Thanks to the U.K.'s recent cheerful economic performance, their security market has started to regain its momentum. The upwind of its end market's demand toward security also comes along with fierce market competition. The market is indeed hot and crowded. Demanding UK customers and unique installation environments are testing manufacturers' agility.
The euro area is turning the corner from recession to recovery. The U.K. is one of the very first European countries to get back on their feet from the economic downturn. What really impressed the world is how just a year after the London riot in 2011, London still successfully organized the Olympic Games and also gradually paced up its economic recovery afterwards. Overall private spending has increased and the projects, which were put on hold, now have started again. Security projects ranging from construction, education, healthcare, retail, and commercial in general have more obvious growth. While growth in large government projects in critical infrastructure still remains slow, the UK security market has benefited from the wave of restoration and heated up with versatile security solutions and services.
Ecnomic Stability Brings Confidence to the Market
The U.K. is taking the lead in the euro zone with a projected GDP growth of 3% in 2014 and 2.6% in 2015, up from 1.7% in 2013. Private consumption is forecast to remain a key determinant of growth and an increase in investment spending is also projected. Due to the UK government still following a modest fiscal consolidation strategy to ease its debts and possible inflation, which might come along with the growth, overall government spending is still weak compared to the private side, but is ready to pick up. However, growth in the longer future will remain moderate. PwC's 2014 UK Economic Outlook pointed out, “Government spending should continue growing over the next two years but at slower rate after the 2015 election as the new government attempts to balance the books.”
This positive economic outlook also reflects on the UK security industry. “With the selling off of national companies in the 80‘s and 90‘s, it was inevitable that the large private sector would fuel growth of any industry, the security is no exception,“ said Adlan Hussain, VP Marketing at CNL Software. “This is also fuelling demand for our PSIM software. This demand is coming from a wide range of private organizations, from nuclear power stations to manufacturing to blue-chip corporations.”
BSIA confirmed the growing momentum from the U.K.'s private security sector and also commented that the competitive UK-manufactured products and services are also appealing to the rest of the global security market now. The promising domestic market still supports the country's economy growth but exports are also gradually strengthening year by year.
The Market is Hot and Crowded!
Aside from being a buoyant market itself, the demand for security in the U.K. is also coming from constant, internal and external, threats. The U.K. has been prone to many security threats, causing high security awareness in the government and local citizens since long ago. The long-standing political and religious conflict with Northern Ireland has caused several severe bombings. International terrorism is also a national security threat that the U.K. is currently facing. The 2005 London Underground bombings were the biggest terrorist attack in UK history, which stimulated the country to face new threats and strengthen its security facilities. This was followed by the 2011 London riots, also known as the “blackberry riots.” With all these historical terrorist attacks and social riots, it seems reasonable to explain why the U.K. needs very comprehensive coverage of surveillance cameras. Generally speaking, in 2007, the U.K. had around 1% of the world's population but 20% of its video surveillance cameras. The latest report also shows that for every 11 to 14 persons in the U.K. there is one surveillance camera, and the total installation will reach 5.9 million in the near future.
The country has already high security awareness. Hussain said, “In more recent years, the U.K. has been at the forefront of developments within video content analytics and PSIM, and UK companies were some of the earliest adopters of this technology. For exmaple, we have deployments in the UK such as Greater Manchester Police and IBM which date back almost 10 years.”
The market, from many security experts' point of view, is quite mature, with a local presence by all the multinational companies. In the meantime, the rise of many local manufacturers has joined in on the market competition. Last, the entrance of Chinese manufacturers has also made competition even tougher for all the players in the country. Chinese products are taking more market shares here and even competing with some companies in the higher-end market sector. "We have been really focused on the improvement of IP technologies and also put what the systems integrators' needs in the first place. Recently, we have experienced quite good growth in the U.K., especially with IP projects," said Tony Yang, GM of UK at Hikvision Digital Technology. Adopted from the book title, authored by Thomas L. Friedman, the UK security market is also “Hot and Crowded.” It is not easy for companies to stand out in this market, unless they carry unique business strategies.
UK Security Market(2-2): Hot and crowded