Following significant growth in 2013, due to the cold weather causing an increase in wear and tear and boosting the requirement for spare parts, the UK heating spares market has experienced more modest growth of 3-4% per annum in 2014 and 2015. Factors supporting underlying demand in the spares sector includes the high level of combination boilers now installed in the UK, while the growth of maintenance schemes, such as those now offered by utility companies and home emergency insurance providers, also support the repair sector and subsequently the consumables and spares market.
Other factors supporting underlying growth include lower levels of capital expenditure in some non-domestic end-use sectors - in particular in some public sectors such as schools and public offices - supporting a trend towards repair rather than replacement, thereby boosting the spares market. Other positive influences have been the continued growth of renewable energy solutions and technological developments, for example in the area of ‘smart’ heating controls. These have generated demand for a wider range of spares, often more specialised and of a higher value. However, a negative influence on underlying market value has been intense price competition, partly created by cheap imports, and weaknesses in commodity prices.
The heating spares market is highly complex and comprises a wide range of products, with some of the major merchants supplying around 50,000 products. Over 50% of heating spares are distributed by four national merchant chains, though in recent years, smaller regional and local merchants have improved their service and ordering processes and, in some cases, have shown significantly higher growth compared to their larger competitors. A small proportion of sales are via the DIY sector, internet retailers and electrical wholesalers, whilst other channels include the service teams of boiler manufacturers and those of companies that provide home maintenance and servicing contracts.
Short-term forecasts for the heating spares market are difficult to make, as the market is to some extent reliant on the weather influencing usage levels and wear and tear. However, factors supporting underlying growth include the large installed base of boilers in the UK; in particular, the large volume of combination boilers installed, which generally experience a higher level of wear and tear. In the non-domestic sector, the focus on repair is likely to be particularly strong in certain public sectors due to constraints on capital spending. The level of housebuilding is expected to remain buoyant and while this favours demand for new equipment rather than spares in the immediate term, the growth in the installed base of heating equipment will support demand for spares in the longer term. In addition, many of the boilers and systems being installed are now more complex, which could result in more expensive repairs.
The type of systems installed in new dwellings will impact on the nature of future spares demand. For example, the increasing pressure on available space and smaller households will favour the development of small homes and flats. This is likely to have a positive impact on electric or gas combination boilers, which are suited to small properties. In terms of product trends, it is likely that the focus on energy efficiency will continue to stimulate the replacement of ‘traditional’ boilers with high-efficiency combination boilers.
“In the renewables sector, demand for combination boilers that can take feed water preheated by solar energy will grow; and there will also be a greater requirement for stored hot water and cylinders with the means to integrate both fossil fuel and renewable heat sources” said Keith Taylor, Director of AMA Research. “Underfloor heating is a growth area in both the domestic and commercial markets, particularly when used in conjunction with renewable technology, boosting demand for the pipework, cabling and controls associated with the heating spares sector”.
Forecasts for 2016 are for growth of around 3%, reflecting another relatively mild winter, with the period to 2020 looking set for steady growth of around 3-4% per annum, subject to the weather.
The ‘Heating Spares 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 www.amaresearch.co.uk or by calling 01242 235724.