Merry Christmas from AMA Research!

The team at AMA Research would like to thank all our clients for their custom in the past year! It has been an extremely busy time – in addition to publishing a wide range of reports, some of which were brand new titles, we have also undertaken a large number of varied client specific projects, ranging from detailed reviews of building materials to in-depth assessments of end-use contractor sectors.

During 2015, we plan to continue to improve our product and service offers, starting with an upgrade of our interactive content delivery platform in Q1.

The building and construction industry is finally showing signs of sustained improvement, driven firstly by the residential new build sector, but also by the non-residential new build sector where offices and infrastructure are forecast for good growth. We hope these improving conditions will benefit all our customers and wish everyone a Happy Christmas and a Prosperous New Year!

 

Please note that we are closed for business from 25^th December 2014 and will re-open on 5^th January 2015. We will process all orders and respond to any enquiries as soon as we are back after the Christmas break.

Positive outlook for the UK construction industry

Prospects for the construction industry are reasonably optimistic according to AMA’s latest Construction and Housing Forecast Bulletin.

Published last December, the Quarterly Bulletin indicates that housebuilding is the main driver of sector growth, with current  forecasts indicating increases in value of 22% and 16%  in 2014 and 2015 respectively. New housing starts are forecast to grow by over 10% in 2015 with medium term prospects set to be driven by Government policy changes in 2016-2018.

Prospects for non-residential construction are more moderate and varied. Office construction is bouncing back from the severe downturn in work in 2009-12, with growth of over 25% in 2013/14 and further steady growth forecast for 2015-18, while education construction work has proved more resilient in 2014 than anticipated. Entertainment and leisure construction is also buoyant and currently worth over £6 billion per annum.

The bulletin is published four times a year and provides a quarterly review of the overall non-residential and residential new build and RMI sectors, containing the very latest statistics and information, together with medium and longer term forecasts updated to take account of recent developments. The next issue of the Construction and Housing Forecast Bulletin is due out at the end of February 2015. For more information or to subscribe to the bulletin, please click on this link or contact us on sales@amaresearch.co.uk.

Online distribution of electrical products worth more than £500m by 2018

In 2014, the market for online distribution of electrical products was estimated to be worth around £400 million, representing 3% of the overall electrical products market. The market has seen consistent growth since 2008 as use of online purchasing and mobile technology has increased, and as suppliers have developed online offerings.

The distribution network within electrical products is complex, reflecting a wide range of products and a variety of end users. The largest distribution channels within online sales are electrical wholesalers and specialist retailers, while merchants and DIY retailers are also significant players in this market.

Whilst electrical wholesalers are strong in the sales of electrical products, their online capabilities are less well developed than certain other retailers. Internet retailers’ development of strong online sales platforms has allowed them to gain strength in lighting and appliances in particular. Electrical Wholesalers’ development of online platforms may be hindered by the complex discount systems in place within branches, which can be difficult to implement online.

Important companies involved in the distribution of electrical products via the internet include Screwfix, Rexel, YESSS, B&Q, Currys, Travis Perkins and a number of specialist online retailers, particularly those focusing on lighting and appliances.

Electrical products are increasingly being sourced online, both by contractors and end users and as such the outlook for electrical products distributed via this type of channel remains positive. Companies are also widening the product ranges offered through online channels and creating special online ranges and promotions in order to promote this type of distribution and to appeal to a wider audience.

Future growth, while positive, could be limited by the lack of transactional capabilities of some of the larger wholesalers and the slow uptake by electrical contractors who tend to remain loyal to local wholesaler branches and the discounts they offer. In addition, the traditional buying behaviour patterns of contractors may also delay gains in the Internet sector over the medium term future.

The market for online distribution may also 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. In addition, growth may be limited in some sectors by the technical or specialist installation requirements of certain products, leading to the specialist contractors retaining their position and often buying through traditional channels.

“The internet sector is outperforming other distribution channels in terms of growth and there are increasing opportunities to purchase online as more of the larger suppliers develop their web and mobile sites” said Keith Taylor, Director of AMA Research. “However, the rate of growth will depend on the attitudes and opinions of electrical contractors and their propensity to use the new media.”

In the medium term, the internet electrical products market is expected to continue to outperform the overall electrical products market, increasing by 37% between 2014 and 2018 to achieve a market value of £549 million.

The ‘Electrical Products Distribution Market Report – Focus on Internet – UK 2014-2018 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.

Home extension planning applications remain stable

The overall level of residential planning decisions granted in Great Britain has remained fairly stable over the last 5 years despite the economic uncertainty and relatively low levels of consumer confidence.

A steady improvement in the economy and housing market in 2013 had a positive impact for the overall home repair and refurbishment sector, which increased by around 2%. The presently more positive economic outlook also influenced the number of householder improvements granted by the planning authorities, with an upturn in 2013.

In terms of regions, England accounted for 89% of ‘householder developments’ in 2013, up from 87% in 2009, with Scotland accounting for 6% and Wales 5%. The majority of householder planning decisions granted were for building extensions, with single and two storey accounting for around half of all projects undertaken.

Single storey extensions were estimated to account for around 37% of householder developments in 2013, while two storey extensions were estimated to account for around 13% of householder developments. Two storey extensions cover a variety of applications and incorporate a wide range of products including bedrooms, bathrooms, utility rooms, a garage etc., in addition to an extension of the living and kitchen areas.

“The nature of the extension can vary from the installation of a new kitchen and open plan living area to a simple utility room and downstairs cloakroom. In 2013, the vast majority incorporated a kitchen and living area” said Keith Taylor, Director of AMA Research. “The growth of the trend towards contemporary design has motivated consumers to create a clean and uncluttered look throughout much of their home. This has led to a demand for more open plan arrangements, particularly in existing homes where improvement and redesign is undertaken”.

Although the UK economy remains fragile, there is more optimism for a continued recovery in the construction industry and the housing market, along with improving consumer confidence & spending. Low interest rates and rising house prices are encouraging consumers to undertake larger scale home improvements, particularly as there have now been a number of years of deferral of product replacements and home improvements.

Into late 2014 and beyond, average UK house prices are forecast to rise by around 6% in 2014 and thereafter by between 4% and 5% to 2017 driven by the continued economic recovery and prospective rises in average earnings. Rising house prices in the longer term should provide underlying support for the home improvement market, particularly high value improvements such as building extensions.

However, the expectation that interest rates are eventually set to rise in 2015, will exacerbate affordability issues and slow house price growth to around 2-3% by 2018. Consequently, the level of building extensions is expected to achieve modest growth in the medium term, reflecting growing consumer confidence and spending and perhaps a return to the trend of carrying out improvements prior to placing properties on the market.

Affordability issues are the main barrier to growth as banks and building societies require more information regarding borrowers' finances in order to assess their income, outgoings along with potential interest rate increases, before making a decision on how much to lend. However, it is reasonable to assume that homeowners with good levels of equity and those considered low risk by lenders will continue to undertake improvements, which should provide underlying support for the market. In addition, overall residential RMI expenditure is expected to achieve a steady rate of growth in the medium term to reach around £28bn by 2018. 

The ‘Home Extensions Market Report – GB 2014-2018 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 www.amaresearch.co.uk or by calling 01242 235724.

Confidence returns to the Warehouse Construction market

After years of decline, confidence is starting to return to the warehouse market as developers respond to an improving economy, recovering levels of manufacturing and current high levels of demand for warehouse property.

Improving market sentiment and a pick-up in economic activity has seen total demand for warehousing floor-space across all regions improve with take-up rising by around 28% in 2013.

In 2014, many developers and occupiers active in the logistics and industrial sector remained relatively cautious and, as a result, new construction continues to be driven mainly by build-to-suit activity. In 2014, speculative development rose to around 2.1m sq. ft., but this is still significantly below the peak recorded in 2007 and 2008.

There continues to be good demand for larger distribution, both from retailers and third-party logistics operators due to an acute lack of available space. This trend is likely to continue with the growth of internet shopping as retailers distribute their online sales from retail warehouse space. In addition, as internet sales continue to rise, they are anticipated to lead to a major change in the logistics market, as retailers invest in major warehouse developments purely for internet sales.

In terms of occupiers, retailers continued to drive the warehousing market in 2014, committing to large pre-lets and the importance of the sector is likely to continue in 2015, driven by discount grocery retailers, such as Lidl and Aldi, who continue to acquire more regional distribution centres to support their expansion plans. In addition, the manufacturing sector now accounts for a larger part of the warehousing market than in previous years, with increasing occupier demand now driven by an upturn in manufacturing output and, in particular, growth in the automotive export market.

Developers have reported an increase in the number of occupiers switching from centralised distribution centres to a smaller, regional ‘hub’ model of warehouse. As the major supermarkets continue to improve their e-fulfilment networks and the need for quicker delivery times increases, competition for smaller, urban distribution hubs near cities, particularly in London – continues to grow.

On a regional basis, most areas of the UK have seen an increased level of activity in 2013 and 2014, with the traditional industrial markets in the Midlands and the North remaining the focus of activity. Greater London and the South East experienced rising activity in 2013 but take-up remained below trend levels in these markets due to supply constraints. In addition, the geographical bias of speculative development is weighted towards the Midlands, South East and the East of London, primarily driven by London’s Gateway Logistics Park.

The switch from traditional store retailing to online retailing is likely to cause a significant structural change in the warehouse sector, changing the type of space required. This could lead to a ‘two-tier’ market becoming established, with more smaller distribution centres close to urban markets to fulfil express deliveries, supported by remote and larger distribution centres through which to replenish smaller urban warehouse hubs. This is leading to retailers needing delivery facilities in multiple locations and the warehouse market is expected to see more speculative development of sheds of less than 250,000 sq. ft. in the suburbs, close to good road networks.

“Warehouse construction is expected to have begun a steady recovery in 2014 in response to general economic recovery, an improving manufacturing sector, efforts by retailers to streamline their supply chains and increased demand from logistics businesses serving the e-commerce industry.” said Andrew Hartley, Director of AMA Research. “As a result, output is estimated to have grown by around 10% in 2014, with further growth forecast in 2015-2018.”

Beyond 2015 and up to 2018 the warehouse market is expected to grow year on year to reach a value of £1.7bn in 2018, though this is still well below its peak in 2007. The warehouse construction market continues to face a number of challenges including increased competition and, in particular, an acute shortage of industrial land, particularly in locations close to major urban conurbations in some areas and planning delays.

 The ‘Warehousing Construction Market Report – UK 2014-2018 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.

UK Household Textiles Market worth almost £1.4bn

UK household textiles market was worth an estimated £1.36 billion in 2013, according to a recent report by AMA Research, with further growth of 3-4% estimated for 2014.

This market is mature and demand is heavily influenced by external factors such as household income, consumer confidence and spending, underlying strength of the housing market and trends in home decor.

Sales of bed linen are valued at around £560m in 2013, with steady growth forecast for 2014. Duvet covers accounted for the largest sub-sector, followed by sheets, pillowcases, bedspreads/throws/bed runners and blankets. Sales of filled products increased by around 2% in 2012-13 but with good growth in 2014 as the economy slowly recovers. Sales of duvets are likely to remain positive with evidence of consumers trading up to higher value products likely to underpin the sub-sector. The market for bathroom textiles is valued at over £200m, with towels accounting for over 80% of the sector.

Supply and distribution of household textiles is extremely fragmented reflecting the wide product range and alternative routes to market. Many suppliers and retailers have reported increased footfall and stronger demand, while others have seen less of an upturn, and there have been a number of high profile closures in recent years. Some traditional retail outlets have also come under increasing pressure from online sales channels.

The rise in housing transactions and significant improvement in the number of first time buyers are key to ongoing growth in demand for household textiles. The market is likely to experience shorter replacement cycles in some sectors into the medium-term as consumer confidence and spending recovers, which should also help underpin steady growth.

The bed linen sector is set to remain the largest sector with share value remaining at around 40%, while a high demand for duvet covers, particularly for children’s character sets, is likely to underpin the sector into the medium-term. Duvets are likely to benefit from trading up to more natural materials and consumers owning different weights for summer/winter usage, whilst pillows and cushions are likely to show steady underlying growth.

“Polarisation of the market is set to continue into the medium-term with intense price pressure at the lower end of market likely to constrain future value growth” said Andrew Hartley, Director of AMA Research. “Continuation of the trend to ‘on-shoring’ may lead to some value growth in the mid-upper market sector, though this could be partially offset by low cost imports driving the lower market sector into the medium-term.”

The current positive trends in the housing market and underlying economy are likely to remain key drivers for growth in the short-medium term. However, more moderate annual rates of growth are expected towards the end of the forecast period in 2017-18, resulting in market value of around £1.6bn by 2018.

The ‘Household Textiles Market Report - 2014-2018 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.

Pharmaceutical Construction sector sees slowdown in growth

UK is the 9th largest pharmaceutical market in the world, and the sector makes a greater contribution to the UK economy than any other industrial sector – and also generates an annual trade surplus of almost £3bn.

The industry is particularly important in terms of its R&D contribution and the pharmaceutical sector alone accounts for more UK-based business R&D than any other manufacturing sector – around £4.2bn is spent on pharmaceutical R&D in the UK, almost 25% of the total industrial R&D spend.

The top 10 global pharmaceutical companies account for around £24bn or almost half of total UK sector turnover. Many of the top global pharmaceutical companies have a considerable manufacturing and research presence in the UK, with 12 out of the top 20 global pharmaceutical companies accounting for a total of 55 UK sites.

Known as ‘The Golden Triangle’ the centres of London, Cambridge, Oxford and Stevenage house the UK’s largest biomedical cluster in the UK. Clusters of pharmaceutical companies are also found in areas close to universities. The North West, in particular, is home to ‘Big Pharma’, with several global pharmaceutical companies operating a facility in the region.

Capital expenditure by pharmaceutical companies in the UK has been in decline, with R&D capital expenditure falling from £496m in 2002 to just £137m in 2012, and manufacturing capital expenditure declining from a peak of nearly £1bn in 2001 to just £422m in 2012.

However, the Government has announced a forward pipeline of over £200m worth of capital projects in the pharmaceutical and biotechnology sectors between now and 2018. In addition to these confirmed capital projects, a number of expansion plans have been announced by leading pharmaceutical companies, which are reviewed in AMA’s report and should be of interest to construction companies and their supply chains operating in the pharmaceutical sector and to suppliers of laboratory and allied products. Increasing specialisation within the pharmaceutical industry has also brought about varied opportunities for construction engineers and contractors, and also broadening into other niche construction sectors in advanced manufacturing, food processing etc.

“Current design and construction trends are moving away from ‘bespoke’ buildings to flexible and mobile laboratories and cleanrooms requiring less time to design and build, and incorporating modern methods of construction. The demand for mobile or modular cleanrooms is increasing driven by industry cutbacks which have forced many pharmaceutical companies to rethink their business and manufacturing operations” said Andrew Hartley, Director of AMA Research.

The ‘Pharmaceutical and Biotechnology Construction Sector Report – UK 2014-2018 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.

Slow but steady growth forecast in the UK Electrical Accessories Market

The electrical accessories market is estimated to be valued at just under £1.5bn in 2014, according to a new report from AMA Research. The market has seen growth of 16% since it bottomed out in 2009 and is now only 7% below its peak in 2007.

Although the difficult economic situation impacted negatively on market value between 2008 and 2010, a substantial rise in raw material costs inflating prices and offsetting low demand, coupled with modest improvements in the economy and growth in the construction market resulted in 10% market growth in 2011. While the market declined in 2012, signs that the economy was improving started to appear in 2013, housebuilding picked up and in addition, the electrical accessories market continued to be supported by major public sector projects, committed to prior to cuts, and as a result the market saw healthy growth in 2013.

The electrical accessories market, according to AMA’s definition, is dominated by low voltage cable systems with value share of over 50%, followed by circuit protection with around a quarter of the market and wiring accessories, which accounted for the remainder. As the electrical accessories market is mature, the product mix has remained fairly stable in recent years.

Raw material prices play an important role in determining market performance for electrical accessories, with the price of cable in particular being highly dependent on copper prices. These have fluctuated widely in recent years. Legislation on energy efficiency and carbon emissions as well as volatile fuel prices has seen interest in, and use of, integrated systems spreading into the wider domestic and light commercial markets to provide greater control for heating, lighting and all electrical systems.

Activity at supplier level during the recession has been focused on consolidation, rationalisation and cost cutting exercises, with many taking the opportunity to integrate earlier acquisitions, streamlining purchasing processes and even repositioning their businesses.

As the electrical accessories market is a mature and sizeable market, recovery will be relatively slow and steady. However, market value is expected to surpass its 2007 peak level by 2016. Pressure on pricing is likely to remain a key aspect of the market for some time. The current focus on solutions and systems within the electrical products market will continue to lead to demand for integrated systems in both the domestic and commercial sectors in the medium term, as well as an increased use of pre-fabricated wiring assemblies and wireless switches.

The demand for environmentally friendly products continues to be a major issue and this is a factor which is likely to be more influential in future years, as homeowners and business operators alike, use whatever means they can to improve the environmental credentials of their properties. This will lead to increased use of individual and central controls for lighting and other electrical products, perhaps creating demand in the electrical accessories sector.

Product development will continue to focus on environmental efficiency, wireless systems, integrated controls, reduced space and impact, quick installation such as prefabricated units and low installation application such as plug and play connections to reduce time on site and cut ‘down time’ during RMI situations.

“Current forecasts indicate annual growth rates of 5-6% from 2015 as the economy improves and house building activity increases” said Keith Taylor, Director of AMA Research. “It is expected that the market value will be around £1.8bn in 2018. However, this will depend on the speed of economic recovery and any fluctuations in raw material prices.”

The ‘Electrical Accessories Market Report - UK 2014-2018 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.

Consistent growth in Bed Market despite intense price competition

The market for beds and mattresses fell steadily in the 2008-2011 period, before showing consistent growth to reach an estimated value of £650m in 2013.

This market is mature and as such is experiencing high levels of price competition, in particular from imported products. Faster replacement cycles and trading up to higher value products are some of the factors that have contributed to market growth in recent years.

Divans account for around a third of the market by value, although market share has been eroded steadily by the strong growth in demand for bedsteads, including wooden, upholstered and metal bedsteads. Overall bedsteads currently account for around 28%, with growth supported by a wider range of product options.

Mattresses sold separately have grown to account for around a quarter of the market in value terms. This growth has been underpinned by the growth in the higher value pocket sprung sector and by the growing popularity of other materials, such as memory foam. Mattresses are one specific area of the beds market where opportunities for value growth exist, with consumers trading up to higher quality products. In addition, the growth of bedsteads has also supported the demand for higher quality mattresses.

During the last 5 years there has been a marked trend away from single to double beds and, in particular, to king sized beds. This growth can be attributed largely to falls in the price of double beds relative to single beds, with prices being driven down as a result of the high level of price competition within the market.

The beds sector is dominated by several large suppliers. Total imports of beds and mattresses have increased steadily in the last few years, reaching £164.2m in 2013, with imports of metal bedsteads accounting for 53% of bed imports by value in that year. Since declining to £23.7m in 2006 exports have expanded steadily to reach £52m in 2013. The distribution of beds is dominated by the furniture multiples with 46% of the market.

Total sales of beds are forecast to reach £760m by 2018, with the market showing steady and increasing growth during that period. This market is also likely to benefit from investment in the contract sector, particularly in the hotel and leisure sector, although this may be offset by reduced Government expenditure in the education and health sectors.

Manufacturers are likely to continue to add value with features such as integral side tables, storage and upholstered bedsteads, particularly in leather, along with higher quality mattresses, in order to combat the declining average prices in the beds sector.

“The mature nature of the beds market has resulted in the emergence of niche sectors, which are expected to support volume growth in the near future, as prospects for the UK economy improve. In addition, the market will be supported by higher levels of replacement purchasing, added-value purchases and some value growth at the upper end of the market” said Keith Taylor, Director of AMA Research.

However, the beds and mattress market is mature and heavily reliant on manufacturers encouraging shorter replacement cycles. As a result the development of value added features and the communication of these benefits to the consumer are likely to continue to be key elements in terms of product development and the stimulation of early replacement sales. Parts of the contract sector are not expected to experience the high levels of growth seen in the past, as expenditure in sectors such as health, education and the MOD has been reduced as part of the Government’s austerity measures.

The ‘Upholstered Furniture and Beds Market Report - UK 2014-2018 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.

Waste Management Market expected to reach £24bn in 2018

By value, data indicates that the market for the collection, treatment, recycling and disposal of controlled waste was worth an estimated £18.9 billion in 2013. Strong underlying annual growth rates have been driven by the implementation of EU Directives, aimed at reducing the volumes of landfilled waste and increasing the levels of material recovery through recycling, composting and energy-from-waste.

Above all, the impact of the Landfill Tax escalator on landfill gate fees has made these alternative approaches more commercially attractive. The downturn in the UK economy suppressed growth rates in 2012 due to lower levels of waste arisings, declining prices for many types of recyclate and the delay to many infrastructure projects.

Over the medium-longer term, however, the key 2020 targets for both the EU Landfill Directive and renewable energy mean that regardless of the economic situation, central government, local authorities and businesses do not have the option of scaling back waste reduction and recycling objectives. There remains a pressing need for the UK to improve waste recovery rates, particularly in the commercial and industrial waste (CIW) sector, and to develop a suitable waste collection, treatment and recycling infrastructure in this sector.

From 2014 through to 2018, it is expected that there will be an increase in the market growth rate, underpinned by the EU Landfill Directive target for 2020 which will necessitate an increase in waste recovery rates and a major increase in investment in the infrastructure needed to deliver this, by possibly as much as £5bn.

To achieve both these aims, energy-from waste (EfW) technologies, in particular advanced conversion technologies (ACT), will be core to government plans to meeting both the Landfill Directive and renewable electricity targets. Despite opposition from local interest groups and NGOs, there are a large number of 'mass burn' EfW incineration and ACT plants in the development pipeline that will be used to dispose of large volumes of the 21 million tonnes of residual ‘black bag’ waste currently being landfilled.

There has also been marked growth in the rolling out of anaerobic digestion (AD) plants treating food waste, underpinned by Landfill Directive requirements to divert biodegradable municipal waste from landfill. From just one facility in 2005, there were over 60 AD plants taking food waste at the end of 2013.

Keith Taylor, Director of AMA Research said: “The current rate of expansion and convergence with the EfW sector continues to attract new players into the UK waste management industry, particularly from overseas. The market has also seen further consolidation among UK companies over the past 2-3 years.”

By 2018, it is estimated that the market for the collection, treatment, recycling and disposal of controlled waste will be worth around £24bn, following annual growth rates of between 3-7% per annum during the period.

The ‘Waste Management Market Report - 2014-2018 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.

Energy efficiency drives growth in the UK Central Heating market

The UK domestic central heating market is substantial, with an estimated total value of around £1.1 billion at manufacturers’ prices in 2014. Over recent years this market has benefited from more stringent energy efficiency legislation and a drive towards sustainability.

Currently around 92% of UK homes have central heating installed, but while the market can now be considered mature, it still offers plenty of growth potential through upgrade and replacement purchases as well as product innovation to improve thermal performance, energy efficiency and control.

Between 2009 and 2012, the UK domestic central heating market was comparatively volatile, in line with the uncertain economic situation at this time. However, since January 2013 the market for domestic central heating products has seen a notable increase, with demand picking up as the economy improves. This growth can be partly attributed to the introduction of Government initiatives such as the ECO scheme and the Green Deal in 2013 as well as the further tightening of energy efficiency legislation in all product sectors of this market.

Estimated at £637 million at MSP in 2013, the boiler sector dominates the industry's sales. This is followed by radiators, heating controls and circulator pumps. The majority of these products are distributed via the trade channels such as builders/plumbers merchants and electrical wholesalers. However, replacement and retrofit products are often distributed via the DIY multiples and Online retailers. Other distributors include specialist heating retailers, hardware stores and catalogues. A number of products are also sold into OEMs.

In 2013 the market for domestic central heating products could be broken down into three key areas; refurbishment, which accounts for over 80% of sales, new build and first time installations. A major area of support for the market is expected to come from the domestic refurbishment sector. With new legislative measures, householders are now more aware of energy efficiency and the environmental impact of domestic central heating products.

The future performance of the UK domestic heating market is likely to be influenced by overall trends in house building, home improvement, fuel prices, energy efficiency legislation, renewable technologies, and technological developments also niche market drivers such as the self-build and conservatory markets. 

Increasing legislation represents a major influence in the long term development of this market. In addition to the demands of the European ErP directive, all radiators sold in the UK since July 2013 have to conform and have outputs verified to British Standard BS-EN442, something which is supporting the UK radiator industry as a whole, as it will eliminate low cost, imported products that do not meet this new mandatory standard. Higher levels of efficiency are also likely to be driven by the 2014 revisions to Part L of the Building Regulations.

Increasing awareness of energy usage and cost among consumers, partly as a result of the smart meters installation programme under which 53 million gas and electricity meters will be replaced with smart meters by 2020, is also a factor. This will also drive growth and product development within the heating controls sector, as demand for more sophisticated control products filters through into the consumer segment. The Governments’ renewable energy strategy with initiatives such as the domestic Renewable Heat Incentive (RHI) and Feed-in Tariffs (FIT) is likely to lead to further development of heating systems that are compatible with these technologies.

“The outlook for the UK domestic central heating market in Q4-2014 remains positive, with the continuing recovery in the UK economy and the related upturn in housebuilding and consumer confidence. However, with the election in mid-2015, uncertainties do exist regarding Government policy after this time” said Keith Taylor, Director of AMA Research. “By 2018 it is estimated that the UK domestic central heating market will be worth some £1.3 billion, representing an increase of around 18% when compared to the estimated market size in 2014.“ 

The ‘Domestic Central Heating Market Report - 2014-2018 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.

UK market for Upholstered Furniture to reach £1.9bn by 2018

In 2013 the Upholstered Furniture market was worth an estimated £1.6bn (at MSP), with the domestic market accounting for around 90% in value terms and the contract sector 10%. The financial crisis and the ensuing decline in the housing market had a serious impact on consumer confidence, with ‘large ticket’ items suffering badly, particularly where loan facilities were involved. As a mature market, the high level of price competition amongst major retailers has also restricted value growth.

Although sales of 3 piece suites have declined, suites consisting of a sofa and at least one other piece still account for 60% of the market, with combinations of 2 sofas becoming a popular choice. Sales of single sofas and convertibles represent an important part of the market, with a combined share of around a third, while armchairs sold separately account for a smaller share of the market. Sales of action furniture have also increased slowly and now account for almost 20% of the market, with most of the major manufacturers including such products in their ranges.

The share of the total market held by leather furniture continued to grow until the recessionary period, supported by the wide range of styles and designs and the increasing use of leather in other furniture sectors, home furnishings and accessories. The penetration rate has declined since then, although most of this decline has been offset by the increasing popularity of upholstery combining both fabric and leather finishes.

Imports of upholstered furniture reached their peak in 2006 at a level of £797.8m, but have since fallen to £710.3m in 2013 – around 40% of the market – with imports from China now accounting for the major share, although Italy remains an important source, despite declining exports to the UK. Exports have increased steadily since 2010, reaching £71.4m in 2013.

The supply structure of the upholstered furniture market has changed dramatically over recent years following the sale of the Christie-Tyler subsidiaries. The furniture multiples continue to dominate the distribution structure with almost 50% of the market.

The development of the market is likely to continue to be influenced by the high level of price competition, although sectors such as leather/fabric furniture and action furniture are expected to gain share. Sofas and chairs are also expected to gain share at the expense of 3 piece suites, in line with the growth of single person households, combined with the trend towards smaller accommodation.

Multi-functional furniture has made inroads into a number of furniture sectors in recent years, with storage an increasingly important issue. Tailored designs and clean lines are expected to remain popular in line with contemporary trends.

“The value of imported products within the upholstered furniture market has increased in the last three years, although the rate of penetration has not increased and this should provide some respite to UK based manufacturers, who seem to have held their own in those years, although pressures on price are sure to continue for both suppliers and retailers” said Keith Taylor, Director of AMA Research.

Total sales of upholstered furniture are forecast to reach £1.9bn by 2018, following consistent growth in the 2014-2018 period.

The ‘Upholstered Furniture and Beds Market Report - 2014-2018 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.

UK Domestic Window Coverings Market worth over £1.1bn

Research’s estimates indicate that the market for domestic window coverings in the UK was worth over £1.1bn in 2013, having experienced growth of around 3% over 2012. The upturn in the market in 2013 followed two years of decline, though the degree of improvement varied significantly between the different product sectors.

Growth was largely driven by improvements in the housing market, with economic recovery boosting consumer confidence. The market is very mature and replacement purchases are the dominant sector, accounting for an estimated 68% of sales in 2013, though the ‘new housing’ and ‘move to a new home’ categories have also seen growth over the last 2 years.

The UK market for curtains was worth an estimated £535 million in 2013, representing a small increase over 2012. Readymade curtains accounted for over 50% of sales with a share that has remained relatively unchanged over the last 5 years, while custom made curtains and curtain fabric accounted for lower shares.

Demand for window blinds has also been relatively buoyant, with growth of over 3% in 2013. Conservatories, a key end-use application for blinds, still accounted for more than a quarter of sales in 2013, though share has fallen in recent years reflecting the declining consumer appeal of conservatories. Custom made blinds account for over 70% of sales and venetian blinds are still the top-selling domestic blind in the UK.

The supply and distribution of window coverings is both fragmented and diverse, reflecting product mix as well as delivery, installation and service requirements. Mail order, internet and catalogue stores are now the largest distribution channel, but closely followed by department stores/variety stores and grocery multiples.

Andrew Hartley, Director of AMA Research said: “The stronger economy is likely to have a positive influence on future sales. Growth in housebuilding creates new demand, while a recovery in housemoving will also help drive up sales, as new curtains and blinds are seen as a relatively quick and low cost way of improving the décor of a new home.  In addition, we are likely to see an increasing amount of ‘trading up’ to higher value products as householders’ spending power continues to improve.”

The market is likely to experience further fragmentation, as more suppliers and retailers broaden their range of products and services to maximise sales potential and try to add value wherever possible. A further rise in online shopping is also forecast, particularly within the homewares sector, and tablets and smartphones are increasingly used.

Our forecasts indicate that the total windowcoverings market will experience further steady annual growth of around 2–4% up to 2018, with the market forecast to be worth around £1.28 billion by 2018.

The ‘Domestic Window Coverings Market Report - 2014-2018 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.

Major changes ahead for healthcare construction procurement

Under reforms in the Health and Social Care Act, the NHS has undergone major structural change with the management of the NHS, including its estate, decentralized as more power is handed to Clinical Commissioning Groups (CCGs).

In addition, with NHS capital spending now drastically reduced, the process of funding new hospitals and primary care facilities has also changed. For procurement purposes, the most significant change for the NHS comes in the transfer of commissioning functions from PCTs to GP-led CCGs and NHS England, which has lead to the increased provision of services in the primary care setting.

With more healthcare services being driven out of the acute setting and into the primary sector, many GP practices are already expressing concern about how they can comply with the CQC requirements and where funding for property alterations may come from. In February 2014, NHS England announced that it had put the vast majority of GP premises investment on hold while it develops a national framework to evaluate bids for funding. The broader policies of developing GP-led commissioning have undoubtedly lead to greater co-operation between the private and public sectors and more work with private providers and their construction teams.

A further driver of increased partnership with the private sector is also taking place in the acute healthcare sector with the creation of NHS Foundation Trusts, under which hospitals can generate their own income. As a result, there has been a rise in private providers refurbishing part of existing hospitals, adding extensions, new-build facilities or even taking on the full operation of an NHS hospital. Foundation Trusts are expected to be a popular target for construction companies as they tend to be more commercially aware and are usually more financially robust. Furthermore, Foundation Trusts are moving towards more longstanding, partnership-style relationships with the construction supply chain, with the focus on building up long-term relationships.

As a result of these reforms, the nature of future work in the healthcare sector is changing to reflect a more rationalized estate, with the majority of healthcare clients reviewing their healthcare estates in a bid to achieve efficiency savings. The transfer of the NHS estate to NHS Property Services in April 2013 amounts to some 4,000 sites and a maintenance backlog of around £4bn.

The future focus of NHS services will be on moving care within or closer to home, more regional services and the closure of some hospitals. A capital programme is being developed, which is likely to see more healthcare work coming through at local level. In the months during which the PCTs were abolished, a number of healthcare projects were put on hold, but over the next 18-24 months opportunities for work in the sector are likely to re-emerge.

The joint venture structure as seen in PF2 and ExpressLIFT to replace the traditional PFI model now seems to be the way forward for privately financed development in the NHS. LIFT also has experience of bringing in capital investment into rundown areas. As public spending tightens, the shared use of buildings with other public sector bodies may be the only way that investment into new facilities can be achieved.

In the years ahead, NHS trusts and hospitals are expected to focus on the maintenance of their estates with refurbishment programmes and on improving staff and patient facilities. Projects are likely to continue at the smaller end of the scale in value terms, but there will be a high volume due to the need to improve the condition of the healthcare estate and most of these will be procured under P21+.

“The main challenge for contractors will be to reduce build costs and develop standardised designs and techniques. The current economic climate has focused all NHS trusts on capital efficiencies – how to achieve more for less.” said Andrew Hartley, Director of AMA Research. “The construction industry will be looking to work closely with newly formed Foundation Trusts and CCGs in the primary care sector with advice and ideas on how to utilize existing assets to reflect the changing nature of health care needs within their area.”

Despite reforms and austerity measures, investment in the NHS still remains a priority for the Government, with revenue funding for the NHS protected until 2016, and increasing to £115.1bn in 2015-16. At the same time, NHS capital funding will rise to £4.7bn a year by 2015-2016. The Government has indicated that it may need to extend its austerity measures beyond 2016, which will mean further funding constraints for the NHS.

The ‘LIFT and P21 Procurement in Healthcare Construction Market Report – UK 2014-2016 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.