North America security saw growth, due to post-pandemic recovery that prompted businesses and projects to resume. Supply chain issues and inflation, meanwhile, present uncertainties that may impact growth in the near term.
North America security saw growth, due to post-pandemic recovery that prompted businesses and projects to resume. At the same time, problems unique to the US market also forced users to strengthen security. Supply chain issues and inflation, meanwhile, present uncertainties that may impact growth in the near term.
North America suffered great losses during the height of the pandemic. Yet with the 7-day moving average of daily new cases as of Sept. 28 standing at 47,112, a return to normal is seen as offices reopen and projects resume. This, in turn, results in a recovery of the security industry.
“There have been many improvements to the industry in the last year, and overall it is moving in the right direction.
Trade shows and events are back, customers are taking in-person meetings again, and manufacturers are meeting their revenue targets. While significant hurdles still must be overcome in the supply chain, we are starting to see the light at the end of the tunnel,” said Jeff Ross, Director of Marketing at ACRE Americas.
“The North American region has experienced pent up demand for security technologies. Early in the pandemic we saw a reallocation of funding from security to other facility needs, and now we see end users looking to secure their facilities with the newest technology,” said Adam Lowenstein, Director of Product Management at i-PRO Americas.
For a lot of North American end users today, COVID impact has become more of a change in mentality as businesses focus on digitization and remote/hybrid working models. “We’re definitely still feeling the long tail of COVID, particularly the impact of work from home, and opening of networks that came with it. Spending on security remains a priority, but there has been an accelerating pivot towards connectivity and remote accessibility as part of these deployments, driven by necessity during COVID lockdowns, and the slow uptake of return to in-office work,” said Charles Pitman, Product Marketing Manager at Genetec.
Verticals, technologies that are hot
In terms of verticals, security demands are seen in a range of markets. “The market for security systems integration continues to be strong — driven in part by pandemic tailwinds, rapid technology innovation and the push to digital transformation across verticals. While all vertical markets have experienced growth, Convergint has seen significant strength in the financial, healthcare, SLED, data center and utilities markets,” said Mike Mathes, Executive Vice President of Convergint.
In terms of technology,
video analytics and cloud continue to dominate the security scene. “There has been a considerable increase in the interest in cloud and mobile technologies, particularly regarding access control and video management solutions. Many organizations recognize that traditional on-premise solutions can be expensive to maintain, difficult to keep up to date, and time-consuming to manage. The transition to the cloud and mobile offerings ultimately bolsters an organization's infrastructure, saves on costs, and allows for greater security,” Ross said.
Shortages present both challenges and opportunities
Amid growth in the North American market, there are uncertain factors that may dim future growth prospects. Among them are supply chain issues that have plagued the entire world – North America included. This, then, tests vendors’ ability to deliver goods in time despite components shortages and logistics issues.
“The supply chain disruptions were very bad for everyone, and i-PRO was not immune. However, i-PRO was able to mitigate the disruptions for its reseller channel in many cases thanks to having its own factory and not relying as much on electronic manufacturing services providers to supply core components,” Lowenstein said. “To further lessen our lead times, we also shipped products in by air versus ocean freight. We have also introduced a Quick Delivery Service with a 24-hour delivery timeframe for key models to ensure that our partners can realize their project requirements in a timely manner.”
There were also certain positive effects coming out of supply chain issues. “The supply chain issues that the world has been experiencing have encouraged businesses to be less dependent on single-source, proprietary solutions. Forward thinking organizations have instead been seeking open-architecture solutions that offer them increased choice and flexibility based on requirements and current availability,” Pitman said.
“Supply chain constraints have caused end-user customers to be even more flexible and open to evaluating, installing, and managing alternative solutions instead of sticking to their traditional approach. Manufacturers of card readers and access control cards are also experiencing significant delays due to the limited supply of microprocessor chips and other raw materials. This is causing a more rapid adoption and transition to mobile credentials leveraging smartphones,” Mathes said.
Closely related to supply chain issues is inflation where a price increase is seen in various products, including security.
“Across all industries, most organizations experience price increases due to the supply chain, inflation, and other external pressures. As costs rose throughout this past year, parties across all parts of the supply chain were forced to raise prices, and certain suppliers and resellers could not fully absorb the increases,” Ross said.
“We have seen some security manufacturers raise their prices from 10-20 percent in the Americas. Others have cut their discounting programs. For i-PRO, although we had a spike in air freight costs, we have not raised our prices. Our intention is to keep our prices stable and absorb additional expenses while the market settles post pandemic. This is part of our commitment to our channel to help them win business and offer the best value to their customers,” Lowenstein said.
What’s in store for 2023
As for 2023, the uncertain factors are expected to continue in North America. “The Americas market is expected to continue to grow in 2022 therefore helping to drive revenue growth. However, the North American market is expected to slow from 2023 onward as economic uncertainty increases,” Pitman said.
Yet security players are cautiously optimistic about the market. While external/internal challenges remain, security will always be a necessity, especially in a country like the U.S. where security and safety issues are always a
concern: in 2022 alone dozens of mass shooting incidents occurred – the most severe being the high school shooting in Uvalde, Texas where 22 were killed.
“Heading into 2023, we expect the security market to continue to grow in North America as a result of pandemic tailwinds and technology advancements, as well as an unfortunate number of critical threats taking place in 2022 alone. Security should remain a top priority across all verticals, and it’s important that business and security leaders look to implement, integrate, or upgrade security systems to optimize protection — and they can turn to experts to help them accomplish this quickly and efficiently,” Mathes said.