About the report
The report provides an analysis of the UK two-man home delivery market. It quantifies the market size, historical growth rates and levels of industry profitability. It also includes an in-depth analysis of the relevant drivers of industry growth setting out historical trends and available forecasts. It profiles the leading UK providers of two-man home delivery services. Our forecast for industry growth is based on this analysis of historical trends and growth drivers.
The 2018 version has been fully research and updated. It includes a new section identifying the 2-man delivery providers used by each of the Top 500 UK online retailers with relevant requirements.
What are the sources and methodology?
This report is based on
– Interviews with senior-level contacts in the consumer credit industry
– Extensive research into published industry sources
– In-depth analysis of the macroeconomic environment and relevant market drivers
– Financial analysis of the accounts of companies in the industry
We have used assumptions to build the estimated market data contained within the report. We have used third-party market estimates of key product segments applicable to two-man home delivery, eg washing machines, tumble dryers, fridge freezers, sofas, dining room tables, bed frames, divans and mattresses.
We have not included brown goods in our definition of the market as most brown goods, other than very large televisions, would be delivered by standard courier.
We have used assumptions about average cost of delivery for certain product categories, as well as average cost of assembly and connection for certain items. We have also made assumptions about average cost of disposal on a per product category basis. Further, we have made assumptions about the likely consumer take-up of these services on a per product category basis.
These assumptions have been updated and refined since our last two man delivery report. Using research on live pricing of delivery, disposal, connection and installation; as well as updating our estimates of uptake of delivery, installation and disposal, our market value figures have been revised upwards.
The data was cross-referenced against revenues of specialist two-man home delivery companies, volumes for specific two-man delivery contracts and other anecdotal information to refine our market estimates.
Who is it useful for?
The report is intended for:
– Providers of two-man home delivery services; and other home delivery services
– Retailers and online retailers of large ticket items, such as large domestic appliances and large items of domestic furniture.
– Investors in these businesses
– Banks, analysts, consultants and other parties with interests in the sector
– Market regulators and policy makers
A two man home delivery service typically involves a driver and mate delivering large, bulky or specialist items, often involving assembly, installation, fitting and removal of packaging and old items.
This report focuses on deliveries to customers’ homes. Although there is a business-to-business two-man delivery segment which focuses on items such as medical equipment, ATMs, commercial kitchen equipment and large computers, it is much smaller than consumer two-man delivery and has lower growth. The latter segment is not included in this report.
The two man home delivery market includes deliveries of large items including mattresses, beds, bed frames, wardrobes, flat pack items, large domestic appliances (fridge freezers, washing machines, tumble dryers and ovens), kitchens and other household items such as fitness equipment or large garden items.
The market comprises three main activities:
– assembly / connection
We believe that the UK market was over £850m in value in 2017, growing in line with UK retail demand for large items. This value includes both in-house and outsourced deliveries.
In recent years the market has been impacted by changes in supply chains, which have seen a move away from the old model of distribution of items via store networks towards regional and national networks which may be operated by a retailer or, in some cases, by the OEM with the retailer never taking possession of the physical items.
There have also improvements in customer service and the efficiency of customer communications, driven by systems innovations, and designed to ensure first time / no-fault delivery
The market is driven by a range of factors including:
– sales of larger items requiring two men to deliver, assemble or fit the items (typically furniture, large domestic appliances, garden furniture, home gym equipment, etc.)
– the volume of residential housing transactions, given that people are most likely to buy big items after moving house.
– factors which influence overall retail sales, such as consumer confidence
– the offer and take up by customers of premium services, such as next day delivery and installation, assembly and disposal services
– regulations regarding the recycling and disposal of items that are taken away from customer premises which have made consumers more likely to pay extra for disposal
Some manufacturers and retailers outsource their two-man home delivery operations and others choose to maintain in-house capability (e.g. Argos, John Lewis, Currys). We segment the market between:
– Larger third party two-man delivery service providers, such as ArrowXL, Expert Logistics, Wincanton, CEVA Logistics, Panther Warehousing, DX Group, Breezemount, Panther Warehousing, DSV Solutions, BJS Distribution and DHD Direct
– In-house delivery operations of large retailers – such as John Lewis, Currys and Argos – which have the scale to run their own national two-man delivery operations efficiently
– Smaller two-man delivery service providers
– Smaller retailers carrying out their own deliveries or using a local transport partner.
We believe that the majority of the market is still carried out in house but that the outsourced segment has grown more quickly as, in particular, medium-sized retailers, have outsourced their operations.
Operating margins vary, with the highest at 14.2%, and the lowest at 3.3%. Aggregate industry margins have improved since we reviewed the market in 2016.
We expect the market to continue to grow, driven by
– On-going demand for the purchase, connection, assembly, installation and disposal of large items.
– Further increases in penetration of value-added services such as installation and collection / refurbishment / recycling of old equipment.
– Supply chain trends present further opportunity for providers as both retailers and OEMs look to modernise and streamline their processes by using an external delivery specialist.
– Increasingly the trend is for offline businesses to follow the pattern of online retailers with physical items being distributed direct from the OEM to the consumer, rather than going via a regional / local store network.
There is uncertainty given the Brexit referendum and the impact it has had on consumer confidence and prospects for retail sales – in particular for larger-ticket, more discretionary purchases, and the housing market. Our forecast assumes an orderly Brexit.