Our 2020-2025 World report on the Physical Security business forecast growth of 3% over the course of 2021. Whilst the pandemic has continued to cause havoc to normal trading / working practices, vaccination programs are gathering pace in many countries and there is more optimism that that the COVID-19 virus can be bought under control by the end of the year.
Coming out of the significant decline in 2020, we expect the leading suppliers to capitalise on the volatile market, where smaller suppliers will struggle. We have identified 3 critical strategic factors that we anticipate will shape the physical security market over the coming 2 years.
1. Successful vendors will need to focus on buyers with a strong financial base and access to cash. COVID-19 will have created numerous Small to Medium Size Companies (SMEs) drained of sufficient resources to survive and governments lacking the funds / creativity to support them. Within the next 2 years many could go out of business.
2. A focus on verticals markets that have the best chance of growing and needing physical security products to ensure their future. These include; Public Surveillance (Smart Cities), Hospitals, Education, Transport and Integration with Smart Building systems. Many of these will be Public financed infrastructure projects.
3. A realignment in geographic distribution of physical security products. China will continue to increase its global market share particularly in video surveillance; along with other Asian countries. Western Market's share of the business could decline. Suppliers will need to take steps to mitigate the effect of this continued shift.
Leading manufacturers will increase their share of the business at the expense of SME’s during the next 2 years. In the case of the supply of physical security products, size does matter. Big will be able to cope with lower rates of growth and lower margins during the lean years that could follow the pandemic. But more importantly they have the reserves to maintain expenditure on R&D in software and hardware which is driving down the cost of physical security products; reducing the total cost of ownership which in turn is increasing demand.