About this report
The security industry has been touched by several important trends, some of which are important across business services markets with others being related to even broader trends. These include:
– Application of new technology such as CCTV and consequent reengineering of services
– Growth of integrated FM contracts
– Government spending cuts and outsourcing of services such as prisons and policing support to achieve savings
– Increase in levels of security in airports and other sensitive locations
– Growth of internet retailing and impact on the high street
This market report reviews the provision of outsourced security guarding services in the UK. We quantify the security market size, historical growth rates, segmentation patterns and levels of industry profitability while reviewing key factors behind these figures. We also carry out an in-depth analysis of the relevant drivers of industry growth – in particular trends in prisons and policing, air travel, retailing and development / deployment of CCTV and other security technologies – setting out historical trends and available forecasts. Our forecast for industry growth by segment is based on this analysis of historical trends and our understanding of growth drivers.
In assessing the prospects of the security market, it is important to think through what each of these trends means for the industry and see how, and by how much, it may change in the light of them. That is the main objective of this report.
Who is it intended for?
Security service providers
Manufacturers of security equipment
Purchasers of security
Facilities management groups
Governments and regulatory bodies
What are the sources and methodology?
This report is based on:
– Interviews with senior-level contacts across the security market
– Extensive research into published industry sources
– In-depth analysis of the macroeconomic environment and relevant security market drivers
– Financial analysis of the accounts of companies in the industry
– Our own experience of advising both companies and investors in security businesses and other business services areas.
Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions.
Market forecasts have been constructed using simple assumptions which are clearly stated. Supporting evidence is provided for our assumptions but readers can easily flex them to model alternative scenarios.
Market growth and drivers
The outsourced security guarding services market is approaching £5bn in size, having grown steadily in recent years.
Retail, airports and prisons have accounted for most of the growth with increased emphasis on airport security in the post-9/11 world and outsourcing of prison contracts being important factors
Technology such as CCTV, continues to be deployed extensively, both as a complement to and a substitute for, human guards
In 2012, the Olympics represented a significant additional one-off requirement leading to temporary growth in the security market.
Crime rates have fallen, although public perception and fear of crime appears not to have done. As a result, demands for tougher sentences are widespread and prison populations have increased, with the UK incarcerating more of its population than most other European countries
The market for manned security remains relatively fragmented. In our research we have analysed the performance of 17 of the largest UK service providers, which we believe account for 75% of the security market – with the remainder being served by a long tail of smaller providers. The industry accreditation body, the SIA, has over 700 members.
There has been significant convergence between security and facilities management. Several of the leading players in the industry, such as G4S, MITIE, Vision, Serco and Sodexo provide security has part of a much broader range of services.
For FM companies the benefit is clear: adding security revenues can increase revenue per customer and hence drive profitability.
Benefits for customers are less clear as there are few reports of significant operational reengineering to remove costs by integrating security and other services on the ground – although integration of local management at smaller sites is frequently reported
Some leading providers, such as Securitas and Corps, continue to focus on security as a standalone service.
Industry margins have held up very well with price increases being achieved despite the economic downturn and wage inflation being kept in check.
While the core manned security market is somewhat mature, growth is likely to come from increased outsourcing of government services such as the operation of prisons and provision of certain police services which are not in the front line.
In addition, airports are likely to remain a key source of growth. Economic recovery is likely to accelerate passenger growth and new technologies are constantly being developed and deployed.
The nature of security market growth, with the most attractive opportunities appearing to be in areas where there are large contracts, implies future market consolidation. [/restrict]