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Country Report

Institutional Channels in

Institutional Channels in the United Kingdom

27 pages, Oct 2016

US$2,100

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Executive Summary

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Stronger year for institutional services

Institutional services saw stronger growth in 2016 in comparison to the review period CAGR. This was due to more favourable economic circumstances in the UK in general. Growth was also supported by the ongoing outsourcing of all non-core activities by public and private institutions to contractors.

National Living Wage brings up average pay within the industry

From 1 April 2016, the UK government made the National Living Wage (NLW) mandatory for workers aged 25-years-old or over, thus increasing their hourly pay rates above the National Minimum Wage. The NLW was already on its way to becoming a mainstream concept at this time, especially in high-profile workplaces such as bank head offices and public institutions such as Parliament. In Parliament, campaigns for the NLW notably gained significant public support over 2014-2015. Long-term contracts are the norm in institutional channels, with the NLW resulting in an initial increase in costs. This is likely to have an adverse short-term impact on service providers' margins, as contracts are already in place. However, the impact of the NLW will diminish in the long-term, as additional costs are priced into renewed contracts.

High-value contracts grow while low-value contracts remain flat

Although the overall performance was positive in 2016, high-value contracts performed best. Multinational companies with high-value contracts servicing larger institutions, both private and public, notably saw strong value gains. Companies that provide specialist services via low value contracts however struggled, principally due to a fall in contract prices as a result of stronger competition for tenders.

Single-service contracts lose out to bundled facility management contracts

2016 saw further consolidation of overall facility management. Specialist contracts for outsourced single services are seeing declining demand, such as contracts for cleaning, foodservice, waste management, security, mechanical services and electrical services. Public and private institutions increasingly favour contracts for bundled services, with clients shifting to contracts covering multiple services in order to reduce procurement costs.

Brexit puts growth prospects at risk

Following the EU referendum in June 2016, the prospect of the UK leaving the EU has become a reality. This in turn creates uncertainty for the delivery of goods through institutional channels. Labour is one of the largest costs in the delivery of services. In the event that migration flows to the UK are dampened, restrictions on free movement will reduce the supply of labour in an industry that heavily depends on it, resulting in wage inflation. Further risks are linked to a potential economic downturn and increased costs due price inflation of for imported equipment. More businesses may focus on cutting costs, thus reducing spending on contracted services. If there is an economic recession, there is also uncertainty regarding how the largest European contractors operating in the UK will react.

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Overview:

Discover the latest market trends and uncover sources of future market growth for the Institutional Channels industry in United Kingdom with research from Euromonitor's team of in-country analysts.

Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections.

If you're in the Institutional Channels industry in United Kingdom, our research will save you time and money while empowering you to make informed, profitable decisions.

When you purchase this report, you also get the data and the content from these category reports in United Kingdom for free:

The Institutional Channels in United Kingdom market research report includes:

Analysis of key supply-side and demand trends
Historic values, and company market shares
Five year forecasts of market trends and market growth
Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as:

What is the market size of Institutional Channels in United Kingdom?
Which are the major brands in United Kingdom?
Which sector is the largest by value sales in United Kingdom?
Which sector of the market has been growing the fastest, in value terms, in United Kingdom?
Which companies dominate in the market in United Kingdom in terms of market share?
What is the distribution channel split for institutional services in United Kingdom?

Why buy this report?

Gain competitive intelligence about market leaders
Track key industry trends, opportunities and threats
Inform your marketing, strategy and market development, sales and supply functions

This industry report originates from Passport, our market research database.

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