Wednesday, December 20, 2017

Brexit uncertainty likely to limit growth in the UK wood floorcoverings market

The UK wood floorcoverings market has a high level of import penetration, and is therefore highly susceptible to fluctuations in exchange rates. As such, it was impacted by the downward movement of Sterling following the 2016 Referendum. Prior to this, the market had been showing good growth, increasing by 6% between 2013 and 2015. While signs at the start of 2016 were positive, the climate of uncertainty surrounding the Brexit issue and the competition from LVT meant that growth for 2016 slowed to 1%. Estimates for 2017 show value growth of around 1-2%.
Wood floorcoverings are now marginally the second largest floorcoverings sector in the UK, currently accounting for an estimated 16% of the market in value terms, a share which has fallen only slightly since it peaked at 17-18% in the 2004-07 period. The main competition has been the vinyl sector with increasing popularity of LVT in both domestic and contract providing significant competition for some wood floorcoverings products.
Market trends have generally been positive since 2011, with growth strengthening until 2016, buoyed by rising consumer confidence as the economy improved and by improvement in the housebuilding and wider construction sectors. However, as in other market sectors, there was considerable variation between the performances of individual suppliers, together with strong competition from other smooth flooring products. Design trends have seen the increased use of greater colour variations and mixed plank sizes to allow bespoke flooring installations, but also the use of texture and embossing to replicate features such as knots, “distressing” and antique floors.
Domestic DIY installations of wood flooring are still below pre-recession levels and seem unlikely to improve in the short to medium term, as major DIY multiples carry out significant restructuring programmes in the face of consumer reluctance to carry out their own home improvement tasks. At the same time, the contract sector is now suffering from the uncertainty in business confidence, particularly in the commercial office and retail sectors.
Laminate, the largest product category in this sector, continues to be a strong driver of growth in the overall wood floorcoverings market and it has become an increasingly popular choice in the commercial/contract sector. Value added products with useful additional features, such as non-slip and water-resistant or waterproof flooring, have also helped stimulate demand. Sales of laminate are likely to continue to grow by an additional 2% in 2017.
The solid and engineered woods sector has been slightly more volatile than laminate, and has seen slowing growth of 1% in 2016 with similar growth estimated for 2017, while the market for accessories, such as underlay, edging strips, glues, jointing strips, is not forecast to grow significantly in 2017.
The rationalisation of production facilities away from the UK to lower cost countries by larger global players has been a critical factor in the increasing role of imports to the UK market. The percentage share of imports from the EU has risen significantly, from 45% in 2011 to 56% in 2016, while imports from Asia have fallen from 51% to 41% in that period.
Jane Tarver of AMA Research commented:
“The wood floorcoverings sector is forecast to show annual gains of around 2-3% in the period to 2021. Forecasting is difficult at present, with the Sterling exchange rates likely to have more impact into the medium-term than has previously been the case. Increased import costs will have a greater impact on margins and many suppliers may be forced to pass on these increased costs. However, value growth is also likely to be stimulated by increase demand for FSC and PEFC certified timbers as environmental considerations become more prominent in the specification process.”.
The housebuilding sector of the construction industry is a key driver of demand for wood floorcoverings and current forecasts indicate more modest annual rates of growth for completions of 2-5% between 2017 and 2021. The medium-term outlook for the non-residential sector is for only modest improvement to 2018, followed by annual growth rates of 2-3% to 2021, based on indications of slowing growth rates for new orders throughout 2016, together with an element of uncertainty that is affecting business confidence and investment levels.

The ‘Wood and Laminate Floorcoverings Market Report – UK 2017-2021 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.

Monday, December 18, 2017

Mechanical & Electrical Contractors Market - 5 Key Facts

  • The market for mechanical and electrical (M&E) contracting has grown by almost 24% since 2012. 
  • The largest sectors for M&E contracting work is offices, with an estimated 25% of the market by value.
  • London and the South East of England had the largest proportion of M&E contracting activity in 2016, accounting for 29% of the total. 
  • Electrical work accounts for 50% of all the work undertaken by M&E contractors. 
  • There are essentially four tiers of the market, with around 68% of revenue generated by smaller local and regional contractors with a turnover of up to £20m, and just 8% by the leading 5 organisations.
These facts have been extracted from AMA Research's 'Mechanical and Electrical Contractors Market Report - UK 2017-2021 Analysis' available for purchase now. 

Friday, December 15, 2017

Consolidation to continue in the UK construction contracting industry

The construction contracting industry has experienced good growth since 2013, as a result of relatively buoyant construction activity across several end-use sectors. In particular, the infrastructure, commercial office, education and entertainment sectors have performed well in recent years, with infrastructure projects accounting for over 40% of the value of contracts awarded in 2016. More recently, however, the number and value of contract awards have been lower than in 2015, indicating a slowdown.

Despite the growth in recent years, the contracting industry is facing a number of challenges, including significant labour shortages, in particular with regards to skilled tradesmen, across all areas of the country. In addition, the impact of Brexit on the construction industry is expected to be most significant on the long-term supply of capital and labour into the UK, and potential changes to immigration policy could widen the supply gap in the labour market.
The leading UK contractors in terms of turnover are Balfour Beatty, Kier, Skanska, Multiplex, Willmott Dixon, Carillion and Galliford Try, Morgan Sindall and Laing O’Rourke. Together, the top 30 contracting firms accounted for over a third of the total work awarded to contractors in 2016/17.
Contractor margins remain under significant pressure in 2017 as a result of rising material costs and wage inflation, and this has led to some restructuring in the industry. In addition, the fall in the value of Sterling has meant that UK firms have become more attractive to overseas firms, especially where there is a long-term pipeline of major infrastructure work, and in recent years there has been significant consolidation activity in the sector.
There is a growing political and economic uncertainty concerning the EU withdrawal and contracting firms currently remain cautious about future workloads. With competition for construction work now stronger than ever and large-scale construction contracts now few and far between, main contractors have been considering lower value contracts in a bid to maintain workloads. This has led to intense competition also with smaller, regional companies competing for small and medium sized contracts.
Hayley Thornley, Research Manager at AMA Research, commented:
“Going forward, growth in the contacting industry is likely to be underpinned by opportunities in large-scale infrastructure, public sector and private residential work, as new private commercial sectors suffer a slight slowdown. Major construction contracts are increasing in size and complexity, and by 2021 the construction industry is expected to have undergone significant consolidation - driven by the larger UK players as well as interest from overseas firms - resulting in several larger multidisciplinary players with the necessary scale to handle larger and more complex projects“.
Many end use sectors are expected to support growth with positive outlook in sectors such as infrastructure, entertainment & leisure and the health sector. However, this will be partially offset by the more subdued performance from sectors such as retail, which may suffer from reduced consumer confidence levels, along with lower output in commercial offices and education. The market is also expected to be impacted by the increasing economic and political uncertainty surrounding Brexit.

The ‘Construction Contractors Market Report – Focus on Sector Capability and Strategy - UK 2017-2021 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience in the construction and home improvement markets.  The report is available now and can be ordered online at or by calling 01242 235724.

Thursday, December 14, 2017

Online sales of electrical products in the UK worth £1.3bn

In 2017, the market for online distribution of electrical products was estimated to be worth £1.3 billion, having grown by almost 300% on 2012, according to a new report recently published by AMA Research. This can be compared to growth of 20% within the overall electrical products market over the same period. Online sales are now estimated to account for around 8% of the overall electrical products distribution market.
This significant growth can be attributed to the fact that leading wholesalers, as well as both trade and DIY distributors, have expanded their internet presence in recent years, launching transactional websites and starting to move towards ‘omni-channel’ services. The increasing use of click and collect has also made a significant difference to the way contractors purchase, allowing them to combine the convenience of on-site ordering with collection from a convenient store at a convenient time.
The largest distribution channels with regards to sales of electrical products are direct from manufacturers and via electrical wholesalers, while merchants and other trade distributors, such as HVAC specialists, are also significant in this market. In terms of online sales, the most significant distributors of online sales are ‘internet only’ distributors, with around 42% of the market.
Internet retailers’ development of strong online sales platforms has allowed them to gain strength, in lighting and appliances in particular. While trade channels such as merchants and home improvement retailers have made progress in terms of their online presence, their limited involvement in the electrical products market restricts their market share within this sector.
The share of online distribution currently remain hampered within the electrical wholesalers channel, as a number of significant players still lack transactional websites. However, the larger wholesalers have been expanding and developing their online offering, and there is substantial potential for growth, in particular with regards to the ‘click and collect’ segment given the extensive branch networks of electrical wholesalers.
In general, the distribution market for electrical products is starting to move towards ‘omni-channel’ distribution, whereby customers can access information, goods and services via multiple platforms and channels within one transaction, with a focus on the overall customer experience.
 “Going forward, the market for electrical products sold online is expected to continue to outperform the electrical products market and is forecast to increase by 57% between 2017 and 2021” said Fiona Watts of AMA Research.
“Growth is likely to remain strong, although limited by the lack of growth in the electrical products market overall, caused by stagnation in construction due to uncertainty in the overall economy.”
Online sales of electrical products may remain limited in certain product sectors, such as electrical accessories, where items are low value, commodity products and distributors hold a constant, high stock level, providing less benefit to pre-ordering. Specialist sectors, such as fire or automation, where direct ordering is more prevalent, may also have more limited online potential.
One of the key drivers for growth of the online channel in recent years has been the emergence of distributors with a strong online presence and catalogue in combination with a trade counter, such as Screwfix, as well as the widening of product ranges by large internet retailers such as Amazon and ebay. They offer quick delivery and transparent pricing, as well as an online browsing of the full product range, providing electricians with a convenient alternative to using the electrical wholesalers.
The traditional buying patterns of contractors appear to be shifting as click and collect becomes more widely accessible. An increasing number of electrical contractors now use mobile technology such as smart phones and tablets whilst on site in order to do product research, check product availability, locate nearby stores and check product prices, and indicates that click & collect and online ordering via mobile technology has much more potential for growth.

The ‘Electrical Products Distribution Market Report - Online Focus - UK 2017-2021 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience in the construction and home improvement markets.  The report is available now and can be ordered online at or by calling 01242 235724.

Monday, December 04, 2017

Office and Home Office Furniture Market - 5 Key Facts

  • By 2021, the market for office and home office furniture is forecast to show steady growth and increase by 11%.
  • The share of the market held by the leading five suppliers fell steadily from 35% in 2014 to 32% in 2016.
  • In 2016 the seating market accounted for 33% of market value, gaining share from desking.
  • Imports are a significant factor in the market, reaching £288.9m in 2016, compared to £270.5m in 2015, and account for around 35% of the market.
  • The two main distribution channels for office furniture are via the dealer network or directly to end users, with 45% and 24% shares respectively.
These facts have been extracted from AMA Research's 'Office and Home Office Furniture Market Report – UK 2017-2021 Analysis' available for purchase now.