Fear of crime is making more people take extreme steps to prevent becoming a victim, making the residential security industry increasingly profitable, say industry analysts.
The fear of crime causes a rising number of people to take extreme steps to prevent becoming a victim, making the residential security industry increasingly profitable, say industry analysts Frost and Sullivan. In its review of geographical performance, Frost & Sullivan notes that the highest penetration rate is registered in the UK and the Republic of Ireland, with 9.0 per cent of households in these regions having installed some kind of security system. Across Europe, revenues jointly amassed by sales of intrusion detection and alarm systems, alarm services – such as the installation of alarm equipment such as repairs, monitoring, technology upgrades and general operation and maintenance, as well as smoke and fire detection sensors and alarms, stood at $1.29 billion in 2001.
<br><br>
More awareness
<br><br>
A new study by Frost & Sullivan, an international marketing consulting company, believes that growing end-user awareness of the types of security equipment and their benefits is reflected in a dramatic increase in security system installation. Consequently, participants in the electronic security equipment market are advised to boost promotional campaigns to further encourage uptake, rather than mainly
channelling efforts into building credibility and faith in security products. The growing financial attractiveness of the European residential security industry will prompt multi-national groups to expand their presence in the market, to the detriment of rival national companies. As prices are expected to remain low, and increasingly user-friendly emerging technology will adopted to the residential sector’s requirements, the battle for greater market share is hotting up, the analysts say.
<br><br>
Sales billions
<br><br>
Set to rack up sales worth $2.57 billion in 2008, the European residential security market will see a shift in focus from security hardware equipment to security services in terms of revenue generation. Jose Melero-Mart, Research Analyst at Frost & Sullivan, says: ‘The high degree of fragmentation and intensifying competition is forcing down prices for security services, hardware and software, making it increasingly difficult for some companies to obtain profitable margins and retain their foothold in the industry. However, prices are expected to stabilise towards the end of our forecast period due to a growing trend towards mergers and acquisitions and the threat of suffering profits in an intensive price war.’
<br><br>
Frost & Sullivan pegs the total number of alarms in European households at 7.3 million in 2001, representing a 5.0 per cent penetration rate across inhabited dwellings. Of the total alarms installed in households, approximately a third are estimated to be wireless alarms. He adds: ‘Wireless technology will take the intrusion equipment systems sector by storm. This technology is easier to be operated and installed, as well as more affordable than its wired counterpart. In the residential security services sector, demand will be concentrated on basic services offered at competitive prices, such as the connection to central monitoring stations.’ Different national police forces are demanding the reduction in false alarms and threatening not to attend addresses with installed security equipment with records of false alarms.
<br><br>
The availability of more reliable and interactive systems boasting increasingly sophisticated detection devices (such as the reduction of false alarms through filtering procedures at alarm receiving centres) will drastically minimise or even altogether eliminate false alarm incidences. The study believes that around 32 per cent of European households are connected to an alarm receiving centre (ARC). Mr Melero-Mart notes that the lack of interest shown in smoke detectors across Southern European countries is a key stumbling block in the development of this sector, despite efforts invested by governments, industry bodies and association to convince the general public of the necessity of fire risk prevention.
<br><br>
More than 100 companies compete on the European residential security equipment manufacturing stage, as well as distributors importing equipment from the Far East. Most of the companies operate in local and regional markets, though a large number of them, particularly the UK, show higher internationalisation.
<br><br>
In terms of security services, the European market is controlled by Securitas, Group4Falck and ADT, a subsidiary of Tyco Fire and Security. ADT is rapidly gaining market share, the analysts say, by implementing an aggressive market policy that offers free equipment and installation if a contract of security services is signed by the customer. Its acquisition spree, including CIPE in France and Benelux, ProtectionOne in the the UK and Viterra Sicherheit in Germany, has also helped catapult ADT into the top league. The study points the a growing trend, especially in the UK, towards commercialising intrusion alarm systems through e-commerce platforms and DIY warehouses: ‘Thus, distributors target those individuals willing to buy a security system that is easy to install and reticent to spend the monthly fee required for signing a contract of security services. This market is forecast to display favourable developments and potential for growth.’
