The distribution of
‘industrial consumable products’ is fragmented and difficult to define. AMA
Research have recently published a new report on this complex market in the UK
which, as defined by AMA, is estimated to be worth over £1.8 billion in 2016.
This is a mature market which has experienced relatively stable conditions in
recent years, and estimates indicate the sector was relatively flat during
2015/16.
The key product sectors
of the ‘industrial consumable products’ market according to AMA’s definition are
power & hand tools, health & safety, engineering & metalworking,
fluid & air control, workshop & maintenance, storage, security, access,
site equipment & handling equipment, with fasteners, janitorial and
abrasives products each accounting for smaller shares of between 2-4%.
In recent years, the
market has benefited from a growing focus on health & safety, energy efficiency
and environmental issues, which have largely been legislation-driven. In
addition, the development of value added services, such as VMI (vendor managed
inventory), continues to represent a growth area, as customers look for a wider
level of support from the major distributors.
Key external factors impacting the market
include the state of the economy and the relative performance of key customer
sectors. Also impacting on the market are general levels of maintenance &
repair, legislation, costs of fuel, energy & raw materials, and the
volatility of Sterling. The sector has an extremely fragmented customer base
operating in a diverse range of end-use applications, which tend to experience
varying performance levels. Some sectors of the market are relatively stable
(such as utilities and food & drink) whilst other sectors are more volatile
and/or cyclical, such as automotive.
Distribution is diverse
with a mix of some distributors operating in all product sectors, while others
focus on a narrower range underpinned by their history and expertise in key
markets. One-stop sourcing remains important for customers, which is
particularly applicable to commodity type products. This trend is underpinned assisted
by a growing focus on e-commerce as company websites can display more products
than shown in catalogues, though predictions of the death of the catalogue have
not been borne out to date.
“The impact of Brexit on the industrial sector and
thereby the industrial distributors market is extremely difficult to forecast
and its implications are likely to become clearer as the UK begins the process
of negotiating trade agreements in order to leave the EU” said Andrew Hartley, Director of AMA Research. “With a recent study indicating that many
manufacturers are likely to hold back their investment in plant and machinery,
maintenance and repair will continue to be important, providing opportunities
that will help to underpin the market, which is forecast to experience modest
growth of 1-2% per annum to 2021.”
As indicated earlier, the future performance of the
market is closely linked to the overall state of the economy and general
conditions in sectors such as manufacturing, engineering, transportation,
utilities, public sector and construction. Increasing levels of health &
safety, environmental and energy legislation are driving product demand, with
value added opportunities. The future performance of individual distributors
will primarily depend on their product and customer profile, together with regional
strengths, pricing and stockholding strategy. In addition, those that are
taking advantage of the opportunities offered by value added services such as
VMI are likely to benefit.
The ‘General
Industrial Products Distribution 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 www.amaresearch.co.uk or by calling 01242 235724.
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