The heating spares market is highly complex comprising a wide range of products, with some of the major merchants supplying around 50,000 products. The market achieved significant growth in 2013, due to the cold weather causing an increase in wear and tear and boosting the requirement for spare parts. However, subsequent winters have been mild and wet, which has reduced the level of wear and tear and resulted in lower demand for heating spares. Consequently, the market experienced modest growth in 2014 and 2015 at 3-4%, with similar growth expected in 2016. Factors supporting underlying demand in the spares sector includes the high level of combination boilers now installed in the UK. The level of wear and tear is relatively high on this type of boiler, and this should support underlying growth in the spares market. The growth of maintenance schemes, such as those now offered by utility companies and home emergency insurance providers, also support the repair sector and subsequently the consumables and spares market.
Other factors supporting underlying growth include lower levels of capital expenditure in some non-domestic end-use sectors, supporting a trend towards repair rather than replacement, thereby boosting the spares market. Other positive influences on the heating spares market have been the continued growth of renewable energy technologies and other technological developments, for example in the area of ‘smart’ heating controls, that have expanded the range of spares required, often into higher value product ranges. However, a negative influence on underlying market value has been intense price competition, partly created by cheap imports, and weaknesses in commodity prices. The type of heating system fitted in new buildings and upgrades to heating systems in existing buildings also impacts on spares demand, for example, the replacement of vented hot water systems with mains pressure systems.
Over 50% of heating spares are distributed by four national merchant chains. In recent years, however, smaller regional and local merchants have improved their service and ordering processes and, in some cases, have shown significantly higher growth compared to their larger competitors. A small proportion of sales are via the DIY sector, Internet retailers and electrical wholesalers, whilst other channels include the service teams of boiler manufacturers and those of companies that provide home maintenance and servicing contracts.
Short-term trends and forecasts for the heating spares market are difficult to predict, as the market is largely reliant on the weather influencing usage levels and wear and tear. However, factors supporting underlying growth include the large installed base of boilers in the UK; in particular, the large volume of combination boilers installed. In the non-domestic sector, the focus on repair is likely to be particularly strong in certain public sectors due to constraints on capital spending during the lifetime of the current Government. The level of housebuilding is expected to remain buoyant, as the Government seeks to address the problem of undersupply, and while this favours demand for new equipment rather than spares in the immediate term, the growth in the installed base of heating equipment will support demand for spares in the longer term. The type of systems installed in new dwellings will impact on the nature of future spares demand. For example, the increasing pressure on available space and smaller households will favour the development of small homes and flats. This is likely to have a positive impact on electric or gas combination boilers, which are suited to small properties.