Reflecting what could be a similar trend in the Australasian marketplace, the www.cleanzine.com reports that the UK contract cleaning industry has found solace in a shift to specialist services.
A MTW Research report, released early this month, has found that 60 percent of UK contract cleaners experienced growth in the last 12 months, supporting the recent UK industry shift towards more specialist cleaning to boost revenue.
Based on 90 percent of industry sales, the research found that while pressure on contract prices remains significant in 2013, many contract cleaners are successfully enhancing their specialist service portfolio to offset margin erosion. In addition, the report identifies an increasing number of contractors easing pricing pressure by offering services more closely aligned with the client’s corporate aims and objectives.
MTW’s director Mark Waddy commented: “There is a clear growth in ‘strategic fit’ cleaning, with more focused market positioning also providing growth opportunities in an otherwise challenging environment. Increasingly the contract cleaning market is realising that clients need high quality cleaning services, which also fit their organisational and corporate culture, for example – an environmental policy statement could be the clincher between winning a tender or not.”
The 250-page report discusses the part contract cleaning industry has played in successfully reducing the UK’s MRSA cases by 85 percent, but also notes that viral infections will continue to drive demand for high quality cleaning in the longer term. MTW points to 5,000 deaths from antibiotic resistant ‘gram negative’ superbugs and the new strain of bird flu from China, which will ensure that hygiene and cleanliness remains at the forefront of the public’s awareness.
The research finds that margin erosion has grown in recent years, with the overall industry’s level of profitability experiencing erratic performance during the last two recessions. Debt has risen by AUD$2.37 billion in the last six years according to the report, with borrowing now standing at more than 100 percent of total industry revenue in 2013.
Discussing the impact on product and equipment suppliers, Waddy said: “The contract cleaning industry is highly leveraged at present and this continues to dampen capital expenditure and sales of new cleaning equipment. However, liquidity is increasing throughout much of the sector with spending on new or more specialist equipment likely to grow in the near term as contractors look to enhance their service and efficiency levels in order to offset the impact of pricing pressure.”
The research found that despite ongoing pressures in terms of pricing and lower volumes of cleaning contracts, the number of start-up companies has continued to rise, boosting demand for entry level cleaning equipment and supplies. The growth in new companies has outpaced the level of business attrition in the cleaning industry in recent months according to MTW, with this trend indicative of a growing sense of optimism in 2013.
However, the report acknowledges that the UK economy and business confidence remains fragile, with ‘real term’ growth in the contract cleaning market unlikely to return before 2014.