Proof of Resiliency
But considering the increasing sense of vulnerability that Americans feel about their safety and security, it should have been expected.
“I think we’re in a great period right now,” says Tim Whall, chief operation officer of HSM Electronic Protection Services, owned by The Stanley Works. The publicity surrounding security technology has made our industry a mainstream topic, he says.
“We’ve never been as close to the front page as we are now. We’re seeing that every year in our sales figures. There’s more and more opportunity out there,” Whall emphasizes.
For example, although the lowered level of residential construction has impacted security dealers that depended on prewired alarm system sales, many of these dealers have picked up business from customers that want to enhance their existing security systems with video monitoring and remote monitoring using cells phones and PCs. In the non-residential arena, boosting growth are technologies such as IP-based video, global positioning systems (GPS), and incident tracking and management.
The health and viability of the electronic security industry is measured each year through SDM’s Industry Forecast Study, conducted annually since 1981. The results of the study are presented in the tables and charts on these pages. Through the Forecast Study, which samples SDM’s subscriber base of installing security dealers and systems integrators, we get a depiction of the strength of the industry as measured by revenue increases and decreases, expected growth for the coming year, pricing trends for systems and services such as monitoring, and challenges that installing companies face such as employment issues and channel conflict.
STATE OF THE MARKET: EXCEPTIONALOverall, the state of the security market is exceptional, deem the respondents to SDM’s 2008 Forecast Study. When asked to consider the economic health of their businesses and the potential for sales in 2008 among various product categories, dealers and integrators indicated that video surveillance leads the way. More than 9 out of 10 (92 percent – up from 89 percent in last year’s Forecast Study) described the potential for video system sales as “good,” “very good” or “excellent.”
Alarm systems are the foundation of the security industry and historically have been responsible for the lion’s share of total annual revenue. However, SDM’s Forecast Study shows that each year since 1992, burglar alarms as a percentage of total revenue has dropped â€” while revenue from video surveillance systems has picked up in its place. An average of 33 percent of security companies’ total revenue in 2007 came from alarm systems (down from 40 percent in 2006), and 23 percent came from video surveillance systems (up from 16 percent in 2006).
DOUBLE-DIGIT GROWTHIf your business grew last year, then you keep good company. And, if your total gross revenues grew by double digits, then you’re in line with industry norms.
More than half (55 percent) of the security dealers and systems integrators who participated in the 2008 Forecast Study report an increase in 2007 revenues over 2006, and another 36 percent report even revenues with 2006. Only 9 percent declined.
Among respondents that improved, the average increase was 19 percent more. (Compare with 2006’s average 16 percent increase.)
To know exactly what is measured, survey respondents were asked to state their company’s revenue from the sale, lease, installation, service, and monitoring of security systems including alarms, access control, video surveillance, life-safety, home systems, and related low-voltage systems.
Respondents anticipate their top three best-growth markets in 2008 will be retail, commercial office space, and educational facilities on the non-residential side. On the residential side, they foresee growth coming primarily from existing homes in the middle-value range.