The UK market for
replacement domestic doors and windows is large, but mature and
volumes have been declining – even prior to the current recession.
In 2009/10, the market has been hit hard by the recession in the
UK. In 2010, the market is still experiencing some further
consolidation, but economic circumstances, ie the credit crunch,
and the collapse of the housing market have driven a change in the
character of this market. The number of takeovers has diminished,
though they are still a key feature of this market.
Defining
characteristics in this market in 2010 are: maturity,
fragmentation, competition, building legislation, ‘green’ building
issues, cost-management and diversification. Replacement windows
are the dominant sector, accounting for an estimated 55% of the
replacement market by value. Residential doors account for an
estimated share of 37%, whilst the patio door sector has a minor
share at around 8%.
The private ‘direct
sell' or retail home improvement market remains the dominant
sector representing around half of the market. However, we
estimate that share has reduced in 2009, as a result of the sharp
contraction in the market exacerbated by the credit crunch.The
public sector, by contrast, has increased as a proportion of the
whole market, with this sector maintaining volumes in 2009. In the
coming years, this is set to reverse as public spending cuts are
implemented.
Consolidation is a
major feature of this market though there are fewer acquisitions
reported for this market in 2009 and early 2010, than in the last
edition of this report. In 2010, it is likely, however, that more
companies yet may exit the market, whether through merger,
acquisition or closure.
Our forecasts for the
development of the door and window replacement market are for a
further decline in 2010, with only modest increases in value for
this market beyond that, reflecting the fact that this mature
market has very little scope for volume growth. There is
considerable caution and uncertainty in the market, as companies
are anticipating future spending cuts in, for example, public
sector building and refurbishment programmes and a rapid return to
high volumes in the new build or RMI sectors is not anticipated.
Sustainability is
becoming a key issue and, in the longer term, the development of
the sustainable building concept will affect the choice of
materials by specifiers and end-users.
The structure of the
industry has always been volatile with a high turnover of retail
companies. As margins have become more depressed in this saturated
market, and the pressure on companies to survive a downturn in
sales alongside rapidly rising costs becomes more acute, it is
expected that there will be numerous changes in the market with
further examples of acquisition, mergers or companies exiting the
market altogether.
Long term prospects
will be governed by the underlying level of second / third time
replacements, though the underlying growth in housing stock
provides some opportunities.
