Research reports hope for future
December 1st 2008

MTW Research has published a new report on the UK contract cleaning market which offers some optimism in the light of current market conditions

Anew report from MTW Research on the UK contract cleaning market has found that 45% of contract cleaning companies experienced growth during the last 12 months, despite the worsening economic climate.With the likelihood of tougher trading conditions in 2009, rising investment in the public sector should offer some optimism for the market in the near term, particularly from RMI and new build construction projects within the health and education sectors.

The new market report, based on sales returns from 80% of the industry, found that the contract cleaning industry in 2009 is likely to be characterised by a decline in capital expenditure and spending on equipment coupled with a growing 'squeeze' on assets as sales revenues contract over the next 12-18 months. For suppliers to the contract cleaning market, the report highlights the growing need for more focused marketing in order to target those contract cleaners who are continuing to perform well in the industry at present.

MTW Research also found that 30% of contract cleaning companies are considered 'at risk' in late 2008, with the report highlighting the growing problem of customer retention.Customer loyalty is becoming less prevalent according to MTW, and clients of contract cleaners are increasingly seeking more competitive prices before renewing contracts.

This growing trend in the market is driving price competition in a sector where volume demand is now declining as smaller and medium sized firms in particular are internalising certain cleaning duties, rather than outsourcing.

With business confidence at a particularly low ebb in a number of key markets at present, indications are that suppliers to the contract cleaning sector will experience more difficult trading conditions as contractors are less willing to invest in capital equipment during a period of sustained low demand.Despite the likelihood of a downturn, however, there is likely to be some continuation of capital investment by the industry, albeit at much lower levels than recently experienced, with total assets forecast to rise by just under 4% in 2009.The report goes on to forecast a recovery in mid-late 2010, with the market set to experience a relatively fast paced return to 'real term'growth, followed by a rising level of expenditure on capital goods and equipment.

The industry in general remains in good financial health with borrowing levels representing around 35% of total revenue, reflecting a relatively low ratio and one which is likely to be sustained in the long term. Longer term prospects are more positive for the contract cleaning sector, with more optimistic growth forecast by 2012 as the industry regains some ground lost in 2008 and 2009.

The report provides a comprehensive review of contract cleaning market and industry trends in late 2008. It is available to purchase from GBP375. Please contact the company for a free sample.

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