Supermarket sweep rings industry changes
August 1st 2005

Price competition and market saturation mean life will only get tougher for scrubber dryer suppliers, particularly the smaller ones, according to Stuart Taylor, MD, Hako UK. Brendan Coyne reports

Taylor estimates the UK market for sweepers and scrubber dryers in 2006 will be £15-20m. He claims Hako’s share will be 17%, with Nilfisk-Advance about a point behind and Tennant holding 25%.

Wetrok will have around 10%, Karcher 3-5% with ‘others’making up the rest. It’s a relatively small pot to feed so many companies. “I can’t actually understand how the market can support so many suppliers,” says Taylor.

“Particularly with the market reaching saturation and prices being driven down.” The retail sector (which Taylor says controls the market) is responsible for driving down cost.

Dropping huge contracts onto the market every few years, competition is fierce, with margin sapping results. While this has necessitated leaner, efficient manufacturing, Taylor says smaller suppliers – without European markets to feed the production line and generate economies of scale – will find the next few years increasingly hard. He adds that the peaks and troughs in volume rollout resulting from the retail market’s cyclical nature add to the pressure on internal resources, forcing smaller suppliers to look elsewhere, squeezing them out of the market.

Lacking innovation? While sceptics say innovation from the suppliers is lacking, Taylor says they forget the innovation necessary to keep prices down, taking for granted the high levels of service, delivery and maintenance to which they have become accustomed. “Innovation is a bit of a buzzword: people put it in their tender without really knowing what to expect. They forget what we have achieved: machines have moved from 36 volts to 24 volts because there’s a cost reduction – motors are cheaper and more reliable, battery cost are lower; parts are standardised; designs are modular.

However, Taylor agrees that true innovation is perhaps a hard ask for a floor cleaning machine. “You’re scrubbing the floor with water, you’re picking water up – there’s only so much you can do: People will always walk on the floor so there will always be a demand for it; the design works, so you can only really refine it. Until battery technology can take another step forward, design innovation is hard to achieve – because the battery in any decent sized scrubber dryer takes up 30-40 percent or more of its footprint. If we could have smaller, lighter batteries we really could revolutionise design.” He says there is also a lot of innovation in Hako’s locker. “We’ve had robotic, fully automated scrubber dryers designed to be low cost shelved in projects – completely ready to go – for 8 years. But the market hasn’t caught up in labour costs yet. So there’s a lot of innovation waiting in the wings. However, until the market is prepared to pay for the capital value, that won’t change.” Contractors Taylor says that while major contractors such as MITIE are meeting price pressure with innovation, many are failing to take a broader view, missing out on business as a result. “Like us, the big contractors on major contracts are working to extremely tight margins. The expectation is very high and it is very hard for them – yet they willingly take on the contract, because with good management they can make it work. But there are a lot of cleaning companies out there that do a good presentation and take the job on price. I don’t think that helps the industry, and you can work out which companies they are by looking at who has taken on a big contract and lost it within a year. So there is certainly room for innovation from the contractors: Why only concentrate on cleaning? Yes it’s your core business but larger retailers are looking to outsource so they can focus on their specialisation – why not add shelf filling or facilities management?” Other than MITIE, Taylor says contractors capitalising on this opportunity are few and far between.

Future As well as improving manufacturing processes, designs and assembly methods, Hako's recently built factory in Poland (which it wholly owns and manages) ensures labour costs are minimised. Within two years the company will have replaced its entire product range – and the benefits of its improved processes should then bolster the companies bottom line.

So while the market looks set to get tougher for everyone, Taylor is confident Hako's size and determination to hone production will enable it to thrive. “Much the same as any industry, it gets a little bit tougher for everyone each year. But I've no complaints: this is the industry we chose to work in – and at least it keeps things interesting.”

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