Industry Sector Research
As mentioned in other sections, market research is crucial to your business in terms of start up and growth.The purpose of this section is to define some of the main industry sectors. We have established links to other very useful websites within each industry. If you have any suggestions for further development of this section please email our consultants.
The following industries have been identified:
Construction
IT Industry
Craft / Art Industry
Entertainment
Retailing
Tourism / Leisure
Consultants
Construction:
The Construction industry covers not only the erection of buildings
but also demolition, repair and maintenance work. It services all sectors
of the economy, both public and private buildings (e.g. houses, schools,
hospitals) and commercial buildings (shops, offices, etc) and the UK infrastructure
(e.g. roads, rail). It also includes the manufacture and sale of building
materials.
Construction is a highly fragmented industry typified by lots of small
companies. There are roughly 165,000 firms classified to construction
with over 50% being sole proprietors. At constant 1995 prices, the UK
construction industry is forecast to grow by 12.1% between 2001 and 2005.
The construction industry is one of the most important in the UK, in both
the public and private sectors. With over £62bn of work carried
out a year it represents 8% of the UK's gross domestic product (GDP) and
is the largest single contributor to GDP in the UK.
In addition it is a major employer with 1.4m employed, which represents
almost 10% of the working population. Key issues in the industry include
the Aggregates Tax, the Climate Change Levy and energy/environmental issues
generally. The Government is encouraging more partnering in the construction
industry, and a quality mark scheme has been introduced
IT industry:
The UK computer market generated revenues of over £45 billion
in 1999. The computer hardware sector was worth £ 13 billion in
1999 with the software industry estimated to be worth £5.5 billion.
Competition within this industry is vast and worldwide with the effect
that growth has slowed since 1998. IT is an industry that quickly expires
- as soon as it is introduced to the markets, it can be out-of-date. In
N. Ireland, it is apparent that more computer retail outlets are opening
up specialising in sails, repairs, accessories, and IT advice or second
hand computers.
Information Technology itself concerns the uses of systems that allows
the transfer, storage, processing and presentation of information. The
IT market in NI is enjoying a steady growth as the economy improves and
stabilises and more people invest in IT. According to Keynote it is predicted
that the demand for IT training services and courses will remain relatively
strong over the next 5 years, as the number of IT staff in the UK continues
to grow, and as the UK continues to face IT skill shortages. E-learning
will be the main driver of growth, but the distinction between ILT and
e-learning will continue to be eroded as virtual classrooms and blended
learning increase in importance.
The software market is highly fragmented, with even the largest companies
only having a small overall market share each. There are numerous small
companies or sole operators, usually in the bespoke software or IT services
sectors, where entry barriers are low. The UK market is dominated primarily
by American owned companies, although some consolidation between UK companies
has been taking place as firms strive to become more competitive in the
face of rising development costs. The 700 members of the Computing Services
and Software Association (CSSA), account for around 80% of the UK industry
by turnover with combined revenues of over £14bn in 1999.
Customers come from all sectors. The largest customers tend to be major
companies with the financial resources to spend on major computer installations
and software programs. In the consumer sector, the majority of software
is bought through PC sales, as most PCs come with basic applications included.
Craft/Art Industry:
The arts and crafts industry is an extremely broad based sector covering
a range of diverse activities. Arts deals with the buying and selling
of paintings and antiquities, through art dealers or auctions and crafts
deals with traditional handmade goods that include textiles, pottery,
ceramics, leather, wood and jewellery as well as touching upon the retail
of unusual crafts and gifts.
Crafts is a sector exclusively made up of small, independent businesses,
working in one specialised area. The majority of craft businesses operate
as sole traders but some are two to three person operations or partnerships.
Crafts are increasingly sold directly, giving the craftsperson first hand
contact with their customers. Craft fairs and markets attract a variety
of buyers ranging from the casual amateur to the eager collector. Crafts
sold in major cities are most likely to be bought by tourists, both overseas
and British.
In terms of overall retail sales, the value of most sectors (for example,
toys and games) fell from 2000 to 2001. Items purchased as giftware have
been particularly hard hit. The market for luxury goods, comprising discretionary
purchases, is rapidly affected by the economic climate, with levels of
employment, disposable income, interest rates and availability of credit
all being important factors However the market has regained an upward
growth pattern. The cycle of growth and depression felt in the art market
over the past decade has been due to factors outside the control of the
industry.
Entertainment/Recreation:
The record industry is an extremely successful part of the UK economy,
and its exports make a considerable contribution to UK invisible earnings.
In addition about 130,000 people work in the music industry in the UK.
Record sales are dominated by specialist chains such as HMV, Virgin and
Our Price. Woolworth's, though selling a comparatively narrow selection
of CDs and tapes, also represent a significant proportion of sales. More
and more people now have access to hi-tech up to date recording equipment.
Musical computer systems enable musicians to record high standard multi
track tapes in their homes, and equipment to record onto CDs is available
for domestic use. Commercial studios are also becoming ever more sophisticated.
While the video hire market is led by Blockbuster, followed by Global,
Choices, Apollo, and VidBiz. Independents, convenience stores, libraries
and mobile vans are also a part of this market. Blockbuster has decided
to decrease the number of VHS tapes in its stores and replace them with
DVDs. The growth in DVD (Digital Versatile Disc) has been exceptional.
Sales of DVD players increased during December 2001 as they became one
of the top Christmas gifts. They have become the fastest growing consumer
product of all time. This has been due in part to the sharp reduction
in the price of players, which can now cost as little as £100-£200.
The video retail market is almost twice the size of the rental market.
In the video retail market the leading retailers are: Woolworths, HMV,
WHSmith, Asda, Virgin, Tesco, Blockbuster and Our Price. The grocery multiples
have increased their market share. While specialist retailers stock a
wide range of titles, the grocery multiples tend to concentrate on popular
and family titles.
Retailing
The retail market itself is estimated to have sales of over £200bn,
with food sales representing the largest proportion of this. The market
has seen dynamic change amongst individual retailers, with Wal-Mart, for
example, purchasing ASDA in July 1999, and there is constant news of restructuring
amongst clothes chains, from Marks and Spencer to C&A (Head Office)
and Arcadia. Faced with e-commerce, restrictions on space and a need to
attract the consumer to particular locations, there has been an increase
in the number of mixed-use schemes, with retail and leisure developments
particularly increasing. Shopping centres actively market themselves to
attract consumers, with some £18.5m being spent by key UK shopping
centres for the year ending September 2000 alone, according to ACNielsen
MMS.
As the ultimate driving force behind retail development, the consumer
is the starting point for anticipating retail trends. The profile of the
UK population is changing significantly, and by 2011, a fifth will be
aged over 65. There will also be growth amongst the 45+ category with
traditionally higher disposable incomes. Meanwhile, the number of children
under 10 will fall significantly, whilst the more technically proficient
group of teenagers and young people in their early 20s will rise. Against
this background, retailers must adapt their product offer accordingly
to target particular market segments.
Key Note forecasts that there will be growth in town-centre shopping centres
over the period 2000 to 2005, with retail sales rising by an average of
5% per annum, given the number of centres which are planned to open and
taking into account competition between individual centres and other external
factors such as e-commerce.
Tourism/Leisure
The scale of domestic tourism is much larger than travel abroad in terms
of trips, involving 132 million individual 'staying' trips away from home
in 2000, but the spending (£15bn) is much less than the amount spent
on travel abroad (£23.91bn).
Incoming tourism is on a much smaller scale again, at 25.3 million trips
and spending of £12.77bn in 2000. However, this is because incoming
tourism has failed to grow significantly over the last 5 years (since
1996).
A closer look at destinations shows that British tourism abroad is heavily
concentrated - on the Spanish 'Costas' and islands (led by Majorca and
the Canary Islands), on Paris or Amsterdam for city breaks, and on Florida
for trips to the US. Even more concentrated is the pattern of incoming
tourism, with London acting as the main magnet for over 50% of visitors.
Outside the capital, favourite destinations include Bath, York and Edinburgh.
Traffic through the Tunnel has grown more slowly recently because of the
low-cost airlines, the other major transport development. EasyJet and
Ryanair have challenged the orthodoxy of the airline business, helping
to develop the independent travel market, and using the Internet as their
main sales channel. There was an exceptionally gloomy start to 2001, with
the foot and mouth epidemic following hard on the heels of freak weather
conditions, a late spring, more railway problems and economic nervousness
on the global stock exchanges.
Consultants
The UK market remains extremely buoyant, having shown year-on-year growth
of more than 10% over the past decade, reaching 20% in some years. Key
Note estimates that the market was worth £6.55bn in 2001, following
an annual increase of 13.9%. This excludes consultancy work agreed in
the UK but destined for overseas clients. Including overseas earnings,
the Management Consultancies Association (MCA) estimates that the UK market
was worth more than £7bn in 2001.
The market comprises nine sectors: information technology (IT); corporate
strategy and organisation development; project management; financial and
administrative systems; production and services management; human resources
management; marketing and corporate communications; economic and environmental
studies; and outsourcing. The largest sectors are outsourcing and IT.
The major client sectors in 2001 were hotels and catering, banking, transport
vehicles and equipment, and telecommunications. Private-sector clients
far outweigh public-sector clients in terms of consultants' fee income.
Key Note forecasts that, while annual growth will slow in 2002, it will
remain in double digits and begin to rise again in 2003, after which it
will continue to increase to 2005. During this period, e-business will
be an important driver of growth. The market will also witness continued
growth in outsourcing, as well as a move towards results-based consultancy.
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