During what will be known as the first global pandemic of modern times, the economies of many European countries where hit hard and came to a grinding halt due to the lockdowns. Some industries where hit harden then others, but overall we can say that the construction and installation industries where hit severely.
Throughout the business value chain the effect were felt, architects reported more postponed and cancelled projects, installers show a drop in their orderbook and turnover development. The effects were obviously the strongest in countries like Spain where a full lockdown took place and construction sites closed. But even in countries like the Netherlands, where construction continued, the effects of the pandemic were severe.
That being said, the effects and severity of the crisis was different throughout the business value chain. Overall, general builders were least impacted. But what about a target group like electrical installers. How deeply are they effected and what are their outlooks for this year?
German and Dutch installers least effected
In the European Electrical Installation Monitor, a quarterly multi-client research based on 3,200 telephone interviews with electrical installers, we always cover a key trend (i.e Sustainability, Digitalization, buying behaviour, orientation behaviour and so on) and the economic development of the electrical installers. The image above represents the saldo of electrical installers regarding their turnover (increase/decrease) for Q2 and their expectations for Q3. It becomes obvious that the German and Dutch electrical installers are least effected by the crisis. As mentioned before, one of the reasons is that the industry didn’t went in a full lockdown in these countries. Moreover, the installation market in these countries were preforming very well before the crisis hit with very high orderbooks. The installers in Belgium, the UK, France, Poland and Spain were hit much harder, with on average half of all installers reporting a strong decrease of their turnover in Q2 2020 compared to Q2 2019.
The outlooks for Q3 2020 and the remainder of the year
When looking at the outlooks for Q3 2020 (this measurement was taken end of Q2) a more positive image arises. In all countries electrical installers expect a far better Q3 compared to Q2. Especially in Germany, France and the Netherlands installers expect that Q3 2020 will be at least on the same level as Q3 2019. Installers in Spain and Poland are the least positive about Q3 2020, but even here a slightly more positive outlook is presented compared to Q2.
This more positive outlook is also reflected by the fact that in almost all countries the order books were growing again in, following a sharp decline in the early phases of the pandemic. With this increase in order book, the outlook for the remainder of 2020 looks even more positive, however during the measurement the second wave of the virus wasn’t visible yet.
The drivers and barriers for further growth
We have seen that the electrical installers are becoming more positive, but how will this develop mid to long term. What are the drivers for this growth and potential barriers?
First of all, with the demand side of the equation things are looking positive. Even tough orderbooks at all stake holders in the construction industry dropped during the start of the pandemic, they are recovering and remain on a very high level. This in turn in driven by a high labour shortage in many countries and a high demand (or shortage of) residential new build.
Another strong driver is the push towards more sustainability and thus more renovation jobs or new build with more complex and bigger installation parts.
Finally, the investments and government support can drive further growth, but most of the effects will be seen later, as many government projects still need to be designed, tendered and so on.
There are of course also some strong barriers. First and foremost the development of the current second wave of infections. This can have a double negative effect. First of all, we could face more uncertainties and new lockdowns. This will again lead to postponed, delayed and cancelled projects. Furthermore, this could also lead to another slump in the residential renovation, maintenance & repair business. As the first wave hit us, many consumers were unwilling or afraid to have a professional working in their houses. The share of DIY jobs done increased, but the share of DIFM decreased sharply. During the summer the share of DIFM and the willingness to have professionals work in their homes increased again. At the start of the crisis, about 70% of the European consumers where uncomfortable to have a professional working their homes. This share decreased to about 40% in July, but has since been rising again and was at 48% end of August.
So what will happen? It’s hard to say. If the second wave will not lead to new lockdowns and the impact remains minimal, the electrical market will continue to grow and improve as the driver for growth are strong. On the other hand, if the impact is more severe, we could face a return to the very negative sentiment and further deterioration of the market. Time will have to tell which scenario will come to be
About the research and USP Marketing Consultancy
The European Electrical Installation Monitor is a quarterly multi-client survey by phone amongst 3,200 Electrical installers annually. The full reports provide an in-depth view on key topics like sustainability, buying behaviour, orientation behaviour, digitalisation and many more.
This research is part of the multi-client research portfolio of USP Marketing Consultancy. Other multi-client report cover target groups like HVAC installers, contractors and architects.
Besides offering key insights through our multi-client portfolio, USP Marketing Consultancy also utilises its high level of market knowledge of the construction, installation and home improvement markets (build op over the last 25 years) to conduct dedicated ad-hoc market research. Our market knowledge is our key asset, enabling better insights and clear advice. When it comes to dedicated market research, USP Marketing Consultancy covers all types of research, for example branding, customer satisfaction, market entry, product concept tests and many more.