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RANGE REVIEW: SECURITY & SAFETY


NEW TECHNOLOGIES UNLOCK GROWTH IN SECURITY MARKET


AMA Research takes a closer look at the electronic security market and what is driving growth – from wider demand for CCTV and access control products, to greater opportunities in smart home – but warns increased competition will continue to have an impact in some categories


and associated services – was estimated at approximately £2.35bn in 2017. The market value increased by around 5% during the year, despite the fact that the electronic security market is mature, with replacement purchases accounting for the majority of sales. The electronic security market has improved considerably since 2015, following several years of relatively poor performance, driven by technological advancements that have led to increased replacement demand, along with a relatively buoyant construction sector. In addition, the level of price competition has also stabilised in some sectors; something that has contributed to higher volumes and value. In terms of value, CCTV accounts for the majority of the overall electronic security market with a share of over 50%. However, the majority


T of electronic security


installations in the residential sector are intruder alarms, though access control systems are often also installed in flats and apartments. Intruder alarms


he total UK


electronic security market – comprising of electronic access controls, intruder alarms and CCTV


have reported increased uptake of wireless alarms in recent years, as they are less expensive, and easier to install and to upgrade. Most installers are now recommending wireless or hybrid systems. As with other


areas of the


market, intruder alarms look set to benefit from the increased preference for integrated electronic security systems, particularly the combination of CCTV and intruder alarms at perimeters. Providers are seeking partnerships and acquisitions in order to deliver this end-to-end capability - most notably in this sector, Hikvision acquired UK-based


alarm Pyronix in 2016. In the access control sector,


product development and wider availability of products have been key drivers of growth, as has the performance of the UK construction sector, particularly in commercial offices and housebuilding. In addition, access control products have not been subject to the price deflation experienced in other sectors, thereby enabling relatively consistent value growth. CCTV is also a growing sector for residential applications, driven by the increasing range of wireless systems brought to market. Increasing competition is a key


represent


the most mature of the security product sectors and, as such, its performance is closely linked to activity in the construction sector. It also generally experiences a lower level of technological advancements and has longer replacement cycles than other product sectors. As a result, value growth in this sector is relatively moderate, at around 2% per year, following two years of stronger growth in 2015 and 2016, when new housing completions increased by 19% and 14% respectively. Housing RMI has also increased, driven by home extensions and the ‘improve, don’t move’ trend.


in


The majority of alarms the


residential sector professionally-installed 12 DIY WEEK 28 SEPTEMBER 2018 are wired systems, although industry sources


feature of the market. In recent years, Chinese manufacturers have stepped up their presence in the market. Their initial strategy successfully pursued volume growth through cost leadership, but they are now among the main investors in R&D and bring highly innovative products to the market.


“The development of smart home products and integration with other security and home management systems should offer opportuni- ties for value growth”


The market has also seen a number of new entrants from aligned sectors that have blurred some of the lines in the supply chain. This is particularly so in the residential market, where the move to Smart Homes and changes in locking technology have seen new competitors take a greater interest in this area. Both Amazon and Google have pursued acquisitions in recognition of the fact that security is a key element of the Smart Home market, as an additional element to their Echo and Dot products. In addition, Yale is heavily promoting its range of Smart products and electronic locks.


The outlook


Prospects for the electronic security market are positive, although lower levels of construction activity across key end use sectors is likely to have a dampening effect. The overall market is expected to see average annual growth rates of 3-4% over the next two years. Value growth is likely to come from increasing adoption of new technologies in both the new and replacement sectors, and from service revenue. There remains considerable scope to expand the level of electronic security installations in homes. Intruder alarm installations are estimated at around a third of homes, and the improved range and


availability of CCTV products and smart locks etc, should support their wider installation in the residential market. The development of smart home products and integration with other security products and home management systems should offer opportunities for value growth in the intruder sector.


Housebuilding is a key strategic priority for the government, and a shortage of affordable housing, particularly in urban areas should shift the focus back towards flats/ apartments. In addition, other drivers include rising demand in the residential sector for both CCTV and access control products such as smart locks. Wider availability via internet channels will also support this growth.


The prospects for electronic


security products in the commercial sector are also positive. While construction output levels in commercial offices are not expected to be maintained at the levels seen in 2014-2016, end-users will have significant demand for upgrading their electronic security systems and integrating them with other business enterprise systems, driven by efficiency and lower total cost of ownership. The full


‘Electronic Security


Systems Market Report – UK 2018- 2022 published by AMA Research is available now www.amaresearch.co.uk


www.diyweek.net manufacturer 27% 17%


Electronic Security Products in the Residential Sector Estimated Product Mix by Volume (%)


Intruder Alarms- Audible


Intruder Alarms- Monitored


CCTV & Access 56%


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