Cleanzine: your weekly cleaning and hygiene industry newsletter 18th April 2024 Issue no. 1110

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Contract cleaning market to enjoy £100m growth for 2016

A new report from MTW Research suggests the contract cleaning market is set for £100 million growth in 2016, despite the new National Living Wage dampening market profitability.

Following a healthy 2015, the contract cleaning market is expected to experience solid growth in 2016, according to MTW's analysis of 70 top cleaning contractors. Contract cleaning sales are set for above inflation growth this year, boosted by a number of key end use sectors including health, care homes, education and private commercial markets.

The 150 page report forecasts demand growth across several sectors, with more specialised cleaning services leading the way in terms of value growth.

Discussing the findings, MTW's James Taylor commented: "By 2020, our forecast models indicate total contract cleaning market sales will rise by £500 million, underpinned by volume and value growth."

The report identifies a number of key growth trends to support this optimism, with many of MTW's findings making for positive reading for the cleaning industry and associated cleaning equipment suppliers.

The introduction of the National Living Wage is set to reduce profitability in the contract cleaning market in the short term, though is likely to instil some benefits for the market in the medium to long term.

"Cleaning companies will need to increase productivity and differentiate through better staff management, more efficient equipment, enhanced levels of monitoring and communication, Internet of Things (IoT) automation and integration of new technologies if they are to succeed," continued James.

The report suggests that new technologies continue to offer considerable growth opportunities for manufacturers and contract cleaning companies in 2016. One example is the rise of IOT and robotic technologies stimulating growth in the floor cleaning sector, as companies seek to increase the effectiveness of their cleaning services.

The rise of environmental concern also offers growth potential for suppliers of environmentally friendly and 'green' cleaning products, according to MTW.

Amongst this optimism the report sounds a note of caution, highlighting a 'two-tier' market with non-differentiated cleaning contractors experiencing pricing pressure and low client loyalty. At the lower value end of the market, acquisitions have increased with facilities management companies augmenting their economies of scale.

Nevertheless, the general tone of the report is one of underlying optimism with 6% more contract cleaning companies forecast to enter the market by 2020.

The research involved analysis of companies with more than £3 billion of sales and found that just under 50% of contract cleaning companies experienced growth in the last 12 months. MTW points to a core strength in the market, with more than 80% of contract cleaners having either a 'good' or 'excellent' credit rating in 2016, reflecting a generally strong trading environment despite ongoing challenges in some sectors of the market.

Some seven years after the recession, the report depicts a healthy market for well-positioned cleaning contractors and those who continue to enhance their service offering. Whilst some contractors are struggling to maintain margins and retain clients, the overall future for contract cleaning appears positive, buoyed by volume and value growth.

T: 08456 524324
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W: www.marketresearchreports.co.uk

7th April 2016