommodation may also constitute a growth area going forward. The sustained economic recovery should also support installations in some private end-use sectors. Construction levels in the office sector are expected to experience growth of between 5% and 8% annually up to 2019, and demand in general is improving, although the large supply base in this sector is likely to support the replacement and upgrade of security systems rather than large scale new installations. Overall, the UK electronic security and access control market is forecast to see growth rates of 4-6% per annum until 2020, reflecting a strong focus on security going forward.

The ‘Electronic Security and Access Control Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at or by calling 01242 235724.

Thursday, April 14, 2016

UK Electric Vehicle Charging Infrastructure market to double by 2020

The UK electric vehicle (EV) charging infrastructure equipment market is estimated to have grown by over 28% in 2015, to over £20m. However, while still at relatively low values in terms of equipment, the overall sector is much larger when all associated installation and civil engineering works are included.
The market has seen significant growth in response to the introduction of the Plugged In Places grant in 2011 and, more recently, in 2014/15 as a result of further Government incentives. Other key factors supporting market growth include tighter environmental legislation, rising sales of electric vehicles and product development resulting in shorter charge times.
Conversely, there are some negative factors affecting the market, including uncertainty about future funding beyond 2020, a lack of harmonisation of products and relatively low current sales of electric vehicles, as well as more recently, lower fuel costs. Commercial users are a key focus within the electric vehicle market. EVs offer significant long term savings and commercial users are more likely to accept higher upfront investment costs to take advantage of lower running costs than domestic users. As a result, the development of fleet charging infrastructure is a key area.
Most electric vehicles are expected to be charged at home or at work. However, a wide infrastructure of publicly accessible points is being developed. Around 35-40% of these are currently located in public car parks and on-street parking to maximise visibility, with commercial premises and garages, particularly car sales forecourts, also offering a significant resource as manufacturers attempt to bolster vehicle sales. In the future, service stations, transport hubs and commercial premises will supply a greater proportion of publicly accessible points as greater emphasis is put on enabling longer journeys and faster charging.
Fast chargers represent the largest market sector by volume, with standard speed chargers also a significant part. Rapid chargers, which are relatively new, more expensive and can require upgrades to the electrical supply, remain smaller in terms of volume, but this sector is growing rapidly and answers the need for fast recharging. Product development is primarily concerned with higher levels of systems integration and monitoring, development of smart grid capabilities and faster, more convenient charging times.
Industry participants reflect a range of backgrounds from electrical accessory/component companies to utilities, software specialists, vehicle manufacturers, battery suppliers etc., as well as new companies set up specifically to enter the market – all attracted by high growth potential in the longer term. Undoubtedly, the supply and distribution structure will evolve as the sector grows, with indications already of some industry rationalisation.
Going forward, there are a number of encouraging signs, with new electric car registrations increasing substantially in recent years and registrations in 2015 expected to reach 30,000, together with the Committee for Climate Change’s recommendation that the Government aim for 1.7m EV’s to be on the road by 2020. Environmental legislation is also likely to continue to tighten, with savings in transport a major factor in reducing carbon emissions, prompting continued movement towards more environmentally friendly methods of travel. Expansion of networks to enable longer journey distances, for example incorporation of more charging points at service stations, is likely to drive growth in the longer term.
“Forecasting market growth of a sector in the early stages of development is extremely difficult. However, given a sustained rise in ownership levels of electric cars, our estimates indicate that the market for EV infrastructure is likely to have doubled by 2020” said Andrew Hartley, Director of AMA Research. “Industry investment in expanding the network is likely to continue to grow in the short to medium term, although government funding remains uncertain, with emphasis shifting towards provision by other sectors in the longer term.”

The ‘Electric Vehicle Charging Infrastructure Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at or by calling 01242 235724.

Tuesday, April 12, 2016

Many challenges ahead for the UK Small and Medium Renewable Energy market

The market for ‘small and medium’ renewable energy products has fluctuated since 2011, when market values peaked, but has remained at well above £2bn per annum in 2012-15, according to a new report recently published by AMA Research. The main driver has been solar photovoltaics (PV), which accounts for over 80% of all renewable electricity and 98% of all installations under the FIT. While private households were the main area of application, this market has declined since 2012 due to a reduction in subsidies, while demand from the commercial sector has grown.
The new edition of this report has been extended from covering just the renewables microgeneration sector and renewable heat generation, to covering small and medium size renewable electricity and heat generation. The upper limits are in accordance with the parameters of the Feed In Tariff (FIT) and Renewable Heat Incentive (RHI) subsidy programmes, which are for installed capacities of 5 MW and 200 kWth respectively.
While the FIT incentive has been almost the sole demand driver for nearly all sub 5 MW solar PV schemes, other small-medium size renewable energy projects have been developed, either under the Renewables Obligation (RO) or without government support. Although the RO was closed off to new sub 5 MW developments after the launch of FIT, it still continued to support new developments in Northern Ireland, where the FIT is not available. While private households have been the main area of application since 2012, when the first degression led to a large reduction in tariff payments for domestic schemes, this market has declined while demand from the commercial sector has grown.
All other small-medium size renewable energy markets, such as windpower, hydropower, anaerobic digestion-with-biogas and wood-fuelled boilers, have also grown since the introduction of FIT in 2010, albeit at much more modest rates than the solar PV market. The RHI subsidy programme has also provided a significant boost to the number of renewable heat technologies, although wood-fuelled boilers are by far the most widely installed type in the non-domestic sector. In the domestic sector, the main area of demand has been for heat pumps and, to a lesser extent, wood-fuelled boilers. Other types of technology, in particular solar power, have suffered from declining demand in recent years.

“The forecasts through to 2020 illustrate the expectation that the market is likely to face significant challenges, in the form of declining Government support as well as lower gas and electricity prices, and this is likely to mean that any growth in the market will be at an individual product level, rather than an overall market level” said Keith Taylor, Director of AMA Research. “The recent round of degression to tariffs under the FIT scheme is likely to severely impede growth in the renewable electricity sector - while rates have been reduced for all technologies they have been particularly severe for solar PV and windpower.“

While the prospects for solar PV and windpower do not look promising under current support schemes, other sectors are expected to fare better, in particular non-water industry anaerobic digestion (AD). One of the least mature renewable technologies, the impact of degression has been relatively small because new capacity coming on-stream each quarter has not been sufficiently high to trigger large drops in tariff rates. One key factor expected to drive the market is the recent availability of RHI tariffs for biomethane-to-grid injection. With negligible capacity prior to 2014, it increased by over 400% in 2014 and is forecast to grow fourfold in 2016.
Unlike solar PV and windpower FIT tariffs, the RHI programme appears to be relatively safe for now, with £1.5bn annual support pledged by the Government in the Autumn 2015 review. How this is apportioned across the eligible technologies is as yet unknown but, as well as AD biomethane, heat pumps and commercial wood-fuelled boilers are likely to benefit from increased demand. In spite of this, the whole renewables industry is now faced with a raft of problems that could curtail growth, including the proposed implementation of EU requirements to raise VAT levels to 20%, the removal of the Climate Change Levy Exemption Certificates (LECs) for all renewable power generation, whether new or existing schemes, the withdrawal of the Allowable Solutions scheme and the abandonment of the Zero Carbon Homes targets, and the removal of tax breaks for community and small business energy projects. However, constant policy changes make it a difficult sector to forecast and prospects will continue to be volatile as new initiatives are introduced.
The ‘Small and Medium Renewable Energy Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at or by calling 01242 235724.