Last year, more than 2 billion meters were sold in Europe’s Top 20 markets as the market for Sanitary Pipes & Fittings suffers by the declining housing market and other problems. The long-term growth trend remains intact and surface heating and cooling will become more important in the next few years. Regarding the material types, metal pipes will see its market shares decline from 18.2% in 2021 to 15.9% in 2027, as the latest study by InterConnection Consulting shows.

Radiator Connection Pipes Have, Are and Will Lose Market Shares

The Sanitary Pipes and Fittings market is segmented into surface heating and cooling, radiator connections, and hot and cold water installations. The market share for radiator connections is expected to decline from 25.5% in 2021 to 23.5% by 2027, driven by Europe’s shift to energy-efficient heating solutions. However, the surface heating segment may not see consistent gains across all countries. In Germany, for example, the number of radiators installed in renovations has increased recently due to cost and ease of installation, leading to a temporary rise in market share. Nevertheless, the long-term outlook for surface heating and cooling pipes is strong, with a projected market share of 36.5% by 2027 in Europe.

Plastic Pipes Are The Most Popular Choice

Plastic pipes hold a dominant market share of approximately 46%, with slight growth expected in the coming years. Multilayer pipes are the biggest gainers, projected to increase their market share from 35.3% in 2021 to 37.0% by 2027. Conversely, metal pipes are expected to decline in relevance due to rising prices for materials like copper and steel. Within the plastic segment, PEX (Crosslinked Polyethylene) commands the largest share, primarily used for surface heating and cooling systems, while multilayer pipes are favored for radiator connections and hot and cold water installations. Regional variations are notable; for instance, plastic pipes account for only about 11% of the market in Germany due to concerns over water quality, compared to 36% in the Czech Republic for the same application.

The Majority of Pipes Are Bought First by Wholesalers

Most companies prefer to sell their products through wholesalers and retailers, with indirect distribution channels dominating the market. In Russia, these channels account for 68% of sales, while in Poland, nearly 100%. The average market share across Europe is about 94%. This dominance is driven by the convenience of a “one-stop-shop” for installers, efficient supply chains in countries like Norway, and the strong market power of building product stores in Germany and Switzerland.

Producers of sanitary pipes and fittings should strategically pivot towards developing plastic and multilayer pipes, particularly in the surface heating and cooling segment, while considering regional preferences for these materials. Implementing customer loyalty and retention programs, alongside fostering direct relationships with installers, will enhance market share in this growing segment.

Interconnection Consulting, a leading market research institute, has published its latest study “Industrial Doors in Europe 2024,” which reveals that the industrial door market in Austria, Germany, and Switzerland continues its decline with -2.3% drop-in units sold and a -0.6% contraction in market value. The study highlights a stark contrast between the countries: while Germany and Austria face continued declines driven by economic uncertainty and ripple effects from related industries, Switzerland defies the trend, showing growth in both units sold and market value, driven by a robust economy and a dynamic construction sector.

2024 marks another year of decline for the industrial door market in the region, with economic headwinds from inflation, rising material costs, and a slowdown in construction projects. While the market has struggled to recover post-pandemic, growth is expected to resume by 2026, as the construction sector stabilizes and consumer confidence improves. By 2027, the market is projected to reach €892 million, growing at an average rate of 4.3% per year. The competitive landscape is further complicated by the influx of low-cost producers from Asia, which has intensified price competition, forcing European manufacturers to innovate and reduce costs.

The poor performance of the construction sector has further exacerbated the market’s struggles, as new projects have slowed, and major infrastructure developments remain on hold. The resulting price war, triggered by the entry of low-cost producers from Asia, has forced manufacturers to lower prices despite increasing raw material costs. This has squeezed profit margins, leading to tighter pricing strategies and a downward trend in the market.

Despite these challenges, industrial door producers have shown resilience by doubling down on innovation. Companies are focusing on developing new materials and compounds that can reduce costs for consumers, while investing heavily in digital solutions. These innovations include smart access systems, advanced remote monitoring and automation via mobile devices, and security technologies that integrate facial recognition and artificial intelligence.

In terms of market segmentation, sectional doors remain the market leader with a 58.0% share, followed by high-speed doors at 17.0% and rolling doors in third place. Steel continues to be the dominant material, making up 64.7% of the market, with an expected increase to 65.2% by 2027. Direct distribution channels maintain a commanding 86.9% share of the market, while renovation projects slightly outpace new installations, accounting for 50.4% of total sales.

The dominance of large multinational companies like Hörmann, ASSA Abloy, Novoferm, Domoferm, Teckentrup, Condoor, and Ryterna is becoming more apparent, as these firms control 74.3% of the market. Their scale and resources allow them to weather economic downturns more effectively, maintaining market share through innovation and diversified product lines. In contrast, small and medium-sized companies have been hit harder by the crisis, struggling with tighter margins and fewer resources to compete in a price-sensitive market. These smaller players are focusing on technological advancements and product innovations to overcome the current slump.

The findings are based on a comprehensive survey of over 2,200 producers, distributors, and industry experts across Austria, Germany, and Switzerland.

Global Recovery Not Expected Until 2025

Worldwide profile machinery market, which experienced slight growth in 2023, is set to face serious stagnation in 2024, despite a slight increase in total market volume from EUR 1.02 billion to EUR 1.03 billion. The minimal growth is overshadowed by the challenging economic climate, driven by the war’s impact and inflationary pressures, leaving the market stuck in neutral. According to a recent study by Interconnection, a 3.3% global recovery isn’t anticipated until 2025, offering little immediate hope for the industry.

Soaring Prices Crush Investment Sentiment

The profile machinery sector, especially for profile bar machining centres, has been hit hard by rapidly rising prices, with some industry leaders hiking prices by 15% during 2022-2023. The sharp price increases have stalled demand, with profile bar machining centres still accounting for 47% of the total market value in 2023. Other segments, like cutting machinery (20%) and screwing and drilling machinery (just 2%), are faring even worse, facing anemic demand.

Despite Central Europe’s dominance, holding 26% of global market sales, the region is unlikely to experience any real recovery until 2025. Rampant inflation, high-interest rates, and a lack of governmental support have created a toxic investment environment across Europe, mirroring the situation in Germany.

Aluminium Takes Over as Other Materials Struggle to Compete

In 2023, aluminium machinery dominated the profile machinery market, accounting for 56% of global sales, and this trend shows no signs of slowing. With EUR 878.4 million in total sales across PVC, steel, and aluminium equipment, the aluminium segment continues to grow due to its superior material properties — lightweight, corrosion-resistant, and highly recyclable. Aluminium’s sustainability and versatility make it a top choice in construction, automotive, and aerospace industries, pushing its demand far ahead of competitors like PVC and steel.

The Americas are leading the charge, with 67% of the market dominated by aluminium machinery, while Europe maintains over 50%. PVC’s demand fluctuates with the construction industry, and steel machinery remains niche due to its heavier weight and lower recyclability, struggling to gain traction despite some companies investing in its future.

A Grim Outlook Until 2025

Despite minor growth in 2023 and 2024, the CAGR for profile machinery until 2027 is expected to hit 2.9%, with PVC machinery sales projected to reach EUR 404.5 million. Steel equipment remains a niche market, though some industry players are making small, forward-looking investments.

Aluminium’s continued dominance, driven by its widespread use and eco-friendly appeal, will keep it at the forefront of the market, securing over 50% of sales through 2025 and beyond. However, for the industry to truly break free from its stagnation, major economic shifts are required, alongside global recovery efforts expected in 2025.

Market Concentration Poses Challenges

The global profile machinery market remains highly concentrated, with just a handful of companies controlling most of the sales. European giants like Voilàp, FOM, Urban, Graf, Rotox, Schirmer, and Stürtz dominate, yet they reported a difficult 2023. The situation is mirrored outside Europe as well: Turkish companies Kaban, Murat, and Yilmaz are making moves into Latin America and Africa, while maintaining a strong grip in the Middle East. Meanwhile, APAC manufacturers like Tianchen and Parker are emerging as global forces after years of dominating their local markets.

The USA, typically a promising market, is also showing strength with local producers like Joseph and Pro-Line, though the current global climate has impacted even this market’s potential.

Conclusion

Despite 2023’s initial growth surge, the profile machinery market is in deep trouble. Spiraling costs, weak investment sentiment, and harsh economic conditions have left the sector on life support. Until 2025’s projected recovery, driven largely by aluminium demand, the market will remain in a holding pattern, with only slight incremental growth expected. The future of the industry depends on global economic stabilization — and time is running out.

20/03/2024

Copyright: Interconnection, free of charge for publication in the context of reporting on the study mentioned and IC Consulting.

The European air conditioning (AC) market has faced a downturn in 2023, and the road to recovery seems distant, with expectations for 2024 remaining subdued. With decrease in Western Europe in 2023 by -2,9% in quantity sales and far more -13% in Central and Eastern Europe countries, the market shrank, according to results of Interconnection Consulting.

The Cooling Off of the AC Market

In 2023, AC sales plummeted across Central and Eastern Europe (CEE – Albania, Bosnia & Herzegovina, Bulgaria, Croatia, Czechia, Greece, Hungary, North Macedonia, Poland, Romania, Serbia, Slovakia, Slovenia), with some companies in countries like Hungary and parts of the Balkans witnessing a huge drop in new sales by over 70%. Even regions that fared relatively better, like Albania, saw only a slight decline of 3.8% in units installed, reflecting the widespread impact of the market slowdown. Overall, the AC market in CEE recorded a total quantity of 1,32 million units and value of EUR 1.145,2 million, with expectations of stagnation in 2024 at 0,6% in value sales. Nevertheless, the market in CEE is projected to reach EUR 1.327,5 million in 2027, according to Interconnection Consulting.

The Western Europe countries (WEU – Germany, Italy, Spain, Benelux, France, UK and Austria) faced in 2023 only modest decrease by -2,9% in quantity sales. Persistent governmental subsidies kept the influence of downturned construction lower on AC market, overall. From WEU countries Austria fell the deepest by -15,4% while on the other side United Kingdom quantity sales changed only by -1,1%. The total quantity sales resulted of 3,5 million units sold and value of EUR 4.945,4 million with expectations of positive change 1,6% of value sales in 2024. Overall, the WEU market is expected to reach EUR 5.727,2 million at the end of forecasted period, in 2027.

Replacement Growing and Global Context

On the other hand, AC market is highly supported by replacement segment, which is increasing its share, due to drop in new constructions. Even replacements in some countries boosted by subsidies help the market overcome the challenging times. The new installation and replacement ratio is 63:37 with further tendency for replacements, in some European markets, already accounting for more than 50%, like in Italy. From the global point of view, the AC market penetration in Europe remains lower than in the U.S. or Japan, suggesting that there is still enough space for growth as suggested by Mr. Lukac, author of the study.

Changing Preferences and Technological Shifts

The AC market’s troubles are not solely due to economic conditions. The industry is also facing increased competition from alternative cooling solutions, such as cooling ceilings, cooling provided by heat pumps, and more centralized HVAC systems, especially in non-residential buildings. These alternatives, though more expensive initially, offer greater efficiency and are increasingly favored by architects and builders.

Albania Leads in Growth

Among the countries analyzed, Italy continues to be the largest market by value sales, followed closely by France and Germany. In the CEE region, Poland and Greece are the top performers in terms of sales volume. Albania leads in growth expected for 2024 (4,2%) among all European countries. The office building sector dominates, accounting for 30,3% of the market last year, followed by industrial buildings at 16,6% and the HoReCa sector (hotels, restaurants, cafés) at 16,2%.

 Chinese Manufacturers Gaining Ground

The air conditioning market is highly concentrated, traditionally led by Japanese manufacturers like Daikin, Mitsubishi, Toshiba, and Fujitsu, which accounts for more than 49% of total European market in value sales. However, this dominance is being challenged by the rise of Chinese companies such as GREE and Midea. These Chinese suppliers despite the market downturn in 2023, made their way to rise the market share and kept growing by almost 2% in contrary of other companies’ sales problems. They are making significant inroads, particularly in the conventional split air conditioner segment, which is popular in residential markets.

The Exterior Paints market in Europe dropped by -5.8% in value. Interconnection Consulting predicts a larger decline of -6,3% in 2024.

According to a recent study by Interconnection Consulting, the market experienced a decline of 5.8% in 2023, following a previous stagnation 0.4% recorded the year before. This downturn can be attributed to various factors, including market instability and lack of new construction projects, resulting in a decrease in the total number of liter of paints sold from 302 Mio. to 280 Mio. liters in analysed countries (Germany, Slovakia, Italy, Czech Republic, Austria, France, Spain, Poland).

The majority of paints, 68.8%, were sold in the Residential segment. However, even this segment saw a decrease in quantity of around 6.1% in 2023 compared to the previous year, with an overall market decrease of 0.5%. Pessimism continues to insist in 2024, with building forecasts for residential averaging -9.0%, which is more affected than the non-residential segment, averaging -4.2%, but with significant differences among countries.

Italy’s development could only be impromptu

In terms of growth rates, Italy and Poland performed best. The first recorded the highest value growth in the study (+12.7%). The effects of the Superbonus are still being felt, but these will dry up in the coming years as they have been reduced by the Italian government. Historically, they have gone from the initial 110 to 90 in 2022 and finally to 70 in 2023. From 2025, this measure will no longer exist, and the renovation market in Italy will grow more slowly in turn. Poland grew in value by 10.6% compared to 2022. This result is heavily influenced by the high inflation existing in the country. Despite its average prices being lower than those of Central European countries, the rate in quantity remains almost unchanged (+1.4%). Meanwhile, the largest decline was recorded in Austria, at -13.3% last year.

The structure of demand could change in the coming years: acrylic paints will dominate southern Europe

Emulsion Paints dominate the market as the most popular bonding agent used for exterior paints, with a market share of 34.5% in quantity. It is important to note that emulsion paints will lose share in the next few years, giving more protagonism to acrylic based paints. Italy and Spain have particularly acrylic paints of over 45% – mostly due to regulations, requirements of their usage in the residential segment and price convenience. Overall, silicone resin-based paints are also very popular in certain residential projects due to its high resistance to external phenomena. Silicone-resin paints have achieved nearly 30% of the total market in quantity.

Among the leading silicone-resin manufacturers in the analysed countries, notable names include AkzoNobel, Baumit, Brillux, Caparol, Meffert, PPG, Prosol, Unikalo, Weber, listed alphabetically.

01/07/2024

Copyright: Interconnection, Publication free of charge for coverage regarding the study and InterConnection Consulting.

According to a recent study by Interconnection Consulting, the market experienced a decline of 4.5% in 2023, following a previous decrease of 1.9% recorded the year before. This downturn can be attributed to various factors, including market instability and a shift in company investments towards renovations rather than new constructions, resulting in a decrease in the total number of doors sold from 3,697 th. to 3,532 th. in analyzed countries (Germany, France, Italy, UK, Czech Republic, Austria, Switzerland, Benelux, Poland).

The majority of doors, 88.6%, were sold in the non-residential segment. However, even this segment saw a decrease in quantity of around 2.4% in 2023 compared to the previous year, with an overall market growth of 2.5%. Pessimism continues to linger in 2024, with building forecasts for residential averaging -11.1%, which is more affected than the non-residential segment, averaging -0,96 %, but with significant differences among countries.

Surprisingly, Italy Bucks the Trend With Growth in Door Sales Amidst European Decline

Given Italy’s previous struggles in construction and its lower baseline, due to years before low construction performance, achieving growth was likely easier. Italy stood out as the sole country among the nine analyzed to record growth in 2023. This was attributed to the fact that the non-residential sector in Italy was not as negatively affected by the consequences of the war, and also because Italy was revising its recovery and resilience plan. Door sales in Italy increased by 1.1% in 2023, with the building forecast for the non-residential segment in Italy predicted to grow by 2.9% by 2024. Meanwhile, the largest decline was recorded in Germany, at -7.4% last year.

The Vanguard of Fire Rated Doors: A Wooden Affair

Wood dominates the market as the most popular material in Fire Rated Doors, with a market share of 42.8% in quantity. It is important to note that fire-rated wooden doors not only enhance building safety but also play a vital role in overall aesthetics. Benelux, France, and the UK have particularly high wood shares of over 62% – mostly due to regulations and requirements of their usage in the residential segment. Steel Fire Rated Doors rank second, with a market share of nearly 39%. The Czech Republic stands out with 61.9% of all Fire Rated Doors sold being made of steel. Aluminum leads in third place with a share of 13.4%, especially in Italy and Switzerland. Aluminum doors are popular in certain projects like retail businesses designed with glass storefronts. The fire rating of aluminum is also 90 minutes and is naturally more durable than wood. Composite materials rank last in popularity among Standard Fire Rated Doors, with only 5.3% market share, due to limited fire resistance and maintenance costs compared to wooden doors.

Among the leading fire-rated door manufacturers in the DACH region, notable names include Brunex, Herholz, Hörmann, Jeld Wen, Peneder, Prüm Garant, RWD Schlatter, Schörghuber, Tortec, and Westag, listed alphabetically.

In 2023, window sales declined by 13.5% compared to 2022. Sales in the surveyed markets of Poland, Czech Republic, Slovakia, and Hungary fell from 10.6 million to 9.0 million window units. Due to the ongoing crisis in the new construction sector, the window market is not expected to recover until 2025, according to a study by Interconnection Consulting.

This year, a further decline of 7.1% in the window market is expected in the surveyed markets. The primary reason for the market downturn is the crisis in new construction, which accounts for over 60% of window sales. The forecast indicates a 15.7% decrease in the construction of single-family and two-family houses for 2024. Negative trends are also expected in the multi-family housing and non-residential construction sectors in 2024. Overall, the decline in new construction completions is projected to be nearly 10% in 2024. Inflation and high interest rates have led to significant declines, particularly in residential construction, which represents 61.3% of the window market’s customer segment. In 2024, the market decline in the residential segment is expected to be more pronounced than in the non-residential segment (-9.5% vs. -3.7%). “The state measures already decided to recover the construction industry will only take effect in 2025 and lead to growth in the window market,” explains Julia Hrebenkova, the author of the study.

Hungary Takes a Nosedive

All four surveyed countries experienced a sales decline in 2023, which will continue into the following year. However, the extent of the decline varies. The Hungarian window market plummeted by 26.7% last year. The massive declines are due to the high inflation rate of 17% and the EU’s decision to withhold part of its funding. Compared to Hungary, the market decline in Poland, where the economy is in a state of stagflation, is moderate at -9.3%.

PVC Dominates the Market

In all four countries, PVC is the most popular material in the window market, with a market share of 72.4%. Despite their double average price, metal windows have increased their market share from 13.8% to 14.4%. Wood windows, although not the most expensive option, are losing market share due to more demanding maintenance requirements. More expensive windows made of combined materials such as PVC/Metal and Wood/Metal are not in high demand in the four surveyed markets.

Fragmented Window Markets

The top 10 manufacturers in the window market in the surveyed countries have a combined market share of only 22.4% by quantity. However, market concentration varies among the surveyed markets. The top 10 manufacturers cover 27.8% of the window market in Poland, while the top ten manufacturers in the Czech Republic account for 54.2%. The key players in alphabetical order are AdamS, Dobroplast, Drutex, Eko-Okna, KNS, Oknoplast, Sonarol, Ri okna, Window Holding, and Wisniowski.

The results of Interconnection Consulting’s annual Online Mystery Shopping Study shed light on the service performance of window dealers in Austria. While the response time of dealers to online customer inquiries is improving and an increased focus on closing deals is evident, customer consultation and quoting remain critical areas with room for improvement.

Increasing Response Rate of Window Dealers to Customer Inquiries

In the study, a total of 132 window dealers were contacted via email to make a specific inquiry about a renovation project. Additionally, three questions were asked to assess service quality. The results show a pleasing increase in dealers’ responsiveness: While only 58.7% of dealers responded to the initial email inquiry last year, this year the response rate rose to 75.8%. After a follow-up email and a call, the response rate increased to 93.2%, although slightly below last year’s rate of 96.7%.

Decrease in Offers, But Increased Focus on Closing Deals

However, the study also revealed some concerning trends. While responsiveness increased, the number of dealers who provided an offer after the email inquiry dramatically decreased – from 60.0% last year to only 44.7% this year. Yet there is hope: the focus on closing deals, i.e., dealers following up after providing an offer, significantly improved from 13.6% compared to 5.4% last year. Nevertheless, this figure is catastrophically low and should be above 80%.

Efficient Service – Window Dealers Score with Quick Response and Fast Quoting

The average response time to customer inquiries improved to 2.3 working days compared to 2.8 working days last year, with a notable 59.1% of dealers adhering to the golden rule and responding within 24 hours. The average time to provide a quote also shortened to 5.6 days, compared to 6.7 days last year.

Regarding communication preferences, the study showed that 49.2% of dealers prefer communication via email. Only 23.7% suggested a personal meeting, while only 13.6% proposed a phone call to advise potential customers.

Quality of Customer Consultation Remains a Challenge

Despite the improved response times, the study indicates a decline in the quality of customer consultation. Only a third (35.5%) of dealers answered all three questions about installation, delivery time, and sun protection, compared to 59.1% last year. Mag. Panorea Kaskani, author of the study, emphasizes the importance of these results: “It is encouraging to see window dealers responding more quickly to online inquiries. However, there is an urgent need to improve the quality of consultation and enhance sales closure.”

The annual online mystery shopping study by Interconnection Consulting on the service performance of German prefabricated house manufacturers reveals a worrying trend: Manufacturers increasingly take more time to respond to email inquiries. The quality of responses is declining, despite an improved initiative in follow-up.

As part of the study, a total of 98 prefabricated house manufacturers in Germany were contacted via email with specific inquiries about a construction project. The results show a significant deterioration in the companies’ response times. While last year 64.6% of manufacturers responded within 24 hours, this year only 26.9% did so. The average response time increased from 1.9 to 2.9 working days.

The inquiry included questions on various aspects, such as energy-efficient and ecological construction. However, only 43.0% of the companies answered all four questions, compared to 50.0% last year. Particularly alarming is that one in four manufacturers (25.8%) did not answer any of the questions asked. However, companies like Danwood, Nordhaus, and Luxhaus stood out positively in answering the questions and in the quality of their responses.

Improvement in Follow-Up Falls Short of Expectations

Although the follow-up rate of prefabricated house manufacturers has improved, it remains alarmingly low. The follow-up rate improved to 25.8%, compared to 17.7% last year. This improvement, while encouraging, still does not meet expectations for effective customer care. Ideal follow-up behavior would mean that over 80% of companies actively pursue the interests of potential customers. However, reality shows that only a quarter of prefabricated house manufacturers meet this standard. Companies like Rensch-Haus, Huf Haus, and Favorit, however, set outstanding standards in their closure orientation.

„The improvement in follow-up is encouraging, but we must not forget that it is still a critical point for the prefabricated house industry,” commented Panorea Kaskani, author of the study. “It is essential that companies continue to work on optimizing their customer care and ensuring that potential customers are adequately supported. Only then can they ensure long-term success and gain the trust of customers.”

The market for gutters in the top 5 European countries saw a significant decline of 10.5% in 2023, after modest growth of 0.7% recorded the previous year, according to a recent study by Interconnection Consulting. The total number of gutters sold decreased from 20.4 million to 18.3 million linear meters. Gutters cannot escape the negative construction environment and will not experience growth again until 2025.

The Perfect Storm for the Hardware Store

This shift is primarily attributed to a significant decrease in the new construction segment, which declined by 11.8% in 2023. 43.6% of all gutters sold belong to this segment and face the challenges currently affecting new construction overall: rising construction costs, high financing interest rates, geopolitical uncertainties, and reduced government subsidies. None of the five countries – Germany, Austria, France, Italy, and Poland – experienced market growth in 2023. Gutter sales declined by 2.7% in Italy and by 12.5% in Poland. The decline is higher the higher the share of new construction. For example, in Italy, about 80% of gutters are sold in the renovation segment, while in Poland, 65% of gutter sales are for new construction. The renovation segment is more resistant to the economic climate because a defective gutter does not allow for postponement.

Zinc Dominates the Market

Zinc is the most popular material in the gutter market, with a market share of 40.5%. Buying arguments for zinc include sustainability, easy processing, and recyclability. Germany and France have particularly high zinc shares of over 55%. PVC gutters rank second, with a market share of 19.6%. Poland stands out here, with an impressive 63.4% of all gutters sold being made of PVC. Despite the cost advantage of PVC, the other four countries prefer metal gutters. Aluminum leads in this category with a market share of 16.5%, especially in Italy and Austria. “Copper gutters rank last in popularity among metallic gutters, with 8.6%, due to the higher price and the specific appearance that corresponds less to modern architectural styles,” adds Julia Hrebenkova, author of the study.

Market for Global Players

Market concentration in the gutter market is relatively high: the top 10 manufacturers share a quantitative market share of 54.0% in the countries examined. Poland has the highest market concentration and simultaneously has many local manufacturers. The key players in the top 5 countries, in alphabetical order, are Gamrat, Marley, Mazzonetto, NedZink, Prefa, Rheinzink, and VMZinc.

In Germany, the number of sold window units declined by 10.2% in 2023. The main cause is a significant decrease in completed constructions in both residential and non-residential buildings (-16.9% and -8.6%, respectively). Overall, the decline in window sales in the new construction segment was 13.1%, and 7.7% in the renovation segment. The total window sales in 2023 decreased from approximately 15.4 million units to 13.8 million, as indicated by the regional study conducted by InterConnection, which analyzed window sales figures at the district level. The top 10 cities constitute about 17% of the window market in terms of quantity. When considering sales results across sectors, including new residential construction, new non-residential construction, renovation of residential buildings, and renovation of non-residential buildings, no federal state in Germany deviates from the general trend in the country. The combination of a decline in building permits, rising interest rates, high inflation, and declining real wages has led to a crash in building completions. Inflation and recession are hindering renovations.

Renovation of Non-Residential Buildings is Slightly less Affected.

Positive growth rates at the federal state level are observed only in specific segments: In the new residential construction segment, the federal states of Brandenburg (+7.3%) and Thuringia (+4.6%) are growth leaders. However, this increase suggests a delay in the implementation of construction projects rather than a dynamic development in the window market. In the renovation of residential buildings segment, only Berlin and Saarland show slight increases of 3.0% and 1.7%, respectively. In non-residential construction, the number of sold windows is influenced not only by the number of completed buildings but also by the size of the buildings. With a general decline in window sales in new non-residential construction by 8.6%, all federal states show very different results: from the sharpest decline in Schleswig-Holstein (-26.0%) to the strongest increase in Bremen (+11.0%) and North Rhine-Westphalia (+7.9%). The renovation of non-residential buildings proved to be more resilient in 2023, with a decrease of -4.1%, the lowest among all segments in the window market. The four federal states, namely Bavaria, North Rhine-Westphalia, Baden-Württemberg, and Lower Saxony, where 88% of the window market is concentrated in this segment, are relatively successful in the crisis year 2023. The overall decline in window sales in these states was 3.9%.

Top & Flop: Growth in Some Segments, Decline in All

The district of Peine achieved the highest growth rate with a 45.5% increase in sold windows. 2023 was a particularly successful year for Peine in new residential construction, with only a decrease in renovation of residential buildings observed. The district of Frankenthal in the Palatinate achieved a growth of 43.1% in 2023, leading the ranking ahead of Kronach (+42.4%). Frankenthal shows strong results in the new construction segment after an unsuccessful year in 2022. Kronach made it to the top three through successes in non-residential construction. Landau in the Palatinate rightfully occupies the first place among the losers (with a general decline of 41.4%) and experienced a decrease in sales in all four segments. The same can be said for Main-Spessart: the region loses in all segments, showing a decline of 37.8%, even higher than the entire Lower Franconia administrative district. Friesland concludes as one of the top 3 losers with a sales decline of 34.4%, significantly stronger than the Weser-Ems statistical region as a whole.

“Knowledge of regional growth rates is a crucial success factor for effectively addressing the German market,” says Julia Hrebenkova, the author of the study. Even in a market with a strong downward trend, there are growth islands and segments that resist the market development. Identifying these is a recipe for success.

In 2023, housing completions in Germany will decrease by 16.9%. Building permits will decrease by 32.0% due to rising interest rates and high inflation, making recovery in 2024 impossible. However, as the current Geomarketing study “Residential Construction” by InterConnection shows, regional differences in Germany are significant, and there are also some bright spots.

The total number of completed apartments in Germany in 2022 was 258,794, as shown by Interconnection’s regional study analyzing housing construction at the district level. This number will decrease to around 215,069 in 2023. Overall, the four federal states with the highest housing construction volume, namely Bavaria, North Rhine-Westphalia, Baden-Württemberg, and Lower Saxony, will experience a decline in the construction market of 18.4%, which is above the German average. Only in the federal states of Brandenburg and Thuringia will more apartments be completed in 2023 than the previous year (+7.1% and +4.7%, respectively). However, these increases suggest more of a delay in the implementation of construction projects rather than a dynamic development of the construction sector. In Brandenburg, for example, more than 30% of building permits issued from 2018-2022 were not implemented and are now being brought to life. The positive trend in Thuringia is only a brief glimmer: Thuringia will experience the strongest decline in the number of building permits in 2023, exceeding 50%. Many apartments remain vacant in this sparsely populated area, with a focus on renovating and converting existing housing in Thuringia’s residential construction sector.

Winners and Losers

The district with the highest growth in housing construction at the district level, with 511.4%, is Ansbach. The explanation is simple: 2022 was the least productive year in the execution of residential construction projects from 2018-2022; only 6% of the planned construction projects for the year were realized. Thus, 2023 became a year of seemingly unparalleled growth for the independent city of Ansbach. There is a similar reason for the increase in housing completions in the other two “top performers” (see chart), albeit from Lower Saxony and Hesse. Behind many presumed growth islands are delayed construction projects that were quickly realized due to rising costs. Regensburg, which was particularly successful in completing construction projects from 2020 to 2022, found itself at the top of the decline in the number of completed housing units by 64.6% in the crisis year 2023. The realization rate of approved residential buildings in Regensburg in 2023 is hardly improvable at 99%. The same applies to Coburg, which also clearly reflected the situation in the state’s housing construction in 2023. The next top performer in the construction decline, Oldenburg, had an unprecedented completion rate of 94% in 2022 and returned to its average values in 2023 with a completion rate decline of 63.7%.

Multistory Residential Construction on the Rise

A clear trend toward multistory construction is evident in Germany. In 2023, 63.6% of all completions will be in multistory residential construction. Berlin, Hamburg, Bremen, Hesse, Baden-Württemberg, and North Rhine-Westphalia have a higher rate of multistory residential construction in 2023 than the overall German average. These six federal states also account for 53% of all completions of multifamily houses. The construction of 20% of all multistory residential buildings is concentrated in five major cities in Germany, namely Berlin, Hamburg, Munich, Frankfurt am Main, and Hanover. This amounts to 27,477 housing units. Berlin also leads in the number of completed single and two-family houses.

Prefabricated Houses are Particularly Popular in the Southwest

28% of all completed housing units in Germany are single and two-family houses. Bavaria dominates with over 5,600 units, followed by Baden-Württemberg with over 4,800 units. Prefabricated houses play a significant role in this segment. Approximately 60% of constructed prefabricated houses are in Baden-Württemberg, Rhineland-Palatinate, Saarland, and Bavaria. The prefabricated house rate in this region is over 40%, well above the German average.

2024 without Growth

2024 will bring another decline in residential construction in Germany of 23.4%, and recovery is only expected in 2025. However, it is certain that there will be strong regional differences with growth islands even in 2024.

Despite sustained growth in residential construction completions over the past two years, Austria is experiencing an alarming decline in housing construction. This trend starkly contrasts with the positive developments in previous years, during which the number of construction completions increased by 3.6%, even as building permits declined by 22%. An analysis by Interconnection Consulting for the period 2018-2021 reveals that 13% of construction projects in the residential sector were left unfinished. The slight increase in construction numbers in 2022 is mainly attributed to postponed projects from the previous year. However, Interconnection Consulting predicts a crash in construction completions of 17.4% in 2023 due to a drastic decrease in building permits by 27.3%, rising interest rates, high inflation, and declining real wages.

2023: Less than 50,000 completed dwellings

The total number of completed dwellings in 2022 was 60,377, as indicated by Interconnection’s regional study analyzing housing construction at the district level. For 2023, it is anticipated that this number will decrease to 49,873. None of the federal states are exempt from this decline, with Burgenland (-27.7%) and Vorarlberg (-26.7%) particularly affected by a significant drop. The decline in Burgenland is concerning: population outflow leads to an oversupply of housing and, consequently, a decrease in construction activity. From 2018-2022, Vorarlberg had the highest completion rate. However, in 2023, this region will not have as many outstanding building permits as in other federal states.

Boom District and Flop District: Eisenstadt surprises, Zwettl disappoints

Eisenstadt, with the highest growth in housing construction at 50.6%, surprises as a boom district, despite no construction boom elsewhere in Burgenland. The proximity to Vienna plays a crucial role, making Eisenstadt now attractive to commuters. In contrast, a decline of over 59% in housing completions is expected in Zwettl, following strong growth in 2022.

Multistory residential construction on the rise

In a heavily urbanized country like Austria, there is a clear trend towards multistory construction. In 2023, 72% of all completions will be in multistory residential construction. Graz and the Vienna districts of Donaustadt, Floridsdorf, Favoriten, and Liesing are the districts with the highest construction activity in housing, contributing to nearly 26% of Austria’s total residential construction activity.

Prefabricated houses in Lower Austria continue to trend

The sector of single-family homes represents more than a third of all completed housing units in Austria. Lower Austria dominates with over 1.600 units ahead of Upper Austria. The market share of prefabricated houses is higher in the east (over 40%) than in the western federal states, supported by lower land prices and the strong presence of leading manufacturers such as Wolf, Genböck, Haas, Hartl, and Elk.

The market for Ventilated Rainscreen Facades (VRF) and their substructures (VRF Profiles) in the Top 8 European countries demonstrates remarkable stability in 2023, with only a slight 2.0% decline in quantity. In absolute terms, the market decreased from 46.8 million square meters to 45.8 million square meters. Higher average prices contribute to a significant revenue growth of 4.8% in 2023 for both sectors, as indicated by two recent studies (VRF and VRF Profiles) conducted by Interconnection Consulting.

In 2023, the VRF market records a 4.8% increase in value, reaching 2.4 billion euros in the examined countries. VRF Profiles achieve a revenue growth of 3.6%, resulting in a market volume of 2.0 billion euros. Notably, the crucial new construction sector, particularly in non-residential buildings, experienced significant declines in some European markets, such as Germany. This decline can be attributed to substantially higher construction and financing costs, along with the current economic recession. A stagnation is expected for the VRF market in 2024. Significant growth is anticipated only from 2025 onwards.

United Kingdom Takes the Lead

A closer look reveals diverse market dynamics in the surveyed countries. While Germany and Austria report significant market declines of -19.3% and -16.0%, respectively, the United Kingdom and Spain exhibit noteworthy quantity growth, with increases of +14.5% and +9.0%. “One reason for the growing demand in the United Kingdom, especially in new construction, is that the facades from manufacturers now better meet fire protection requirements,” explains Julia Hrebenkova, the study’s author. The quality of facades has improved, and consumer preferences for VRF have risen. Spain experienced growth in all segments except commercial buildings and single-family houses. Significant investments were made, especially in Madrid and Valencia. Among the Top 8 European countries, the United Kingdom assumed the lead as the largest market in 2023, with a share of 23.1% (Top 8 countries), surpassing Germany. Comparing Switzerland and Austria, it is evident that, with a similar population size, the Swiss VRF market is 50% larger. This is due to significantly higher construction volumes in Switzerland in core segments like office buildings, commercial buildings, and industry.

Aluminum Dominates the Market

In the VRF market, aluminum is the most favored material, with a market share of 25%, owing to its low maintenance and fire-resistant properties. In Germany, the aluminum share is highest at 36.5%, while in France, it is the lowest at 10.5%. The second-largest group is fiber cement cladding, with a share of 17.2%. Particularly in Switzerland and Poland, the shares in this product group are very high at 30.2% and 22.5%, respectively, posing significant competition to aluminum. Aluminum dominates the market for VRF Profiles with a share of 69%. This preference is due to cost efficiency, flexibility, and malleability. However, the material has limitations, such as limited load-bearing capacity and high thermal conductivity, posing a risk in case of a fire, explained Julia Hrebenkova, the study’s author. Stainless steel profiles provide an alternative; although heavier, they offer exceptional strength and a long lifespan. The share of steel profiles is 27.7%.

Market of Global Players

The top 10 manufacturers in the VRF market in the surveyed countries have a market share of 38.4% in quantity. The low share of top players is attributed to the local structure of the market. Proximity to architects and planners contributes to the success and dominance of local players. The key players in alphabetical order are Alucobond, Cembrit, Eternit, FunderMax, Hardie Cladding, Kronospan, Rheinzink. In the VRF Profiles segment, the share of the top 10 manufacturers is slightly higher at 59% in quantity, with the presence of local manufacturers. The key players in alphabetical order are EJOT, ETANCO, Fischer Group, HILTI, SFS, Slavonia.

The two studies for VRF and VRF Profiles examined the markets in the United Kingdom, France, Spain, Italy, Germany, Austria, Switzerland, and Poland.

In 2023, the German market for rainscreen cladding, once a shining star in the European construction industry, experienced a significant decline. According to current data, the market saw a decrease of -18.1% in terms of quantity and -12.5% in terms of value. In absolute figures, the market dropped from 10.8 million square meters to 8.8 million square meters. This decline is directly attributed to challenging conditions in the construction sector, as building completions in Germany have decreased by 19.8%, as indicated by a study from Interconnection Consulting.

Several key factors contributed to this decline, including rising construction costs, limited availability of raw materials, high financing costs for construction projects and geopolitical uncertainties. These challenges have adversely affected the demand for facade cladding solutions in the country as a whole. The structure of the German facade cladding market traditionally featured a significant portion of the new construction sector, constituting 65% of the market. However, the recent downturn in this sector has disrupted market dynamics. The use of facade cladding is most common in non-residential construction, especially in office buildings, accounting for 74% of the market.

Shift in Market Positions with the United Kingdom

“For many years, Germany held the top position in terms of quantity among the top 8 European countries for rainscreen cladding (Germany, Austria, Switzerland, Italy, France, Spain, Poland and the United Kingdom). However, in 2023, Germany has ceded the lead to the United Kingdom, where the market is growing. Forecasts for 2024-2026 indicate that the United Kingdom will continue to outpace Germany in this market,” as explained by Julia Hrebenkova, the study’s author. In Germany, the average annual growth rate (CAGR) for the period 2023-2026 is expected to be 2.1% in terms of value but is projected to decrease by -1.6% in terms of quantity. Despite recent challenges, Germany still maintains a significant share of the European facade cladding market, accounting for 19.0% in terms of quantity among the top 8 countries.

The Aluminum Segment Continues to Lead

When analyzing the market’s product structure, it is evident that Germany has a strong share of aluminum cladding, making up 36.5% of the market. However, the High-Pressure Laminate (HPL) segment is expected to experience a significant decline of -29.7% in terms of quantity in 2023. This shift in preferences suggests a growing interest in more cost-effective aluminum cladding materials. Aluminum cladding strikes the right balance between material cost and its properties. With the rise in aluminum prices, there is no significant decrease in aluminum within the structure of all types (-2.8%). In terms of material sizes, larger panel formats, constituting 71.2% of the market, are preferred as they are more cost-effective per square meter.

The EU countries’ desired phase-out of gas and oil heating systems sent biomass boiler sales through the roof from 2019 to 2022, with average annual growth of 36% in Germany, Austria, Switzerland, France and Italy. But the boom appears to be over as 2023 begins, according to a study by Interconnection Consulting.

This year, the market for biomass heating boilers is expected to decline 19% in the markets studied. The rise in pellet prices made pellet biomass boilers, which account for nearly two-thirds of the market, unattractive to many. In this segment, therefore, the decline will be as much as 24.7%. In addition to the sharp rise in pellet prices, discussions in Europe about the climate friendliness of pellet biomass boilers also contributed to the decline in demand. “Finally, the active promotion of heat pumps in the States also leads to a decline in the biomass boiler segment,” as Yuliia Hrebenkova, the author of the study explains.

Replacement Is Most Important Purchase Motive

After the pellet biomass boilers, which are mainly used for low required heating capacity (between 20 and 400 kilowatts), wood biomass boilers are designed for larger heating capacity of up to 3 megawatts. Due to the higher prices, these account for around 34% of the shares in value, of the entire biomass boiler market. Especially in the segment of boilers with low heating capacity, sales are strongly dependent on the price of the fuel, explains Hrebenkova. “When wood in Austria fell in price by 25%, sales of such boilers increased by 12.4%.” Nine out of ten biomass boilers are sold due to the replacement of old heating systems. This segment continues to ensure the growth of the industry. From 2023 to 2026, sales of biomass boilers are expected to increase by an annual average of 3.9% in the countries studied.

Germany Far Ahead

Within the five countries in the study, Germany is by far the largest sales market with a share of 57.2%. Between 2020 and 2022, Germany experienced a boom in demand for biomass boilers. During these years, sales increased by an average of 57.4% per year. The government played a major role in boosting demand with attractive subsidies. In comparison, France only has a share of 16.5%. There, more use is made of electric heat pumps for replacement. Between 2020 and 2022, the country recorded an increase of only 12.5% per year. In Italy, too, biomass boilers only enjoy a niche existence. There, 80% of energy consumption is still met by fossil fuels. In 2022, only 9606 biomass boilers were sold in Italy, which meant a decrease of 17.9%. The Austrian market developed with 30% growth per year between 2020 and 2022, while the Swiss biomass boiler market performed a bit weaker with a growth of 16.5 p.a.. The top 5 suppliers generate a market share of 41.7% in value and 38.1% in volume in the five countries studied.

The market for solid houses, i.e. houses built with brick on brick on the construction site, slumped by 10.7% in Germany and Austria last year. But that’s not all: the forecast for this year shows a further even stronger slump. The cause of the market slump is primarily due to higher construction and financing costs, as a new study by Interconnection Consulting shows.

Rising interest rates are pushing overall costs above affordability, causing sales in the solid housing industry to plummet dramatically. In Germany, average prices in the solid house market increased by about 11%. “Even more so, a wartime environment is a barrier to long-term loans,” said Johannes Lözelt, author of the study. Although the entire construction industry is affected by this situation, but it hits the solid house industry even harder. The reasons for this are longer construction times and higher costs in the planning and execution of solid house construction projects. This is leading to a decline in the solid house rate. Overall, the solid house quota in Germany was around 73% in 2022 and 65% in Austria. Two thirds of all solid houses are system houses, one third architect houses. The market volume in solid house construction in 2022 was around EUR 25 billion in Germany and EUR 3.9 billion in Austria.

Austria hit even harder

The overall market by house type is quite different in Austria and Germany. While in Austria the single-family house segment accounts for almost 75%, in Germany this segment only takes up just under 50%. Conversely, the share of terraced houses in solid construction is around 40% in Germany and only 12.3% in Austria. With regard to construction stages, a trend towards “turnkey” can be identified, which is at the expense of ready-to-build and ready-to-surface solid houses. Overall, a decline in volume of 19% is forecast for the solid house sector in Germany in 2023. In Austria, the forecast is even gloomier at -22.3%. From 2023 to 2026, Interconnection Consulting expects slight growth in volume for Germany (+0.9% p.a.) and a slight decline for Austria (-0.4% p.a.).

High interest rates and the increased need for equity in mortgage loans, caused demand for loans to fall dramatically. This is compounded by massive increases in construction costs, which far outpace core inflation. Building permits fell 13.1% in 2022. Construction completions in 2023 in the DACH region will therefore also plummet by a double-digit percentage amount (-11.5%), as a study by Interconnection Consulting shows.

Within the DACH region (Germany, Austria, Switzerland), the number of housing completions in Austria is higher in relation to the number of inhabitants than in the other two countries. While three apartments were built per 1000 inhabitants in Germany in 2022, the figure in Austria was 6.7. In Switzerland, 5.5 apartments were built per 1000 inhabitants. For this year, residential construction in Austria will also show a higher dynamic than in Switzerland and Germany, but at a lower level. In Austria, the decline will be particularly sharp at 15.5%. Whereas around 60,000 apartments were completed last year, the number will fall to around 50,000 this year. A similar reduction in construction momentum is also evident in Germany. In Switzerland, the decline is still a moderate 5.2%. The number of completed housing units per 1,000 inhabitants is down to 5.6 in Austria, 2.7 in Germany and 5.2 in Switzerland.

Construction momentum for single-family homes plummets
Overall, the DACH region is showing a trend toward multi-story residential construction (MGWB). This trend is being further fueled in particular by the sharp rise in mortgage lending rates, explains Ernst Rumpeltes, author of the study. “Especially the construction of single-family homes is collapsing sharply.” In 2018, the ratio of MGWB to single- and two-family homes was 65 to 35. In 2023, nearly 71% of all housing units will be completed in multi-story housing. This proportion should not change much in the next few years.

In Germany, housing completions fell by 2.2% last year. In 2023, Interconnection Consulting forecasts a crash in housing completions of 11.8% due to the decline in building permits, rising interest rates, high inflation and declines in real wages. Only in the smaller federal states of Thuringia and Saarland will more flats be completed in 2023 than the year before.

Overall, the number of completed dwellings in 2022 was 160,455, according to Interconnection’s regional study, which analyses housing construction at the district level. In 2023, this number will drop to around 145,000. Larger cities in particular are affected by the sharp decline. Berlin, Munich and Hamburg will all lose around 15%. Düsseldorf (21.2%) and Karlsruhe (25.9%) will even have to accept declines of more than one-fifth of the housing construction volume next year. The federal states with the highest housing construction volume, such as Bavaria, North Rhine-Westphalia and Baden-Wuerttemberg, will plunge between 11% in North Rhine-Westphalia and 15% in Baden-Wuerttemberg next year. In all other federal states, too, the decline will mostly be around 10%. Only in the smaller federal states with a lower volume of housing construction, such as Thuringia and Saarland, can expect growth of 4.2% and 2.9% respectively in 2023. But there is still strong growth in isolated cases despite the economic slump in construction. In Osnabrück, an increase in housing completions of over 66% is expected. Similar growth is also forecast for the district town of Saalfeld-Rudolstadt.

Prefabricated Houses on the Rise

One- and two-family houses are even more dramatically affected by the decline than multi-storey housing. In 2022, the decline in single- and two-family house construction was already 8.2%, and in 2023 this will increase significantly to a minus of 16.4%. The decline is greatest in Thuringia at 38%. In the most important federal states in terms of volume, Bavaria (-17.6%), North Rhine-Westphalia (-16.5%) and Baden-Württemberg (-16.7%), the decline is also above the average for the nationwide decline. Multi-storey housing could still record a slight increase of 1.5% in 2022. In 2023 the decline will amount to 9.2%. This is mainly caused by the decline in construction volume in the major cities, which has already occurred before. Overall, it can be seen that the prefabricated house rate is increasing. In Baden-Württemberg, the rate will reach 50% next year. In Rhineland-Palatinate and Saarland the prefabricated house quota also reaches over 40%. In Bavaria, every third new house is a prefabricated house.

The Austrian prefabricated house market successfully defied the decline in the completion of single and two-family houses in 2022 and grew by 7.9%. However, the further decline in construction dynamics will also result in a decline in the prefabricated house market, as a study by Interconnection Consulting pointed out.

In 2022 there was a decline of -5.4% in the completion of detached and semi-detached houses in Austria. Despite that fact, sales of prefabricated houses increased by almost 8%. In the coming years, the general decline in the completion of single and two-family houses will continue. In 2023, completions of single and two-family houses will plummet by 17%, which will ultimately also lead to a falling sales volume for prefabricated houses for 2023. In Austria, a decline in volume of 7.6% is expected for this year, which, despite sharp price increases, will even result in a drop in turnover in the industry of around 3%. The fact that the decline is not more pronounced is due to the increasing prefabricated houses proportion, which will even rise to 38.8% in 2023. In total, the market volume in Austria in 2022 was 1.3 billion euros.

 More price increases

The Ukraine war has created instability, resource shortages and is affecting the supply side of the economy. The enormous delays in the delivery of services drove the price increases even further. Therefore, on the prefabricated house market, prices increased by +7.3% in 2022, in 2023 prices are expected to increase by +5.1% and in 2024 by +3.9% compared to the previous year.

Turnkey trend

The preferred house type for prefabricated houses is the single-family house. In Austria, the share is currently 78.5%. This is followed by two-family houses with currently 4.9%. The rest is divided into terraced houses and “multi-storey residential buildings”. Frame construction dominates with a current share of 73%. With regard to construction stages, a trend towards “turnkey” can be observed. This stage of construction has shown a continuous increase in market share in recent years, which is currently around 41%. This trend goes at the expense of ready-to-build and ready-to-tile prefabricated houses.

Window prices in Austria show great variation, both between traders and in a regional comparison, as a mystery shopping test by Interconnection Consulting revealed. The people of Burgenland, for example, have to dig deepest into their pockets when buying a window.

At 621.5 euros, Burgenland is in first place for the price of PVC windows (90×130). Alongside the leader, Lower Austria, Vorarlberg, Tyrol and Styria are also above the Austria-wide average price of 547.0 euros. In Upper Austria, PVC windows are the cheapest at an average price of 492.0 euros. Compared to the previous year, the Austria-wide average price for PVC windows increased by more than 106 euros. The surcharge for increased security (increased window security, lockable handles) was around 25 percent in the PVC segment. Depending on the window brand and various features such as sound insulation, Ug-value (heat transmission through window glass), security class and brand, the price range for PVC windows in the 90x130cm format at the surveyed retailers was between 192.5 and 1,026.1 euros. “On average, the different window brands alone account for about 100 percent of the price difference for PVC windows,” explains Vito Graziano, the author of the study. For wood/aluminium windows, the price range is between 659.3 and 1,890.8 euros. For wood/aluminium windows, Vienna is the most expensive province with an average price of 1,139.9 euros for standard safety, ahead of Burgenland and Vorarlberg. Upper Austria also brings up the rear in this segment at around 960 euros. The average price for wooden aluminium windows was 1,041.6 euros. The average surcharge for increased security is 11.4% for wooden alu windows.

Manufacturers are Discount Shy

The average installation costs including delivery and disposal were 2,844 euros, whereby the price range varies greatly between the federal provinces. In Salzburg, installation is much more expensive at 3,199 euros than in Carinthia at 2,005 euros. More than every third provider (38.7%) also grants discounts. Of the roughly 61% who do not grant a discount, 8.7% did not respond to the discount request at all. The average discount was 4.1%, considerably lower than last year’s 10%. Cash discount was granted by 57% of the traders.

Corona has given e-commerce a new lease of life. However, Interconnection Consulting’s annual online mystery shopping test of the Austrian window market shows major shortcomings in online sales, which can also be attributed to staff being overtaxed.

The study examined the online customer service of 144 Austrian window manufacturers. Almost all manufacturers (96.7%) responded to online enquiries, but only after several interventions (reminder e-mail, telephone contact). Nevertheless, the percentage of manufacturers who responded after the first e-mail rose to more than 58%; in the previous year, this value was still below 50%.

Almost No Follow Up

The percentage of window dealers who submitted an offer after the e-mail enquiry increased in comparison to last year, up to 61.1%, whereby in 2021 it was 55.3%. 27.7% of manufacturers do not send a quotation without a reason, the rest issued a rejection for a quotation due to the lack of personal contact. The bad news, however, is that only 5.4% of dealers who sent an offer followed up to see if there was still interest or if there was any ambiguity. A figure that deteriorated significantly compared to the previous year. “Follow-up is still not working at all,” sums up Vito Graziano, the author of the study. The overtaxed salespersons are often left alone by the companies, says Graziano. Attempts to upsell or cross-sell are also very rare. Only one in four retailers tries to increase sales through targeted upselling measures and one in six retailers uses the customer relationship to offer additional or complementary services.

Companies Quicker To Respond.

The golden rule of a response within 24 hours was only met by around one in three retailers. Nevertheless, the speed of response increased significantly compared to 2021. The average response time in 2022 was 2.8 days, a full day less than in the previous year. The average time to place an offer also fell from 7.4 to 6.7 days. Nevertheless, 14% of traders took more than ten days to make an offer. 59.1% of the traders surveyed responded to all three questions asked (assembly, warranty, delivery time).

New Online Mystery Shopping Study Shows Sellers Are Out of their Depth

Corona has given e-commerce a new lease of life. However, Interconnection Consulting’s annual online mystery shopping test of the Austrian window market shows major shortcomings in online sales, which can also be attributed to staff being overtaxed.

The study examined the online customer service of 144 Austrian window manufacturers. Almost all manufacturers (96.7%) responded to online enquiries, but only after several interventions (reminder e-mail, telephone contact). Nevertheless, the percentage of manufacturers who responded after the first e-mail rose to more than 58%; in the previous year, this value was still below 50%.

Almost No Follow Up with Potential Customers

The percentage of window dealers who submitted an offer after the e-mail enquiry increased in comparison to last year, up to 61.1%, whereby in 2021 it was 55.3%. 27.7% of manufacturers do not send a quotation without a reason, the rest issued a rejection for a quotation due to the lack of personal contact. The bad news, however, is that only 5.4% of dealers who sent an offer followed up to see if there was still interest or if there was any ambiguity. A figure that deteriorated significantly compared to the previous year. “Follow-up is still not working at all,” sums up Vito Graziano, the author of the study. The overtaxed salespersons are often left alone by the companies, says Graziano. Attempts to upsell or cross-sell are also very rare. Only one in four retailers tries to increase sales through targeted upselling measures and one in six retailers uses the customer relationship to offer additional or complementary services.

Companies Quicker To Respond than in 2021

The golden rule of a response within 24 hours was only met by around one in three retailers. Nevertheless, the speed of response increased significantly compared to 2021. The average response time in 2022 was 2.8 days, a full day less than in the previous year. The average time to place an offer also fell from 7.4 to 6.7 days. Nevertheless, 14% of traders took more than ten days to make an offer. 59.1% of the traders surveyed responded to all three questions asked (assembly, warranty, delivery time).

After a 6,4% quantity growth in 2021, the Aluminium Profile Systems market in Europe (windows, doors, facades, sliding systems, conservatories and sun protection) kept gaining in 2022, but at lower rate of 2,4%. Despite a good start, the market started to slow down a bit in the second half of 2022, mainly due to political instability caused by the Russia-Ukraine war tensions and inflationary pressures, which led to an extreme volatility of demand over the year. “After replenishing their stock in 2021 to cope with rising prices, producers of final products had less need to order new profiles” explains Dr. Armandi, the author of the study.

Norway and Italy overperforming

Best performers in 2022 have been Norway and Italy. In particular, the Norwegian market strongly benefited by public projects resumed after being cancelled during the pandemic, an effect which will play out also in 2023. Meanwhile, the Italian market overperformed due to government subsidies for renovation of old residential building. Contrary, despite that the German market counts for almost one quarter of all profiles sold in 2022, slightly underperformed relative to the European average growth. For the whole EUTOP10 profile market, Interconnection predicts the quantity will keep increasing an yearly average of 0,3% for the next three years with a stronger rebound expected only in 2025.

Prices kept rising for all aluminium profile solutions

Even though the quantity sold did not go up a lot, the industry turnover still benefitted from rising prices and managed to reach over 4 billion euros, that is, a 10,4% growth compared to 2021. Higher prices, however, contributed a bit on the decline of demand, especially in the second semester. The reason is the political instability that caused inflationary pressure over the European economy and made the general public more price sensitive than in 2021. As a consequence, the average price kept rising again by +7,5% in 2022. However, as aluminium world prices start to get back to the pre-Covid levels, Interconnection predicts that average price for aluminium profiles will finally start to stabilize from 2023 and total turnover will fall by an yearly average of -1,6% up to 2025.

In terms of products groups, the most popular solutions, windows, overperformed a bit and went from 39,3% to 39,6% quantity shares. Additionally, facades and doors reached quantity shares of 24,9% and 21,3%, respectively. Among the major companies in terms of turnover, we find Schüco, Hydro and Corialis.

Global flooring market turnover grew by 10.3% in 2022. In the first six months of last year in particular, the industry experienced strong growth, especially in new construction, due to the need to catch up after the Corona crisis, according to a study by Interconnection Consulting.

Further growth was held back by the shortage of raw materials, rising prices, as well as increasing transportation costs and a shortage of skilled workers. Europe in particular will remain the most affected by these developments in the future. Overall, the increase in sales volumes worldwide was 4.0%. In the new construction sector, which benefited most from the catch-up process, sales increased globally by 6.9%. Residential construction showed stronger growth than non-residential construction, mainly because the share of new construction in the residential segment was stronger than in the non-residential segment, as Monika Pan, author of the study, explains.

India the New Growth Motor

The largest flooring market by sales is India, with a global share of 36.8%, followed by China with 29.6% and the U.S. with 12.2%. By turnover, the USA remains the clear number with a 24% share of the global market. Last year, the market volume in the USA was €26.8 billion followed by China with €20.2 billion and India €19.5 billion. Germany is the largest European market with around €7 billion. The market in India in particular will show strong volume growth in the future and will therefore soon overtake China’s market volume, while output in China and the USA will stagnate until 2025. Saudi Arabia is also achieving strong growth, with an annual increase of 17.6% by 2025.

Arabian Peninsula Is Different

Ceramic tiles are the dominant material worldwide, with a share of 67.7%. Resilient flooring is in second place. Sales are organized almost exclusively indirectly. The share of direct sales is only 15.4%. Only in the countries on the Arabian Peninsula is direct distribution dominant. The most important global players are Forbo, Amtico, Kährs, Mohawk, Tarkett, Interface, Kronospan, Gerfloor, Forbo, Shaw Floors, Junckers, Hamberger Flooring, Armstrong, Beaulieu, The Dixie Group. In total, the study examined 30 countries.

Link to News About the Floor Covering Market in Europe

The European flooring market has managed to increase its turnover by 5.6% in 2022, but this was entirely due to the inflationary environment. However, hopes for a longer-term recovery phase with rising sales after the business slump due to Corona are not being fulfilled, according to a study by Interconnection Consulting.

Sales in the European flooring market stagnated last year (-0.2%) and are unlikely to get off the ground in the next few years. In 2023, Interconnection expects a further contraction of 0.3%. The European flooring market in particular will continue to be severely affected by the shortage of raw materials, rising prices and increasing transport costs, which also clouds the forecast for the market. “A more positive development may occur if the construction sector shows more dynamism than expected,” explains Monika Pan, author of the study. However, this will require investment in housing projects, lower real estate interest rates and a less tight monetary policy overall, Pan adds.

Germany is Weaker

The German market is the largest in Europe with 381.3 million square meters, followed by Turkey and Russia. Germany is also clearly number one in terms of value, with a market volume of €8.1 billion, ahead of France and the United Kingdom with €3.8 billion and €3.3 billion, respectively. However, Germany in particular is stumbling a bit in the next few years. For the largest market, an annual growth rate of -0.2% is expected up to 2025. But even across Europe, significant volume growth is not expected until 2025.

Parquet Loses Ground

Overall, ceramic tiles are the strongest product segment in Europe with 26.6% followed by laminates with 23% and elastic floor covering with 12.4%. However, it can be seen that the share of ceramic tiles has increased, while laminate flooring has lost market share. Strongly declining last year was the product group of parquet flooring, which lost about 4.5% and now comes to 8.7% market share. Causes for this decline were shortages, delays in deliveries, and sharp price increases. Nevertheless, parquet flooring managed to defend its number one position in terms of value. The main European players are: Altro, Amorim, Beauflor, Forbo, Gerflor, Nora (Interface), Tarkett, Kährs, Windmöller, Parador, Junckers.

The study examined following countries in the European Region: Austria, Belgium, Czech Republic, France, Germany, Hungary, Italy, Netherlands, Poland, Romania, Slovakia, Spain, Sweden, Switzerland, United Kingdom, Turkey and Russia.

Link to Global Flooring Market News

Since Corona, hardly any prefabricated houses are sold without the Internet as the initial contact. The annual mystery shopping study by Interconnection Consulting on the German prefabricated house market shows that the full potential of inquiries from the Internet is by no means being exploited.

Quality of Responses Decreased

Even though the 100 German prefabricated house manufacturers contacted now respond quickly to the inquiries by mail, the quality of the answers leaves much to be desired. This year, the share of producers who responded to all four questions asked is 50%, whereas last year 72.6% of the prefabricated house manufacturers answered all four questions asked. Companies that took the time and answered the questions in detail were Danwood and Nordhaus.

Hardly Any Focus on Closing the Deal

“The potential of the Internet for customer acquisition is only utilized in the rarest of cases,” says Panorea Kaskani, the author of the study. This is evident not only in the quality of e-mail responses, but also in follow-up. Despite the customers’ expressed interest, only about one-sixth (17.7%) of the companies dare to make another contact attempt, after the first e-mail contact. Only 15.5% of the manufacturers who sent information by post or electronically after the inquiry were interested afterwards whether there was further interest in cooperation (in the previous year it was 16.7%). Positive examples in this regard, which make an effort to conclude a business deal and follow up are here the producers Schwörer Haus and ScanHaus. Elk Fertighaus, Petershaus and Hartl Haus also shine with above-average scores for sales orientation.

Enquiries Are Quickly Answered

While the quality of responses deteriorated, the response of manufacturers to the enquiry improved slightly compared to the previous year. This year, for example, 80% responded to the initial contact by e-mail, compared to only 63.5% last year. Within the first 24 hours, 64.6% responded to the mail enquiry compared to 61.1% the year before. A positive development can be seen in the transmission of information. The percentage of manufacturers who sent information material rose to 60.4% (previous year: 56.8%). The transmission of an online catalogue and direct links with information are the most popular options.

Bioclimatic pergolas suffered a setback in volume for the first time and declined by -8,3% in 2022. Especially in the second half of the year, the whole outdoor living market was affected by a lack of demand, mainly due to the negative impact of the crisis on consumers’ spending.  “Bioclimatic pergolas experienced double-digit growth during COVID and a slowdown was expected, although more gradual” explains Dr. Armandi, the author of the study, and adds “in the medium-term fundamentals are still good and demand will resume”. Interconnection that the market will grow at an average yearly rate of 2,3% up to 2025 with a recovery expected only from 2024.

Mature markets underperforming

Demand fell stronger in mature markets like France and Italy. Short-term factors played a role, but the high level already reached by bioclimatic pergolas in these countries pointed to a stabilization. More unexpectedly, the German market failed to grow in 2022, but pergolas overperformed relative to other outdoor living solutions, which were heavily impacted by the crisis. Still, the German market is expected to recover faster in the next 3 years as bioclimatic pergolas are becoming increasingly popular. The French market counts for more than one third of all bioclimatic pergolas sold in 2022, followed by Italy and Benelux.

Prices will start to stabilize a bit in the next 2 years

Average price rose by +11,1% in 2022. Higher prices more than compensated the fall in quantity and  revenues have reached now 420 million euros. Despite the current slowdown, the turnover has doubled in the last 5 years. However, Interconnection predicts that in the next 2 years turnover will go back slightly below 400 million euros as prices will finally start to stabilize a bit.

Premium, high-quality solutions now counts for 32,1% of the market and kept overperforming  in the last years. There are however huge country differences: in Benelux premium solutions covers more than  half of the market, while in France only 1 out of 10 pergolas belongs to the high-end segment.

Pergolas with ZIP-Screens as side protection gaining popularity

Stand-alone pergolas constitute 48,6% of the whole market, while pergolas with a side protection element keep expanding strongly. Among the different types of side protection, Zip-Screens are the most popular: two out of three bioclimatic pergolas are sold with at least one ZIP-Screens and this proportion is even higher in the premium segment. The three main competitors in Europe are Brustor, Pratic and Renson.

Stefano Armandi / Armandi@interconnectionconsulting.com

Managers in the construction industry are not very optimistic about the near future. 53% of managers in the construction industry think that construction volume in Europe will decline this year and next. In contrast, only 9% are optimistic and believe the construction industry will grow, according to a study by Interconnection Consulting.

Two-thirds of the 208 construction and construction material managers surveyed in Europe do not expect the construction industry to stabilise or normalise until 2024 or later. This year, 67% of the experts surveyed expect increases in construction costs of 30% or more. More than one-third say input costs will even increase by more than 50% this year. “Managers are also not at all confident that they will be able to pass on the increased costs entirely to their customers,” explains Jan Hudak, the author of the study. 55% of the respondents believe that sales prices will not increase by more than 25% this year. As many as a quarter of the respondents believe that prices will only rise by up to 15%.

Widespread Labour Shortage

The shortage of skilled labour, which is causing major problems for more and more companies in Europe, especially in industry, is a focal point for companies alongside price increases. For as many as one-third of the managers, the labour shortage is a recognisable problem for their company. For 13% of the companies surveyed, the labour shortage is even critical, meaning that orders are delayed or cannot be accepted at all as a result. On the other hand, 12% of the companies state that they have no problems with skilled workers or labour shortages.

Inflation Rate and Wage Increases

About half of the construction companies expect wages to increase by 8 to 12% during the current year. Another 35% believe that wage increases will be even higher. These expected wage increases depend on regional inflation. The inflation rate in the EU was 10.1% in August. However, there were large differences within the EU countries. In France the inflation rate was 6.6% in Estonia the inflation rate was 25.2%.

The residential ventilation market in Europe grew by 9.8% in volume in 2021, more than offsetting falling sales during the pandemic. The surge came despite global supply chain issues preventing even stronger growth, a study by Interconnection Consulting shows.

In 2020, the sales volume for residential ventilation systems fell by 5.4%. The UK market in particular, as well as the markets in Italy, Spain and Belgium, which were hit hardest by the pandemic at the time, made a very strong contribution to the declining numbers. However, in Great Britain, as in the other countries, a rapid recovery set in. In Italy, volume growth exceeded 15% in 2021, almost entirely compensating for the decline in the previous year, with the “Superbonus” program playing a key role. With a market volume of EUR 279.6 million, Germany is the largest market for residential ventilation systems. Sales there increased by 3.2% in 2021. Even in the Corona year 2020, the German market was able to achieve good growth rates thanks to a stable renovation sector. It was above all the countries in the DACH region and the Netherlands that steered comparatively well through the crisis. As in other sectors, the market for residential ventilation was also affected by high price increases – sometimes in the double-digit range – although there were also considerable differences from country to country. The majority of manufacturers made multiple price adjustments and planned further increases for 2022.

Heat Recovery is booming in some countries

In terms of quantity, exhaust air systems without heat recovery (HRV), which are usually used in bathrooms and toilets, account for the largest share. These account for around 45% of the market share and were able to grow more strongly in value in 2021 with 13.8% growth in value overall market. This is followed by the central systems with heat recovery with a market share of 44%. In France in particular, there was a very strong increase in this category with growth of almost 50% compared to the previous year, breaking the downward trend of recent years. Strong subsidy programs managed to reverse the trend here. Nevertheless, this segment is also the one with the greatest growth potential, as the study shows.

Decentralized heat recovery systems are very popular, especially in Germany. However, other countries also show high potential for catching up in this area, such as Italy, where sales of this product group increased by 34%. In the past, Germany has been able to record growth rates in the double-digit range for some years, especially in the area of ​​decentralized systems, although growth in this area has recently weakened somewhat, with subsidies also playing a role in Germany, where there have recently been some changes. However, in countries such as Austria, the subsidy landscape is even more important as a demand driver, although the Austrian market for domestic ventilation with heat recovery has been suffering from declining subsidies for years, which is also reflected in the market development. Another problem in Austria is subsidized housing, where the construction costs must not exceed a certain amount. Since systems with heat recovery compared to exhaust air systems entail significantly higher costs, especially as an initial investment (even if these are amortized over the life cycle of the property), these are saved again and again by the property developers in order to reduce the construction costs and to avoid the upper price limits still being able to comply with in social housing.

Positive Trends

Before the pandemic, market saturation in the central systems in particular hit the market and led to lower overall growth rates. However, the market situation has changed fundamentally compared to the time before the pandemic. The renovation market is booming thanks to support measures from some governments and has thus become one of the biggest drivers of the market. Renovations are strongly supported in the individual EU countries, e.g., in Belgium through the Renolution program, which promotes the energy efficiency of existing houses in the Brussels region with €350 million by 2024. The goal is to triple renovation spending to reduce the average energy efficiency of Brussels homes to 100 kWh per m2 per year by 2050. Overall, the renovation share in living space ventilation in Europe is 60%. In general, Corona has also breathed life back into the previously stagnant market, as the importance of clean air has regained consciousness and has become an important market driver. Another driver are the increased energy prices, as Andreas Erdpresser, author of the study, explains. New construction, especially as a driver for central heat recovery systems, is currently difficult to predict, as rising interest rates could curb growth in this segment.

Consolidations in a fragmented market

Overall, market concentration has increased somewhat compared to the previous year. Across all 13 markets examined, the top 10 companies had a cumulative market share of 42.4%, the top 20 almost 60% and the top 100 manufactures are accounting for 90.7%, although the market shares of the top 10 can vary considerably depending on the country. In Germany, for example, the top 10 had a cumulative market share of 64.4%, the top 20 in total 83.3% and the top 50 a share of 94.8%.

In the last ten years there have been consolidations in the market with many acquisitions, such as Helios, which took over Vallox, and Zehnder, which took over Paul, Enervent and Greenwood just to give a few examples. Many companies also work with different brands, such as the Arbonia Group with its brands: Sabiana, Vasco, Kermi, Prolux, Termovent or the Volution Group with InVENTer, Ventilair, Climarad, VoltAir, Fresh, etc. Despite major takeovers, the market is still strongly fragmented. Although there are some very international companies, local top dogs still dominate in most countries. The leading companies in Europe include companies such as: Aldes, Atlantic, Centrotec Group (Wolf, Brink), Helios, Itho, Maico, Swegon, Systemair, Soler & Palau, Volution Group, Zehnder, etc.

The study examined the following markets for controlled residential ventilation: United Kingdom, Italy, Spain, France, Belgium, Netherlands, Germany, Switzerland, Austria, Czech Republic, Slovakia, Poland, Nordic countries (Denmark, Sweden, Norway, Finland as one region).

The market for containers and modular buildings in Germany, France, Austria, Poland and Italy recorded an increase of 10.6% in value last year and reached a volume of 3.2 billion euros. The sales volume increased by 8% in 2021. However, the market will shrink again by 2025, as the study by Interconnection Consulting shows. 

The market for containers and modular buildings will decline by an average of 1.5% per year until 2025, from 9.1 million to 8.9 million square metres of sales volume. The study distinguishes 3 product segments (modular buildings, container systems and rented room systems). Modular buildings dominate the market with a share of about 47% in value. This is followed by container systems and rented room systems, each accounting for about a quarter of the market volume. Modular construction is not only the largest segment, but with an 11.3% increase in turnover it also recorded above-average growth compared to the other product segments. The strongest use is in the private office and administration sector, with 450 million euros in turnover last year. The second largest sales area is public buildings, such as schools, with a market volume of 406 million euros.

Market Concentration Still Low

Container systems achieved a market share of about 27%. The total volume of this segment is 873 million euros. The segment grew by about 10% last year. The strongest demand is for office containers with 37% followed by sanitary containers and storage containers with a share of 20% and 23% respectively. Rented room systems are only close behind with a volume of 827 million euros. Compared to the other segments, this product group showed lower growth of 7.9% in 2021. In this segment, too, offices dominate the business with a share of around 40%, followed by the residential and warehouse segments, which each have a share of around 15%. Overall, the market concentration in the sector is still low. The top 10 companies such as Algeco, Containex, ALHO-Group, ELA account for around 40% of the market.

Even if you’ve already discovered a higher beer price at your regulars: Most businesses are planning to raise prices in the next few months, but haven’t done so yet. So here we provide some thoughts on how to do it well. Ahead, also read the next post to get it quantitatively right.

Do I need to increase prices at all?

This question is quite justified. The almost 10% inflation still says little about how much more expensive your company has to buy to date. Electricity and gas may be a very small part of your business, or your margins may be so large that you can simply swallow the higher prices. If so, it’s worth considering keeping prices stable and retaining existing customers and attracting new ones in an environment of sharply rising prices. However, on the one hand, this scenario will only apply to very few companies, and on the other hand, all companies will have to reckon with massive wage increases in the near future. It is therefore advisable in any case to deal with the topic and the technology of a sensible price increase.

When is the right time?

A price increase is rarely received euphorically, yet it is a bad idea to postpone it for too long! The customer does not appreciate it if you have not made a price increase for three years, but now a much larger one at once. This gratitude will not be forthcoming. And in general, now is a very good time to increase prices, because the arguments for doing so are really obvious to everyone at the moment.

Shock prayers to heaven or deeply relaxed

Warren Buffet cites “pricing power” as the most important criterion for a company’s value. If a company can easily push through a price increase in the market, then this pricing power is given, but if one sends prayers to heaven so that the customer does not leave, there is obviously a lack of pricing power. You can (see next article) pre-test the ability to raise prices, and in most cases that makes a lot of sense, because a customer that’s gone is gone. However, if your customers immediately go away when a price increase is appropriate, there is a fundamental problem with your business case and it won’t be saved by reducing your margin.

Rethink pricing models

If a price increase is unavoidable, you could use the opportunity to rethink your pricing model in general. There are many possibilities, from “flat prices” to “everything as a service”. It would go beyond the scope of this article to describe all the possibilities, but I would like to give you some food for thought:

Often, certain prices – also due to years of very low inflation – have already burned themselves into customers’ brains in such a way that an abrupt increase of, say, 10% can actually be risky. The simplest solution would be to keep core prices and signal prices constant and to charge extra for certain additional services that may have been added over time.

In this way, you can often actually increase average prices very well without changing the base price by only pricing additional services according to the acceptance of the target group. A very price-sensitive buyer will actually get a product cheaper without additional services, while a safety-oriented customer will pay a premium for longer warranty periods, for example. Intelligently done, average price and sales increase with high acceptance of the respective target group.

Segment target groups

Inflation in general, and therefore also price increases in your company, have very different effects depending on the target group. When consumers notice that the price increase is nibbling away at affordability, a lot happens in the lower and upper price segments: many purchases move to the entry-level price segment to give themselves breathing room for important purchases. In the upper price segment, the reward takes place, which is also there to reassure oneself that one still belongs to that stratum that can afford something now and then. How this looks specifically with your customers and/or products is something that should be empirically tested in advance.

It should be clear that a linear price increase is rarely the ideal solution!!

Rethinking pricing

Unfortunately, I have not been able to provide a simple recipe for the price increase that may be necessary. There is none. Rather, my idea was to open your eyes to the fact that pricing is an extremely complex tool that can have a very strong impact on the bottom line. Investing in pricing excellence now should help you to get through the next years well and at least defend your margin.

If you have further questions about pricing, contact the author

Turnover in the office furniture market in Western Europe will rise by 10.7% this year and thus continue the high-flying trend it started last year (2021: +13.2%). Besides inflation, turnover is driven by the growth of smart office solutions that support new work concepts, as a study by Interconnection Consulting shows.

Many producers were forced to increase their prices in 2021 or at the latest at the beginning of 2022, due to higher prices for raw materials and energy. “This year, we are also seeing a high increase in inflation, coupled with supply chain issues and limited access to raw materials and supplies. Therefore, we expect further price increases this year,” foresees Katarina Gajdova, the author of the study. This means that the office furniture market in Western Europe will also grow to a record level of 8.1 billion euros this year. The strongest growth in 2021 was recorded in the UK, Denmark and France, with increases of 26.5%, 18.3% and 16% respectively. Besides inflation, the strong increase in the previous year was driven by deferred projects during the Covid pandemic. While the industry’s revenue growth is impressive, sales in the regions studied are rising only moderately (2022: +3.8%).

Green Trend Despite Higher Costs

The home office is here to stay, the office furniture manufacturers surveyed in this study are also convinced of this. On the other hand, there is growth in smart office solutions, which should support the overall growth of the market. The redesign of office environments should also contribute to growth, as the study shows. This redesign of the office space should counteract the desire for home offices and thus also bring employees back to the office location. Positive developments are seen especially in the segments of sitting and standing desks of lounge sofas and collaborative work environments. The study also shows that consumers in Western Europe are less price-sensitive than other regions of the world. This leads to a greater focus on eco-friendly materials and sustainability in demand. Overall, swivel chairs are the largest product segment in the market with a 26% share. SMEs make up the largest customer segment with a share of 61%. The home office segment already has a share of about 10%. The public sector accounts for about 15%. The most important companies include: Ahrend, Assmann, Flokk, Haworth, Kinnarps, König & Neurath, Sedus, Senator International, Steelcase, Vitra, 

The study examined the markets: Austria, Belgium & Luxembourg, Denmark, Finland, France, Germany, UK, Italy, Netherlands, Norway, Spain, Sweden, Switzerland

The market for insulation materials in the DACH region (Germany, Austria, Switzerland) picked up again last year after a pandemic-related decline in 2020 and, in terms of volume, almost reached the pre-crisis level with 46.8 million cubic metres. This year, sales will increase by a further 5%, as a new study by Interconnection Consulting shows.

Overall, the turnover volume in the DACH region rose by 16.7% last year, also caused by price increases. Driven by EU regulations and government incentives, the market for insulation materials will continue to flourish in the coming years. After all, 40% of total energy consumption and 35% of total greenhouse gas emissions are caused by buildings. Switzerland in particular will see strong growth in the coming years. The Interconnection forecast assumes that the growth rate in Switzerland will be 5.5% per year until 2025. The growth forecast is somewhat lower in Austria (3.9%) and Germany (3.6%). Overall, Germany is by far the largest market with a share of about 80% or a market volume of 2.7 billion euros (Austria 11%, Switzerland 9%).

Mineral Wool in Strong Demand

Mineral wool dominates the market in the DACH region even more than in the rest of Europe with a share of 55.6%. Polystyrene follows at a respectable distance with 27.2%. PUR/PIR (polyurethane/polyiso rigid foam) shows the highest growth rates, but with a volume share of 8.7% it is still a niche product.

Renovation Instead of New Construction

Just under half of the sales are used for walls (43.5%), followed by ceilings with about one third of the sales and floors with 12%. The most important sales segment is residential construction with a share of almost three quarters (73.3%). While new construction predominates in Europe as a whole, the renovation sector is just ahead in the DACH region with 51.6% in 2021. Important companies in the European market are (alphabetically): Austrotherm, Baumit, Knauf, Weber.

The insulation market in Europe was not as badly affected by the Corona crisis as other sectors, and was already able to exceed pre-crisis levels in 2021. A further increase of 5.5% in volume is expected for 2022, according to a study by Interconnection Consulting.

The insulation market remains dynamic due to the actions of the EU and European governments, which are trying to reduce greenhouse gas emissions through regulations and legislation. “After all, 40% of total energy use and 35% of greenhouse gases are consumed by buildings,” says Giacomo Tomada, author of the study. Spain and Italy are the fastest growing markets in Europe, with sales growth of 7.3 and 7.2% respectively. These above-average growth figures are partly due to the sharp downturn experienced by the two southern European economies in 2020. However, when it comes to the overall market, these two countries only play a subordinate role. Italy’s share of turnover is 3.7% and Spain’s 3.3%. The largest markets are Germany with a share of 17.9% and the UK with 14.1%. The largest markets in terms of volume are Germany with sales of 37.7 million cubic metres followed by Poland 31.1 and UK 22.0 million cubic metres.

Mineral Wool Dominates in Europe

Mineral wool is the most important insulation material with a share of about 42% in volume followed by polystyrene with 33.7% in volume. Mineral wool is also the top-selling insulation material in Europe with a share of almost 40%. PUR/PIR (polyurethane/polyiso rigid foam) comes in second with 27.9%. The PIR insulating materials are a further development of the PUR insulating materials that have been used since the 1960s. PUR/PIR is also the product segment with the greatest growth potential in the coming years.

Residential Construction Rules the Insulation Industry

About half of sales are used for walls, followed by ceilings with about one third of sales and floors with 13%. The most important purchasing segment is residential construction with a share of more than two thirds (68.8%). New construction is just ahead of the renovation segment with about 55:45. The most important companies in the European market are (alphabetically): Armacell, Austrotherm, Baumit, Ceresit, ISOVER, Kingspan, Knauf, Paroc, Rockwool, Ruuki, Sto, Weber, Xella.

The study examined: Germany, Austria, Switzerland, Spain, Italy, France, UK, Netherlands, Belgium, Sweden, Czech Republic, Slovakia, Poland, Romania, in addition, the study analysed the countries: Turkey, China, Saudi Arabia and Russia.

Outdoor Living Is Booming again in 2021 as Producers are Pushed to the Limits

The market for outdoor living solutions is overheating since 2020 and demand is expected to remain at the current level despite uncertainty about overall economic growth. In 2021 textile outdoor rose by 9,7% in Europe Top 7, while bioclimatic pergolas keep getting more and more popular overperforming again with 25,4% quantity growth. At the same time, producers are struggling to keep up with demand and have been forced to rise prices as raw materials are getting more expensive. This trend will continue in 2022, but, in case of a prolonged war in Ukraine, producers will have problems in transferring additional price increases to dealers and consumers.

Higher Demand as the new normal?

In the last 2 years, high levels of demand have been in part caused by households diverting their spending toward home renovation and in particular in making outdoor areas more comfortable. Lockdown measures and travel restrictions forced families to stay more time in their homes during the summer months.  However, other structural factors are helping the industry, as for example higher investments in energy saving solutions and climate change. For Dr. Stefano Armandi, the author of the study, “there are early signs that household spending will remain high also in the medium term and Interconnection is confident that the market for outdoor living as a whole will rather stabilize at current levels, at least in absence of external shocks”.

Italy overperformed thanks to government subsidies

Italian market overperformed in 2021 as the government implemented a large intervention by helping homeowners to renovate their homes and covering more than 10% of the final costs. Similar programmes are planned in other countries in 2022, albeit with different coverage and conditions. The German market recorded a robust increase in textile outdoor, while bioclimatic pergolas are still not growing as in other market, like Italy and Benelux.    

ZIP-screens are on the rise

In 2021, all product categories in outdoor living recorded a growth in sales volume. Cross-arm awning, which has the biggest share in quantity, increased above 10%, while the quantity growth of stationary and wintergarten awnings was about 5%. One of the most visible signs of a booming market has been the rise of textile pergolas. After years of declines caused by the introduction of bioclimatic solutions, textile awning grew again in 2021 above 10%. And this happened in a year in which bioclimatic pergolas grew well above 20% on average reaching 50.000 units sold.

Price levels are at all-time high

Most producers were forced to rise prices in 2021 and will likely face rising costs again in 2022. Although prices increased did not yet reduce demand, consumer spending will start to feel the hit of inflationary pressures. The expected rise in energy costs will lead household to reduce spending for other products and services. Interconnection predicts that outdoor living will stabilize in the next 3 years despite some positive growth is still expected in 2022. Textile outdoor will stay around 1,5 million units sold up to 2024, while bioclimatic pergolas are expected to keep growing in average by around 10%.

Turnover in the European roofing market increased by 15.9% last year, much more than sales volume (+4.0%). This was mainly due to price increases, which rose sharply due to the shortage of materials. A further steep price increase with moderate sales volume development is also expected for 2022, as a study by Interconnection Consulting shows.

The massive price increases on the one hand and also the backlog of orders due to the pandemic on the other led to a strong growth of the industry in Europe. The market volume grew from 5.7 billion euros to 6.5 billion euros in the examined markets. A further increase in turnover of over 40% is even expected for 2022.

Germany and France Dominate

There are also large price differences among the individual countries, so that although Germany is the largest market for roofing in terms of sales, France is the market leader in Europe in terms of sales, with a share of 19.4%, ahead of Germany with 17.9% and the UK with 14%. Germany leads the sales ranking with 17.9% market share, ahead of Turkey with 12.6% and France and the UK with 10.8% each. While annual sales growth is expected to remain low in the double digits until 2025, sales will only progress at a leisurely pace. In Germany the forecast growth is only 1.6%, in Italy still 2.9%.

Different Roof Types in Different Countries

The predominant roof types in the individual countries are also different. In Russia and France, pitched roofs dominate with a share of 54% and 66% respectively. In Germany and Austria, too, this segment is still just ahead. In Italy, it is flat roofs that dominate with around 53%. The flat roof is also the market leader in Spain and the Benelux countries. Overall, the pitched roof segment has a market share of 52.8%. The largest sales market is the residential market with a share of 62.2%.

The global roofing market is expected to increase sales by about a third this year, according to a new study by Interconnection Consulting. However, most of the growth comes not from increased sales but from inflationary trends.

In 2022, the market volume for roofing is expected to rise from €16.6 billion to €21.9 billion, an increase of 31.8%. However, this increase is mainly due to price increases. Supply chain issues leading to a shortage of supply have already led to price increases of 15% to 140% in 2021. Price increases should continue in Q1 and Q2 of 2022, while sales volume growth is expected to be comparatively moderate at +6.7%.

Romania and Poland Grow Strongest

The world’s largest market for roofing in value is China, which takes a 33.6% share among the countries analysed (see below), followed by the US with 21.4%. Romania and Poland are the fastest growing markets, although growth is characterised more by inflation than by a strong increase in sales. Thus, the annual increase in these two countries until 2025 is 30 and 22%, respectively. High growth potential is also found in Saudi Arabia or the United Arab Emirates. Germany is the country with the strongest sales volume in Europe. A strong increase in new constructions also raises expectations for the sector in Germany and France, with average growth rates of over 7% in the two most important markets in Europe.

Flat Roofs Dominate

Overall, it is the new construction segment that is driving the economy. With average growth rates of 7-8% until 2025, the segment is growing significantly faster than the renovation sector. Residential construction is the dominant sector with a share of 63%. The predominant roof segment is flat roofs with 49% and still increasing market shares, ahead of pitched roofs with 43.7%. Bitumen, which is the dominant building material for flat roofs, will lose a little share because the increase is lower (+3.6%) than the market average. Overall, bitumen has a share of around 47%.

The study looked at the following countries: UK, Benelux, France, Spain, Italy, Germany, Austria, Switzerland, Hungary, Poland, Romania, Slovakia, Czech Republic, Sweden, Turkey, Russia, Saudi Arabia, United Arab Emirates, USA, China.

Window prices in Austria show great variation, as a mystery shopping test by Interconnection Consulting revealed. A total of 80 window dealers were put under the microscope. Increased security raises the prices of windows. There are also geographical price differences. Burgenlanders, for example, have to dig deepest into their pockets.

Security Surcharge for Windows

At 552.2 euros, Burgenland is in first place when it comes to the price of PVC windows. Besides the leader, Vorarlberg, Tyrol and Vienna are also above the Austria-wide average price of 488.1 euros. In Upper Austria, PVC windows are cheapest with an average price of 450.4 euros. Compared to the previous year, the Austria-wide average price decreased by 4 euros. The surcharge for increased security (increased window security, lockable handles) was around 23 percent in the PVC segment. Meanwhile, the price differences between the individual dealers are huge, especially for windows with increased security. Here, the window prices of the most expensive supplier are five times more than those of the cheapest manufacturer.  For wood/aluminium windows, Vienna leads the price spectrum with an average price of 888.8 euros for standard security, ahead of Upper Austria and Salzburg. Right at the bottom in this segment is Styria with around 780 euros. For increased security, one has to spend on average about 18 percent more for wood/aluminium than for basic security.

Dealers Are Discount Shy

The average installation costs including delivery and disposal were 2,534 euros, whereby the price range varies greatly between the provinces. In Vorarlberg, installation is about twice as expensive at 3,700 euros as in Carinthia at around 1,900 euros. Around every third provider also grants discounts. “Of the roughly 66 percent who do not grant a discount, 13.2 percent did not respond to the discount request at all,” explains Panorea Kaskani, the author of the study. The average discount was around 10%. Cash discounts were granted by about two-thirds of all retailers. “Besides the security features, however, it is also the brand that plays a decisive influence on the price, as the study clearly shows”, as Kaskani, concludes.

Window prices in Germany show great variation, as a mystery shopping test by Interconnection Consulting revealed. According to a study by Interconnection Consulting, the south-western region of the country is the most expensive when buying windows. A total of 80 window dealers were examined for this study.

At an average of 598.9 euros, the south-west region is in first place when it comes to the price of PVC windows. In the West, on the other hand, the prices are the lowest at 410.7 euros. The average price across the whole of Germany is 468.9 euros. The surcharge for increased security (increased window security) was around 17 percent in the PVC segment. Meanwhile, the price differences between the individual manufacturers are huge. For standard windows, for example, the highest price was around 700 euros, the lowest 284 euros. The south-west also leads the price spectrum for wood/aluminium windows with an average price of 1,193.2 euros, ahead of the north region. The lowest prices in this segment are in the West region, at around 820 euros. For increased security, one has to spend on average about 11 percent more for timber/aluminium than for basic security.

Hardly Any Discounts

The average installation cost was 1,736 euros, the most expensive in the north and the east at almost 1,900 euros, the cheapest in the southeast at about 1,400 euros. Here, too, there were huge price divergences among the individual dealers. The most expensive supplier charged almost four times as much for a simple installation as the cheapest supplier. In Germany, granting discounts is not common. Only 8.8% of all dealers gave a discount. The average discount was around 9%. One in eight dealers granted a cash discount. The average rate offered was 2.2%.

The market for sandwich panels is experiencing a shortage in steel production as a result of the COVID crisis, which in turn leads to immense price increases. The market in the CEE countries Czech Republic, Slovakia and Poland is also affected by this. For 2021, Interconnection Consulting forecasts an increase in market volume in these countries of 32.1%, while sales volume will almost stagnate (+1.7%).

The experts are optimistic that the steel supply crisis will soon be over. A recovery in this regard is expected as early as 2022. The resulting drop in production costs will also lead to rising sales figures. In Poland, prices increased by almost 6% in the last quarter of 2020 alone. At the beginning of 2021, this trend continued at an exponential rate. Overall, Poland, like many other countries, showed a noticeable shortage of labour and reluctance to invest in new construction during the pandemic. This resulted in sandwich panel sales in 2020 falling back down to 2017 levels (-6.4%). By 2022, Interconnection expects a return to the level just before the crisis struck. The slump in the Czech Republic was not quite as severe in 2020, but while sales in Poland have rebounded strongly this year, the decline in the Czech Republic continues at an accelerated pace (-5.0%). The reason for the decline in sales is primarily the price increase for raw materials. The same applies to Slovakia, where sales have fallen by 4% this year.

Eco-Friendlier Materials Sought

Products with higher insulation and fire resistance, (e.g. mineral wool and thicker) are also on the rise due to EU regulations. There could also be a shift towards more ecological, such as halogen-free products, explains Katarina Gajdova, the author of the study. Overall, the study shows that steel dominates the market as a covering material with almost 98 percent. As a filling material, PUR/PIR (panels with synthetic insulation materials) dominate with about two-thirds of the market share. Mineral wool accounts for about one third. Important companies active in the CEE region are Balex Metal, Gor Stal, Kingspan and Ruuki.

The market for sandwich panels for thermal insulation of buildings was affected by high price increases during the pandemic, due to shortages in the steel sector. While the market volume in value terms will increase by 16% in Western Europe this year, sales will decline by 6% compared to last year, according to a study by Interconnection Consulting.

The pandemic saw a halt in the production and export of steel production, which mainly brought imports from China, the world’s largest steel producer, to a standstill and resulted in a shortage of the most important cladding material for sandwich panels. Experts expect the situation on the steel market to return to normal in 2022 and prices to move southwards again. The strongest price increases in 2020 were seen in Spain with +10% and France and Austria with +8% each. On a positive note however, the experts’ gloomiest forecasts, which expected prices to rise by 20 to 70%, were not fulfilled.

France Faces a Sharp Slump

While all the countries studied expect a positive turnover trend due to the enormous price increases, which will accelerate again in 2021, sales in all countries will drop sharply this year due to the shortage in the steel market and lower demand. In France, a slump of almost 11% is expected. In Spain, forecasts expect a decrease in sales of around 7%. Germany and Austria will lose about 5% of business. Italy will lose another 3% in sales this year after a 9% slump in 2020. “This is not helped by subsidy measures such as the Superbonus 110, which applies mainly to residential construction, where sandwich panels are not so popular,” explains Katarina Gajdova, the author of the study.

Mineral Wool Catches Up

Steel is the outstanding covering material for sandwich panels with a share of 93.5%. Aluminium is less popular among manufacturers and consumers due to its lower insulating power. When it comes to insulation material, the ecological orientation of products, such as halogen-free, is also becoming increasingly important, as Gajdova explains. Overall, synthetic insulation materials dominate the market with about 71%, but are losing a little market share to mineral wool, which accounts for about a quarter of the market. Important producers of sandwich panels in Western Europe include Brucha, Isopan, Lattonedil and Metecno. Earlier this year it was announced that the Irish company Kingspan, one of the largest players in the sandwich panel market in Europe, had bought the steel division of the Romanian group Teraplast.

Not least the effects of the pandemic have further increased the importance of online sales. In the course of this, Interconnection Consulting conducted a mystery shopping test among 158 sun protection retailers in Germany. The results of the test show that the potential of online retailing is not yet optimally exploited in the industry.

The 158 sun protection retailers were questioned by Interconnection by mail, about a specific concern. The main concern of the mystery shopper was product recommendations for exterior sun protection and patio roofing. However, 65% of the responding retailers made neither a product recommendation for one nor the other. For about half of the companies (44.9%), an online enquiry alone is not sufficient. Only after a reminder email and telephone contact was the response rate 86.7%. Of the 137 responding traders, around 55% would like to have a telephone conversation and/or invite the customer to a personal meeting.

Quality of Service Leaves Much To Be Desired

The average response time was 3.9 days. Only about one in four dealers complies with the golden rule of the internet, with a reply within 24 hours. The enquiry not only contained a specific request, but also three additional questions (delivery time, assembly, guarantee). Almost two thirds of the dealers did not answer the three additional questions. Less than a quarter answer all three questions. Here, the importance of dealers answering questions is obviously underestimated. “Especially risk-averse prospects are lost due to unsatisfactory answers to the questions”, explains Panorea Kaskani, the author of the study. The study also shows that traders have very little interest in closing a deal. 86.1% of dealers who made an offer did not follow up, even though following up is an essential sales step in the customer acquisition process that should not be neglected, says Kaskani. Nearly half of the dealers took over 6 working days to submit an offer after initial contact. It was astonishing that not a single one of the dealers attempted cross-selling, although the market for sun protection delivers these opportunities, for example through insect and/or burglar protection.

Not least the effects of the pandemic have further increased the importance of online sales. In the course of this, Interconnection Consulting conducted a mystery shopping test among 155 sun protection retailers in Austria. The results of the test show that the potential of online trade is not yet optimally exploited in the industry.

The 155 sun protection retailers were questioned by Interconnection by mail, about a specific concern. The mystery shopper’s main concern was product recommendations for exterior sun protection and patio roofing. For four out of ten of the companies, an online enquiry alone was not enough. Only after a reminder email and telephone contact did around 92 percent of the surveyed retailers respond. Of the 143 responding dealers, 65 percent would like to have a telephone conversation and/or invite the customer to a personal meeting.

Room for Improvement in Quality of Responses

The average response time was 4.2 days. Only about one in five dealers fulfilled the golden rule of the internet, with a reply within 24 hours. The enquiry not only contained a specific request, but also three additional questions (delivery time, assembly, guarantee). More than half of the dealers do not answer the three additional questions of the mystery shopper. Less than a quarter answer all three questions. The importance of dealers answering questions is obviously underestimated. “Especially risk-averse prospective customers are lost due to unsatisfactory answers to the questions”, explains Panorea Kaskani, the author of the study. The study also shows that traders have very little interest in closing a deal. 86.1% of dealers who made an offer did not follow up, even though following up is an essential sales step in the customer acquisition process that should not be neglected, Kaskani concludes.

Germans Remain Loyal to Laminate & Parquet Flooring, but Textile Floor Coverings Are Under Threat

Those who use textile floor coverings in Germany very often flirt with other options. Overall, almost one in two (45.7%) expresses a willingness for a new floor covering to replace the textile covering. The situation is quite different with laminate & parquet flooring, as shown in a representative survey by Interconnection Consulting.

Willingness to Change Lowest for Ceramics & Tiles

In the Interconnection survey, 1,000 homeowners (flat and house) were questioned in Germany. According to the study, only about one in four is willing to change their laminate or parquet flooring. The lowest willingness to change is in the ceramic/tile segment with only about 20%.

Living Room Is Parquet Land

Depending on the use of the room, different floor coverings are increasingly used. With a share of 85.7%, ceramics or tiles are the most-used floor covering segment in Germany. This can be attributed to the fact that ceramics/tiles are used by far the most in the kitchen, bathroom and hallway. In the living room, parquet or wood flooring dominates with a share of about one third (31.1%). The willingness to change is also limited and is only around 20%. “The main reason for homeowners not to change their parquet is the high-quality material of their floor covering,” explains Dr. Frederik Lehner, Managing Director of Interconnection Consulting. Laminate is the most commonly used floor covering in the study, bedroom and children’s room. When it comes to the image of laminate flooring, it shows that modernity and sustainability can still form a contrasting pair in this day and age. For example, laminate is considered modern by those surveyed, but not particularly sustainable. Overall, over 60 percent of homeowners use laminate as a floor covering.

Brand Potential Is Not Being Exploited

The study shows that two completely contradictory groups of buyers dominate with a total share of over 50%. On the one hand, there are the discount hunters, who can be encouraged to buy with discounts and cheap prices, and on the other hand, the high-price buyers, who don’t want cheap prices at all, but are attracted by quality criteria (innovation, haptics, etc.) and a great shopping experience. Addressing the entire market is therefore impossible for many manufacturers. “Normally, brands that have a good product for high-price buyers are also strong in such markets, but that is not the case in this market. Brand awareness is extremely low and the potential of brands is hardly exploited,” explains Dr. Lehner. Thus, the brand buyer is the smallest buyer segment with 13.5%. If a purchase of floor coverings is pending, Germans mainly look for information on the manufacturers’ websites (52.3%). This is followed by offline media such as manufacturers’ brochures and retail brochures. But social media is also becoming increasingly important. Of those who use it, buyers perceive Facebook as the most important source of information. However, the number of users is still manageable at 11%.

The market for conservatories and patio roofs in Germany, Austria and Switzerland (DACH) was a big beneficiary of the Corona measures, as a study by Interconnection Consulting shows. In 2020, sales rose by a staggering 16.6% and the boom will continue this year (+13.8%). Austria and Germany even grew by more than 20% in 2020.

Investing in one’s own home became a popular sport during the pandemic. After moderate growth figures in the years before the pandemic, the growth of sales, as well as the turnover of conservatories and patio roofs in the DACH region exploded. The high savings due to travel restrictions and other restrictions on public life were poured into the home. Sales in the sector increased the most in Germany (+21.1%) and in Austria (+20.8%). The Swiss market increased by “only” 13.2% in comparison. “Swiss single-family homes very often have large living rooms and window fronts and therefore, on the one hand, an addition with a ceiling is not necessary and, on the other hand, it is often not even technically possible,” explains Daniel Kollar, the author of the study. For 2021, Interconnection expects growth to continue at a similar level. Many providers are already reporting full order books until September. From 2022, business is expected to decline significantly because people will use their money for travel and other pleasures again. Interconnection expects an average annual increase of 2.0% for Germany, 1.7% for Switzerland and 0.6% for Austria between 2020 and 2024.

Five Companies Share Half of the Total Market

The study takes into account conservatories and patio roofs from profile and system suppliers. Profile suppliers deliver profiles and planning systems to metal builders who produce finished conservatories from these semi-finished products. Important profile suppliers are Schüco and Heroal. System suppliers deliver completely finished systems to building element dealers and metal builders, who then install them at the end customer (e.g. Gardendreams, Aluxe). The products are mostly made of aluminium, more rarely of plastic or aluminium-wood combinations.  Overall, it can be said that patio roofs grew more last year than conservatories (13.4%), with sales growth of 17.3%. Patio roofs account for 82.1% of the total market. In the DACH countries, the market share of the top five suppliers for conservatories and patio roofs is 49.2%.

Bioclimatic pergolas have been steadily growing in the last 3 years and they reached a new high in 2020 with around 40.000 elements sold in the main seven European markets. “As families were forced to spend more time at home because of travel restrictions demand for outdoor living increased and bioclimatic pergolas grew even more than in 2019” explains  Dr. Armandi, the author of the study. In the next three years, the market will continue to grow at an average yearly rate of ca. 10% and will add more than 10.000 new units. Extra demand will in part covered by new players, but especially in the premium segment brand recognition will help established leaders top defend their position.

German market will recover the lost ground

Growth is manifesting in all countries as the product is relatively new whereas growth is a little bit lower in more mature markets, like France and Benelux. In aggregate, for all 7 countries under consideration, revenues have reached 280 million euros in 2020. The French market counts for more than one third of all bioclimatic pergolas sold in 2020, followed by Italy and Benelux. As a late-comer, the German market is expected to overperform in the next three years and will reach 11,1% market shares in 2023.

More players, lower prices, but still premium pergolas will keep growing

Average price have declined on average by -0,1% in 2020. Interconnection predicts a more moderate growth of average prices in the next 3 years as more players are entering into the market and as pergolas in the economy segment will take shares away from the medium segment. However, premium, high-quality solutions which now counts for 38% of the market will keep growing strongly especially in Benelux and the rising German market.

Pergolas with ZIP-Screens as side protection gaining popularity

Stand-alone pergolas constitute slightly more than 55% of the whole market, while those with a side protection element are expanding strongly, Among the different types of side protection, Zip-Screens are the most popular: two out of three bioclimatic pergolas are sold with at least one ZIP-Screens and this proportion is even higher in the premium segment . The three main competitors in Europe are Brustor, Pratic and Renson .

Contrary to expectations, the crisis caused by the pandemic in 2020 had no negative impact on the prefabricated house market in Germany. A total of 23,006 housing units were built in Germany last year using industrial prefabricated construction methods, 4.9% more than in the year before. Forecasts for the next few years are also looking positive, as shown in a new study by Interconnection Consulting.

The growing importance of moving from the city to the countryside is having a positive effect on the development of the prefabricated house market. The prefabricated house segment is growing more dynamically than the general new construction of detached and semi-detached houses. The prefabricated house rate, which has been growing steadily for years, rose from 20.8% to 21.5% last year. “The Corona crisis did not hinder market development in 2020,” says Daniel Kollar. Above all, the significantly higher market security, the prices already fixed at the beginning of the project, the fixed deadline and the minimised risk of delays ensure large growth rates in the prefabricated construction sector. The east of the republic shows the strongest growth dynamics.

Turnkey Will Soon Overtake Floor Covering Solutions

Although most houses are still sold as floor covered buildings (market share 39.1%), there is a clear trend towards turnkey projects. As early as 2022, turnkey houses will represent the largest market segment, the Interconnection study predicts. In the long term, the segment of shell-finished houses will grow the least, although there are still manufacturers who cater exclusively to this segment, such as Massa or ProHaus. In terms of construction type, timber frame construction continues to gain in importance. This is explained by the increasing focus on the sustainability factor. “Sustainable building is becoming more and more important for builders and wood supports this trend as a renewable raw material” says Kollar.

Room For Competition

The German prefabricated house market is growing so strongly that competition is not so much between individual manufacturers, but rather with other construction methods. Deutsche Fertighaus Holding as a group of Okal, Massa and Allkauf continues to dominate the market and was able to further increase its market share in terms of volume in 2020 with stable growth. Overall, the market concentration of the top ten companies last year was 42.4%, a little below last year’s figure.

The Austrian prefabricated house market was able to record strong gains last year despite the economic crisis. Especially in the second half of 2020, the market was able to more than compensate for the stagnation of the first six months and achieve growth of 5.9% compared to the year before. The trend towards prefabricated housing will also continue for the next few years, as shown in a study by Interconnection Consulting.

Despite the grim expectations for 2020 at the beginning of the pandemic, the trend towards home ownership drove the demand for owner-occupied homes up. Furthermore, the need of young families in particular to move from the city to more rural regions in order to realise the dream of owning their own home with a fitness room, home office space and their own garden is increasing, explains Daniel Kollar, the author of the study. Overall, the prefabricated house market is growing faster than residential construction. The prefabricated house rate is also increasing from 23.2% in 2019 to 24.2% last year. The prefabricated house rate will continue to rise steadily over the next few years, reaching 28.4% by 2024 from today’s perspective.

Turnkey for Generation Y

All providers in the study mentioned a clear trend in favour of turnkey houses. Whereas ten years ago, shell-finish houses were the most popular stage of development, this segment is already lagging behind with less than a quarter of the market share. “The current generation of customers have grown up in an affluent society and do not want to spend weekends and holidays on a building site,” Kollar explains the trend towards turnkey houses. For Generation Y, sustainability also plays a major role in the purchase decision. The timber frame construction method will therefore continue to gain slightly in importance in the coming years. Overall, timber frame construction holds a share of 72.1%.

New Suppliers, Tougher Competition

In general, last year saw a slight decrease in market concentration. The cumulative market share of the top five companies fell from 36.1% to 35.1%. In the case of the top three companies, the decline was even more pronounced. This is mainly due to smaller suppliers strongly gaining market shares. The most important manufacturers are Elk Group, Haas, Hartl, Mischek and Wimberger.

In Germany, over 90% of buyers use the internet as their first source of information and initial contact. However, it turns out that many window dealers have not yet fully seized the potential of the internet, as shown in a mystery shopping test by Interconnection Consulting among the 176 dealers with the highest market share. There are usually big differences between the dealers, both in the speed of processing pure email enquiries and in the quality of the answers.

Only Half Make an Offer

The 176 window dealers were contacted by Interconnection via email, regarding a specific request for a new project. For about half (46%) of the companies, an online enquiry alone is not sufficient. Only after a reminder email and telephone contact, around 93% of the surveyed dealers responded. The number of window dealers who made an offer fell dramatically compared to previous years, reaching only 51.8% this year. The dealers chose different communication channels to submit an offer. Of the 85 dealers submitting an offer, about one third suggested a telephone conversation or a face-to-face meeting, even if this was only possible to a limited extent due to the pandemic. Almost two-thirds send their offer by e-mail. The follow-up rate is dramatically low: only two of the 85 traders who submitted an offer asked whether there is still interest.

Some Dealers Do Not Answer Any Questions

The average response time was 4.3 days. Around 40 percent of the dealers fulfilled the golden internet rule- reply within 24 hours. The average time for making an offer was 3.7 days. The enquiry not only contained a concrete request, but also three questions on the topics of window handles, warranty and installation. Less than one third of the dealers responded to all three questions asked. Around eight percent of the dealers did not answer a single question. The importance of dealers answering questions is obviously underestimated. “Especially risk-averse prospective customers are lost due to unsatisfactory answers to the questions,” explains Panorea Kaskani, the author of the study.

After 2 years of sustained growth, the raised floor panels market has been affected by the COVID-crisis and is expected to experience a quantity loss -6,0% in 2020. Despite an increase in renovation, the fall in new non-residential projects, especially office/administration and commercial segment in the next 2 years will keep the market well below the 2019-level until 2023, as quantity growth will resume only in 2022 in most countries.

Wood and mineral panels most popular as premium solutions

The largest material segments for raised floor panels are mineral with 31,0% quantity shares, which are however falling a bit in part for a reduced availability of the raw material, and wood with 30,6%, which is expected to raise up to 31,1% up to 2023. Wood is already the biggest segment in France, Spain and Benelux, while mineral panels are above 40% in Italy and Germany.

Encapsulated steel is at 28,0% and is the dominant material in the UK market with 68% quantity shares, regaining some of the lost shares as aluminium prices stabilized in 2020.

Hollow floor is extremely popular in Germany with 22,0% quantity shares, but is losing relative to the other segments because of their reduced functionality, especially for office and data centers.

Public investment as silver lining?

Among the positive factors, more investments in healthcare and education by European government will help limit the losses in the next 3 years. Still, most panels are destined to offices and to commercial enterprises and new constructions for these segments will decline strongly in 2021 as new projects will be put on hold. At the same time, renovation of offices rose a bit in 2020 as companies take advantage of the temporary absence of workers during lockdown for restructuring internal areas.

European companies dominates the market

The European market is strongly concentrated, especially in the premium segment, with international and local players counting for 80% of the market and the TOP5 counting for 45% of the total market. Some acquisitions in the last few years increased market concentration further and created some bottleneck for raw materials, in particular for mineral panels. Among the main companies, there are Kingspan (mainly encapsulated steel), and 3 German players, Lindner, Knauf and Mero

In many parts of Europe the Corona-Pandemic was not the trend changer for the residential construction sector but an accelerator for a becoming apparent cool down. Building completions will drop by 9,3% in 2020 in the analyzed countries and are expected to record deep double digit negative growth (-13,3%) in 2021 as shown by the latest study from Interconnection Consulting.

Germany working off order books

Construction stops, security- and hygienic restrictions as well as a lack of work force due to closed borders are the reason for the bad mood of the construction industry and the declining investment readiness. While in countries like Germany and Austria the downturn has been herald, countries like France and the Nordics already expected a cool down of the residential construction activity despite COVID-19.  A specific of Germany is that for years the number of building completions cannot keep pace with permits. “Construction companies are recording full order books. Consequently the recession in Germany does not hit the industry as hard as there is still a lot of work to handle” explains Ernst Rumpeltes, author of the study. Accordingly the number of building permits exceeded the completions by over 50.000 dwellings the last few years. Building permits are expected to decline by 14,6% this year. The biggest drop on permits will be recorded in Italy (-36,7%) which has been strongly hit by the crisis. Similarly the situation in Poland and Hungary where residential building permits are expected to decline by  over 20%.

A case can be made for multi-storey buildings

Even though building permits are dropping in Poland, the decline of building completions is the lowest compared to the rest of Europe. On the other end of the scale Italy and Spain can be found – the two countries hit hardest by the pandemic. In contrast to detached- and semidetached houses, multi-storey buildings still benefit from rising urbanization and housing shortage in metropolises. Especially in Germany this trend can be observed where the share of completed apartments increased from 36,7% in 2008 up to 60,6% in 2019.

The dramatic crash of the construction industry due to the Corona crisis can be felt in all EU countries and will also affect the prefabricated house sector. The prefabricated house market in Europe will therefore decline by 9.7% this year. After a further decrease in 2021, the market is expected to recover in 2022. Despite the drastic decline, the quota for prefabricated houses will increase across Europe, as shown in a study by Interconnection Consulting.

Throughout Europe, the prefabricated house rate will increase from 12.1% to 13.0% in 2020. In Western Europe, the rate will increase from 15.3% to 16.6% this year. The prefabricated house ratio is also set to increase marginally, reaching 7.5% in Eastern Europe. The trend, which has led to a steadily growing proportion of prefabricated houses in Europe for years, will continue during the Corona phase. Italy and Russia are two of the few countries with a negative development in the number of prefabricated houses in 2020. The country with the largest percentage of prefabricated houses is Sweden, with 81.3%. Contrary to the Europe-wide trend, sales of the prefabricated house industry in Germany will increase by 4.8%. In Austria too, a growth of 4.8% is expected this year. The largest growth rate during the Corona phase is expected in Spain. Between 2020 and 2023, Interconnection forecasts an average annual increase of 7.5%.

The Proportion of Single-Family Houses Continues to Grow

The European prefabricated house market is clearly characterized by single-family houses. With a market share of 75.1%, they dominate the market and show the lowest negative market growth compared to two-family houses (-10.6%) and multi-storey residential buildings (-19.2%), with a decrease of only 7.3%. Croatia has the highest single-family house rate for prefabricated houses at 95.5%. For comparison, the rate is 84.5% in Austria and 88.4% in Germany. Compared to most European countries, prefabricated multi-storey residential buildings are very popular in Denmark and represent 39.2% of the market.

Turnkey Solutions are Taking Up

In general, the shell finished and turnkey houses are developing better than floor covering houses. Overall, turnkey expansion is already dominating in many places. In Spain, the sales share of turnkey solutions is 86.3%. Turnkey solutions are also the most popular in Hungary, Poland, Switzerland, France, Great Britain and Italy. In Germany, however, the floor covering houses are just ahead. In Croatia, on the other hand, turnkey solutions are not at all popular and hold only 2.2% of the market. Cultural differences have a great impact on the construction method. While solid construction is an exception in Sweden and timber frame construction dominates with a share of 95.2%, it is conversely the solid construction that accounts for the lion’s share in Croatia with 87.9%. In Germany, solid construction shows a lower increase compared to timber frame construction. According to the study, solid construction is expected to increase in Austria, if only slightly.

The six most important markets for curtain walls in Europe (Germany, France, Spain, Great Britain, Italy and Poland) posted a decline in sales of 0.6% in 2019. Follwoing the most likely scenario, the COVID crisis will cause a sharp drop in sales this year (-4.5%). But even after that, the market will find it very difficult to get going, as shown in a study by Interconnection Consulting.

Ray of Hope in Two Years

The decline in sales across Europe – in the most likely scenario – will continue until 2022. While sales in the previous year were around 21.8 million square meters, they will most likely only make up 19.8 million square meters in 2023, as a low demand for new investments in the construction industry is expected until 2022. The developments caused by the crisis in the individual countries are all different. Italy will experience the largest decline in 2020 in the most likely scenario (-12.2%), followed by Great Britain (-9.9%), although it can be said that for both countries this is simply continuing their decline in sales. By far the largest market, Germany, will lose 3.8% of its sales volume this year, ending a long upward phase. On the other hand, France and Poland will actually end 2020 with a slight increase in sales. However, sales volumes in these countries will also decline sharply in the following years due to the consequences of the crisis.

Trending New Materials

In terms of materials, aluminum-glass holds the majority with a share of 82.6%, followed by steel-glass. While the steel segment continues to lose shares, aluminum will continue to expand its market position. However, the strongest trend can be seen in other materials, such as wood-aluminum or wood-glass systems. Alternative elements such as stone, ceramic or plastic are also being used more and more frequently.

Housing Construction Will Collapse

The market share of property construction is 89.5%. With almost half of total sales, the office segment is the strongest customer segment. This is followed by retail (18.7%) and industry with 14.1%. The greatest losses are expected in residential construction, whose sales will fall by 8.3% this year. Around three quarters of the sales volume is used in new construction.

The market for Residential Ventilation in Europe rose last year (2019) by +2.4% in terms of value, after 2.1% in 2018 and after growing strongly in 2017 (+7.1%) due to favorable construction activity. A decline in building completions and increasing market saturation, especially for central systems with heat recovery, are responsible for the weak growth rates of the past two years. For 2020, Covid-19 is expected to post a strong minus growth of -8.1% by value, with the countries examined being affected differently by the effects of the pandemic and recovery is not in sight for most countries until 2022 or 2023, according to the new study by Interconnection Consulting.

Current indicators suggest that the market for residential ventilation in the analyzed markets (Germany, Austria, Switzerland, France, UK, Italy, Poland, Benelux, Nordics ) will rise by 0.6% annually until 2023 in terms of units sold. However positive growth is expected in some countries not to return until 2023 again.

Of the investigated countries, Austria showed the strongest growth with +6.4% in terms of quantity sold recorded (with simultaneous decline in value of -3.0%), while Poland with 5.0% growth in terms of quantity (+6.5 % by value) most solidly developed overall. The Swiss market shrank by -0.8% in units, but even lost by -3.9% in value. Germany showed overall growth of 3.6% compared to 2018, whereby also here a double digit growth decentral (local) systems with heat recovery had to compensate for the decline of the central systems with heat recovery.

Measured by sales value, considering all the countries examined, Decentral Ventilation units with HR currently account for 10.2% while Central Systems with Heat recovery account for 42.4% and the rest (47.5%) goes for Exhaust Systems without heat recovery. Comparing these numbers in terms of quantity (units sold), exhaust air systems without heat recovery, as well as decentralized systems (with heat recovery) are much more represented due to the lower average price.

Central systems with market saturation

In a whole number of the countries examined, the growth in central units (with heat recovery) was negative, although a differentiation must also be made in some countries. In part, the decline mainly affected systems with lower output (capacity in m³), while more powerful systems (but the quantities of which are sold in significantly (!) lower quantities and can also be used in areas such as schools, kindergartens, meeting rooms, in addition to residential construction), could even record increases. According to industry insiders, manufacturers also like to focus on this area because in some cases even higher margins can be achieved. The manufacturing costs for larger systems are only marginally higher in relation to the significantly higher prices that can be achieved with more powerful units.

Another influence on the systems used, is the increasing proportion of apartments (multi-storey residential buildings), while the proportion of one and two-family houses is declining year after year in almost all countries. In Austria, for example, the industry complains that it is becoming increasingly difficult to argue the investment costs (which goes along with the installation of a central unit with heat recovery systems). Here more and more cheaper alternatives such as decentralized systems or exhaust air systems without heat recovery are used. There is also a lack of necessary funding that could compensate for this trend. In subsidized, social housing, the argument of creating the cheapest possible living space is often in the foreground.

A small ray of hope in the comparison of countries remains Poland, where central systems also saw significant growth in 2019.

Italy is still a special case. Although prices there have been under pressure for years (with high single-digit price declines and ruinous average prices for many manufacturers, especially in the southern region of Italy), the market for central systems fell again in 2019 by -7.8% with a small volume 1.8% increase. Great Britain is another market that is avoided by some manufacturers due to the low product prices and high market concentration in some areas.

Price differences also result from the prevailing country-specific distribution. While Austria and Switzerland mainly rely on two-step direct sales through installation companies, in most other regions indirect three-step sales are more common. Therefore, the average prices (measured as sell-in prices at manufacturer level) in the two countries mentioned are also higher than in other markets, although the significantly higher prices in Switzerland do not fully explain this.

Decentralized systems are booming in “established” countries

Decentralized systems with heat recovery were able to achieve significant growth in almost all countries, provided there is a market in the respective country. Such systems are hard to find in Switzerland or France e.g. but the market for these products is also relatively small in Northern Europe and the Benelux. In Italy, decentralized HRV in 2019 increased by + 25.8%, in Germany still by + 13.2%, bringing Germany to around 225 thousand decentralized units. Decentralized units, which in turn were divided into transverse systems and single room fans, were able to record cumulative growth in all countries examined. In Germany, however, it is primarily transverse systems that contribute the majority of the growth of decentralized systems with HR. However, there is also a strong price war in this area, with the average price only going down in 2019, for example, in Germany, since some manufacturers with very low average prices in this segment were able to show particularly high growth. Since many manufacturers obtain their products from a few OEMs, it is all the more difficult to differentiate them from the competition.

The lion’s share of the decentralized systems is for wall and ceiling mounting, only a very small part is for window ventilation. Window ventilation is only occupied by a few companies, but is considered a market with high growth potential. Even if the competition is manageable in terms of the number of companies, the difficulty lies in the production of large quantities with simultaneous, individually tailored production, which is why some players have already withdrawn from this field. Schüco, which recently launched a new product in cooperation with Renson, is currently making a new start.

Exhaust systems are growing constantly

In all countries examined, the growth of exhaust systems was around 2.65% by volume, with over 75% of the systems being distributed by decentral systems(bathroom / toilet fans) . However, there are very large country-specific differences, for example central exhaust air systems without heat recovery systems are almost not widespread in some countries. A particularly large proportion of the exhaust air systems are in Great Britain, where the market leader already covers a very large part of them.

Corona and its aftermath

Already before Corona, there were already some signs of a slowing economy, such as a decline of economic growth and building permits showed. Due to the pandemic, the situation has worsened again drastically. Some effects of Corona crisis, such as closed construction sites and projects in which the completion was postponed, directly had an impact in 2020; other effects will become noticeable in the coming 1-3 years for the industry, when the number of building completions drops dramatically. Shortly before the lock-down, there was even a brief increase in demand as a kind of pull-forward effect, since manufacturers were still trying to adequately stock up on components, but this effect has long fizzled out.

While DACH or the Netherlands have come relatively well by the pandemic, the lock-down was considerably more problematic in countries such as Italy, Spain, Great Britain and Belgium. Limited Distribution through wholesalers, delays due to closed borders, lack of supplier products and logistics services, or non-existent labor from Eastern European countries, brought many companies already in the last 3 months into trouble. A shutdown at construction sites or requirements, preventing appropriate coordination of trades locally along with concomitant quality problems – will also lead to further difficulties.

As for the manufacturer of ventilation systems, mainly producers of customized ventilation solutions had considerable problems when products already manufactured and ready to ship, were no longer accepted (due to postponed or closed construction projects/sites) by customers as they could not be disposed otherwise.

The emerging demand for new construction projects and thus declining building permits is particularly problematic because the financing of many projects is “on hold”. Although non-residential construction is hit even harder than residential construction, there is also a negative downward spiral here. In Germany there are also further delays in the approval procedures, since in times of shutdown, many procedures of the already overloaded authorities remained unprocessed and the old procedures first have to be worked through. Billions are currently being pumped into the economy and states are outbidding themselves with economic stimulus, support and tax deferral programs, but the state will not be able to sustainably promote such programs in the long term, and these loan-financed financial injections will also have to be repaid one day.

The long-term development of residential ventilation will also be largely determined by the extent to which it can be established as a fixed component of newly created living space in the future. This in turn depends heavily on raising awareness within the population, on the need for energy efficiency and high air quality through constant fresh air supply.

Overall market concentration increased

Overall, the market concentration has slightly increased compared to last year. The 126 companies analyzed in the report have a combined market share of over 91% regarding the total market. However, the top 30 already have a market share of approx. 72%, although in smaller countries the market concentration is often significantly higher. Despite some very international companies, there are still local heroes in most countries, that play a significant role. The leading companies in Europe include: Aldes , Atlantic, France Air, Helios, Itho , Maico , Soler & Palau, Swegon , System Air , Volution Group , Zehnder, etc. to name just a few. In recent years, many companies have also tried to increase their reach through acquisitions and mergers. These include, for example, Helios ( Vallox ), Zehnder (Paul, Enervent , Greenwood , etc.), Soler & Palau ( Pluggit, Envirovent, Unelevent…), Volution Group (Inventer, Pamon, Ventilair…) and many more;

As part of a competitive analysis, the complete study shows the market shares of the top manufacturers at country and segment / product group level, as well as all market data at country level in detail.

2020 will finally stop the longstanding upswing  of the construction industry due to the Corona-Crisis. For this year a decline of -2,7% of the residential construction activity is expected, which is only the beginning of the downward trend, as Interconnection Consulting shows in its latest report.   

Bottom will be reached by 2022 

Tightened hygiene- and safety regulations curb the residential building completions already in 2020. Furthermore, closed borders led the shortage of skilled workers on the construction sites which delay completions further. Short-time work and massive unemployment clearly have a negative effect on purchasing power and investment readiness of local households. Consequently investments in  homes are expected to decline leading to a drop of building permits in 2020 by 14,9% compared to the previous year which will obviously effect building completions within the upcoming years. While the downward trend in 2020 will be comparatively moderate, Interconnection’s forecasts for 2021 are drastic with a decline of -8,7%. Due to the delay between building permits and completions of residential buildings, completions are expected to hit the rock bottom by 2022 while in 2023 we can expect a recovery.

Urbanization further Rising 

Due to declined private incomes building completions of detached- and semidetached houses are expected to drop over proportional. While detached- and semidetached houses accounted for 29,0% of all completed dwellings in 2019 this share is expected to drop to 25,0% in 2020. Even though a slight recovery of this segment is expected, the big trend of urbanization continues regardless the corona-crisis. Consequently construction of apartments will further increase. Was the ratio between apartments and detached/semidetached houses 50:50 back in 2008 a significant shift towards apartments within the last ten years (71% to 29%).

Outdoor venetian blinds hope for a rebound after COVID

After years of sustained growth, the market for outdoor venetian blinds for the 7 major European markets (Germany, Austria, Switzerland, France, Spain, Italy and Poland) will suffer a setback in 2020 due to the impact of the COVID-19 crisis. The market will fall by -3,7%. In new study, Interconnection predicts that quantity sold will experience a gradual rebound in the next years, while the volume in 2025 will raise above the 2019-level in all markets analyzed.

DACH-Region Overrepresented

The popularity of outdoor venetian blinds as exterior sun protection element in the DACH-Region is well-known and strongly defines volume and trend for the whole European market. The German market is by far the biggest market with 49,6% shares,  followed by Switzerland and Austria. Still, it will take some years before Germany will reach the pre-crisis level. Rebound will be faster in some of the less mature and, at the same time, fastest-growing countries, as France and Spain. In 2019, the Spanish market grew by +5.3%. In Southern Europe venetian blinds have been struggling to take shares away from other, more traditional, sun protection elements, as wood and roller shutters. For example, the Italian market is less than 1/10^th of the German one.

Fall in aluminium price could make blinds more competitive

A positive feedback on total volume sold could be lower prices for raw material, as ca. 90% of all venetian blinds are made of aluminium and price of aluminium had been growing stronger before the crisis. This could help producers to take advantage of the situation and help venetian blinds to become more competitive relative to alternative solutions. One of the reasons why average prices of blinds is relatively high is the motorization level which is dominant reaching 93% in France. Only in Poland only 64% of venetian blinds are sold with a motorization system.

More players, concentration declines

In the last 5 years more sun protection players have started to produce their own venetina blinds and, since 2017, Interconnection recorded a trend towards lower concentration among the top producers. Still, the Top 10 companies covered in 2019 59,8% of the total volume. Some of the Top 5 have lost shares in part because present only in the more mature markets. Roma and Hunter Douglas gained shares in 2019.

Sales of curtain walls increased in 2019 by 4.2% to 7.2 million square metres. In 2020, sales are set to decline by 3.8% due to COVID-19, as shown in a new study by Interconnection Consulting. The industry will only slowly recover from the effects of the pandemic by 2023.

In 2020, due to the consequences of the shutdown, sales will most likely decrease to 6.9 million square meters, as the study shows. By 2023, this value will increase slightly, up to 7.0 million square meters. The crisis is set to end the continuous growth of the industry in recent years. The industry recorded an increase from 6.0 to 7.2 million square meters in the five years between 2014 and 2019.

Wood on the Advance

Aluminum is the dominant product group with a share of 78.5% and is not set to lose any of this majority in the future with above-average market growth. Lower growth and thus falling market shares can be expected for steel-glass combinations. The strongest upward trend is the wood-glass combination. „The advantages of the trend-material, like sustainability aspects and easy handling contribute to the rise of this material group. In addition, wood is renewable and resistant and has very good thermal insulation, ”explains Daniel Kollar, the author of the study.

Trade and Industry are Catching Up

The strongest sales segment by far for curtain walls is the office segment with a share of 43.2%, followed by the retail segment with 21.5% and industry. Only then comes the residential segment, which so far only accounts for 12.3% of total sales. This proportion will not increase until 2023. On the contrary, the residential segment will continue to lose shares, while the retail and office sectors will see the largest growth rates until 2023.

Windows as a product are becoming more and more technologically alike across Europe, but international differences in buying behaviour are gigantic, shows a recent study by InterConnection Consulting. While the brand is what counts in Austria and safety is the main factor in Germany, Polish buyers are especially interested in innovations, although this may seem surprising. This information is based on a survey of 500 homeowners from Germany, Poland, France, Austria and Great Britain.

Brand Awareness Highest in Poland

 There are big differences in Europe when it comes to the importance of window brands. Poland is the country in which brands play the biggest role. Oknoplast, Drutex & co. have managed to create a brand awareness, achieving a free recall of 16% – 32%. The brand per se is also an important reason for purchase in Poland. Austria is similar, with Internorm and Josko performing just as well with free recall values ​​around 20-30%. The situation is quite different in Germany, where the top window brands are experiencing a low-single-digit free-recall, while Velux (a roof-top window manufacturer) and Schüco (a system supplier) have reported significantly higher values.

Bargain Hunters Dominate the German Market

There are also European differences when it comes to reasons for purchase and price sensitivity. Germany has the largest share of „bargain hunters“ at 35%. Here, the window buyers are often focused on discounts, they compare prices and are not willing to pay more for brands. France, however, is the opposite, boasting 35% high-priced window buyers. These customers are enthusiastic about innovations and like to pay more if the product meets their high requirements. The distribution across buyer types varies greatly in each of the countries studied.

Wooden Windows Fail to Retain Customers

The Interconnection window study also examined window materials across homes. PVC is the most commonly used frame material among homeowners and is the most popular in all countries studied. Overall, homeowners are satisfied with plastic windows and are barely willing to switch to another material. The willingness to change is 15% lower than with any other material. Wooden windows paint an entirely different picture. Across Europe, home owners with wooden windows were extremely happy to switch to another material: between 53% and 67% of the owners of wooden windows would opt for another material at the next purchase, preferably PVC. The main reason for this trend is the high maintenance wooden windows require. Furthermore, it seems wooden windows have not (yet) benefitted from the new ecological and climatic awareness.

Online Affinity Highest in Poland

Poland boasts a particularly high use of online channels for window- research and purchases. 75% of Polish buyers use online resources, such as manufacturer- or retailer-websites, to inform themselves about brands and products before buying their windows. Poland is also the country with the most online window-purchases in Europe. By contrast, window buyers from France show the least willingness to purchase windows directly online.

No Such Thing as the „European Window Buyer“

The international differences in the buying behavior of window buyers will remain relatively stable over the next few years. If you want to be successful in the European window market, you should be aware of the different purchasing habits and align your sales and marketing strategy accordingly.

The market for floor heatings in the DACH-region not only benefits from the construction boom but also from rising popularity of surface heatings. In 2018 sales increased by 4,2 percent compared to the previous year. Until 2021 it can be expected that the market will reach a level of 27,9 mil. square meters representing an annual average growth (CAGR) of 0,9% – as growth dynamic will slow down significantly from 2019.

A mystery shopping test conducted by Interconnection Consulting revealed that 66% of dealers offset their high window prices by offering automatic discounts. Overall, there are large price differences among the 20 window brands surveyed. There also happen to be geographic price differences. Southern Germans, for example, have to dig deeper into their pockets when purchasing windows than their compatriots in the north.

With an average price of EUR 342.70, Northern Germany has the least expensive PVC windows on offer. Far more expensive are the Southeast and Southwest regions, where average prices for PVC windows are 10% and 18% higher, respectively. However, the most expensive region in this segment is the East (EUR 408.30). In the wood/aluminum window segment, the highest average price of EUR 704.60 can be found in the Southwest, followed by the West, the Southeast, and the North at EUR 655.90.

Installation Most Expensive in the East

For comparable wood/aluminum windows (1000 x 1400), the price difference between the cheapest and most expensive providers is 100%. “You’re not just paying for security features or good heat values, you’re also paying for the brand,” explains Viorica Jeler, author of the study. In the case of PVC lift-and-slide doors, the average price was EUR 3,405 and thus significantly lower than in Austria (EUR 4,280). The mystery shopping test also inquired about installation prices. The average price in Germany was EUR 2,557, slightly higher than in Austria (EUR 2,274). Interestingly, the cost of installation was highest in the East (EUR 3,096) and lowest in the West (EUR 2,007). Regarding window suppliers, many of them offset their high installation prices by offering generous discounts. Around two-thirds of the dealers (66%) grant automatic discounts.

Safety Pays Off

Features like lockable handles that increase window safety generally go hand-in-hand with higher prices. Compared to standard models, prices for safety windows are on average roughly one-third higher. In Austria, customers pay significantly more, namely 61.1%, for safety windows than for standard models. Interestingly enough, increased safety in wood-aluminum windows is much more expensive than with PVC windows. “This is just one indication that there are still many price potentials to be exploited in the German window market, in spite of what one often hears that the customer is only interested in the price,” explains Viorica Jeler, author of the study.

The European market for Bioclimatic Pergolas is expanding steadily and will grow at 7,7% in quantity in 2018. In the next three years, it will continue to grow at an average yearly rate of 5,9%. Growth is manifesting in all countries as the product is relatively new whereas growth is a little bit lower in more mature markets, like France and Benelux. In aggregate, for all 7 countries under consideration, revenues have reached 218,2 million euros in 2018.

France, Benelux and Italy as biggest markets

Bioclimatic pergolas are quite sophisticated sun protection systems and have to be considered as an alternative to textile patio pergolas. First introduced in Benelux and France, they become quite popular in Italy in the last 2-3 years. These three are the biggest market as of 2018. In France the market will grow at 5,5%, while the Italian market will be still expanding by 7,7%. In all other countries, apart from Benelux, quantity will grow above 10% in 2018.

Higher prices in Benelux and in German-speaking areas

In terms of price segment, the seven markets are relatively differentiated. In Benelux, where the main premium brands dominate the market, average prices are higher and the premium segment (>800€ per square meter) covers 43,9% of all pergolas sold in 2018. Lowest average prices have been detected in France and Spain, whereas pergolas in the premium segment are above 40% in Germany, Austria, and Switzerland.

Stand-alone pergolas as most popular solution

Stand-alone pergolas constitute slightly more than 50% of the whole market. Pergolas with side protection (against wind and rain) are expanding strongly, while those without side protection will fall below 25% in the next 3 years. Among the different types of side protection, Zip-Screens are the most popular. The three main competitors in Europe are Brustor, Pratic and Renson.

The sector for concrete fibers and concrete additives gained 3.2% in volume last year in Europe’s largest markets (Germany, France, Italy, Great Britain, Poland, and the Benelux region). Sales in the markets analyzed rose roughly EUR 68 million to reach EUR 1.26 billion. According to a study by Interconnection Consulting, annual growth in the sector is expected to hold at 3.1% through 2020.

All of the markets are benefiting from corporate and government bodies’ growing fondness to invest. The number one growth market is Poland. In 2017, sales volume grew 6.2%. Last year’s increase of 3.9% in the Benelux region was also above average, whereby it was the non-residential sector that registered strong gains in both the Netherlands and Belgium. The concrete fiber and additives market was also able to show significant gains (+3.2%) in France as well. In Germany (+3.1%), Great Britain (+2.9%), and Italy (+2.6%), sales remained just below the overall average.

Concrete Plasticizers Dominate

Plasticizers, with a share of sales of 48.6%, are the strongest product group among concrete additives, followed by superplasticizers (19.3%) and release agents (10.4%). Whereas release agents across the European markets lost heavily in shares in recent years, sales of superplasticizers grew at an above-average pace during the same period compared to the other product groups. However, with a growth of 5.1%, accelerators are expected to exhibit the greatest gains between 2016 and 2020.

Steel Fibers Steal the Show

Concrete fibers come in the form of steel fibers, plastic fibers, and glass fibers. By far the strongest product group is steel fibers, with a market share of 75.2%. In Germany, the supremacy of steel fibers (81.3%) is even more astonishing – and is only expected to grow. Plastic fibers capture 17.1% of European sales shares, while glass fibers are left with only 7.7% of the market, a figure that will continue to decline.

Poland Shows Tightest Market Concentration

Last year the top ten companies in the individual markets held the following shares of the market: Poland (71,9%), the Benelux region (66,5%), Great Britain (66,5%), Italy (64,8%), Germany (64,6%), and France (64,0%).

The market for elastic floor coverings in the CEE countries of Poland, the Czech Republic, Slovakia, and Hungary reached a volume of EUR 221.4 million in 2017, an impressive increase of 7.9% over the previous year. In the coming years, the pace of growth is expected to slow down slightly on account of the sinking dynamics in construction. Average annual growth to 2021 will be 5.1%, according to a study by Interconnection Consulting.

Overall, the market for elastic floor coverings is benefitting from good economic developments: domestic demand is up, unemployment down, and salaries are rising. “Many projects that are also financed by EU resources will continue to contribute to the growth in the sector,” explains Katarina Gajdova, author of the study. However, due to the strong economic developments of the Visegrad Group, EU funding will be falling off by roughly 21.5% beginning in 2020.

Health Sector a Driving Force

With a market share of 17.0%, the health/medical sector represents one of the driving forces of growth on account of its heavy investment activities. In Poland, EUR 3 billion will be invested in the sector between 2014 and 2020. Hungary’s hospital infrastructure will also be extensively renovated. “Large-scale hospitals with a capacity of nearly 3,000 beds are planned for completion by 2025,” explains Gajdova. In Slovakia, the Ministry of Health has already approved EUR 153 million for the renovation of 44 hospitals. The largest area of application for elastic floor coverings, however, remains residential construction, with a market share of 36.4%.

New Trends Expected

The largest product group is heterogeneous vinyl/PVC, with a share of 42.6% in volume. The material is not only less expensive than other flooring material such as hardwood, marble, and stone, but it is also one of the less expensive materials among elastic floor coverings. However, vinyl still has many advantages, such as durability, ease of maintenance, and versatility. LVTs (Luxury Vinyl Tiles) are the fastest-growing product group, with a current market share of 18.4%. But this might not always be the case. There are indications that SPC flooring will soon take over the position as fastest growing floor covering. The reasons are the simpler installation, lower investment costs, lower material and labor costs, better waterproofing, and greater stability. And, it is better for the environment. The top five companies have a market value of 54.8%. The top companies are Amtico, Atro, Beaulieu, Gerflor, Graboplast, Fatra, Forbo, IVC, Lentex, and Tarkett.

Three markets, three different developments. Whereas the market for elastic floor coverings in Great Britain and Ireland is in a downwards spiral on account of the Brexit crises (2017: -1.5% in volume), and is stagnating in Italy (0.3% in volume), in Spain the growth curve is rising off the charts (+3.5% in volume). These trends are also largely expected to continue, according to a study by Interconnection Consulting.

Spain Marches On

According to the study, average annual growth in Spain to 2021 will be 6.2% in volume. The favored area of application for elastic floor coverings in Spain is residential buildings, with an average market share of 27.6%, followed by health/medical with 16.9%. The leading product group in Spain is LVTs (Luxury Vinyl Tiles), with a share of 38.2%. Katarina Gajdova, author of the study, explains the advantages of LVTs: “They have a wide array of design options, can recreate the appearance of stone or wood flooring, and, compared to these materials, LVTs do not come with extensive installation and maintenance costs.” LVTs are also the fastest growing product group in Spain (average forecast growth per year to 2021: 9.1%). The market share of the top five companies is 69.4% (top 10: 76.7%).

Slow Growth in Italy

The average annual growth in Italy to 2021 will be 1.5% in volume. The largest area of application for elastic floor coverings in Italy is health/medical, with an average market share of 24.4%, followed by residential buildings with 17.3%. The dominant product group is homogenous vinyl/PVC (23.1%). Homogenous vinyl consists of one single layer, which offers the vibrancy and depth of the selected color. One layer gives the floor covering rigidity and durability. Homogenous vinyl can thereby be employed in areas with high foot traffic, explains Gajdova. LVTs are in second place, with a market share of 22.6%. As in Spain, LVTs represent the largest-growing product group and are even set to become the highest-volume product group this year. The market share of the top five companies is 62.6% (top 10: 76.6%).

Long-Term Troubles Predicted for Great Britain

Growth in Great Britain and Ireland for the upcoming years will remain at 0.3%, a stagnation largely caused by the Brexit vote. The largest area of application is in residential buildings, with an average share of 36.4%, followed by health/medical with 17.0%. Here, too, LVTs are the leading product group, with 41.8%. The second-largest group is heterogeneous vinyl, with 19.8%. In this region as well, LVTs are the group with the highest growth prospects: 2.3% annually to 2021. The market share of the top five companies is 53.6% (top ten: 76.6%).

The plaster and mortar market shows stable development overall. The countries France (+ 1.8%), Germany (+ 2.2%) and the Netherlands (+ 1.3%) recorded moderate growth in 2017. Poland recorded the highest growth of the five markets examined (+ 8.7% in volume). All examined markets except Italy were allowed to enjoy growth in 2017 and also the outlook for the industry remains pleasing, as a new study by Interconnection Consulting shows.

Poland is growing fastest

Poland is the fastest growing market in all the countries surveyed. In the previous year, sales of the plaster and mortar industry increased by 8.7%. Compared to other markets, the sector in Poland has a very high share in the new building segment (83.2%), which continues to gain shares compared to the renovation sector. Above all, the construction of office and commercial buildings accelerates the growth of the industry in Poland. Nearly half of the market (47.4%) is covered by mortar. Pasty plasters come to 31.2% and mineral plasters cover 21.4% of the market

France in the state of rest

The French market for plaster and mortar is spurred on by a recovered construction industry. Despite the fact that the French market is very high-priced – especially compared to its neighbor Germany – the market will continue to grow at an average rate of 2.6% per year until 2021 over the next few years. Unlike Poland, the French market is driven mainly by the renovation sector (66.5%). The total market of € 1.1 billion is dominated by mortar (share: 59.4%). Pasty plasters come to 25.4% and mineral plasters to 15.2%.

In Italy there is a risk of dry plaster

The Italian market has a market value of € 323.1 million. The industry is struggling with lower demand due to the crisis in the construction industry and increased substitution by drywall, which has led to the market easing by 4.6% in 2017. Due to the rise of the drywalls Interconnection expects a further decline of the market until 2021. The renovation sector is the dominant segment with 64.1%. The pasty plasters have a market share of 41.9% and are thus the strongest segment. This is followed by mortars with 33.1% and mineral plasters with 25.0%.

In Germany, housing helps

In Germany, the market rose by 2.2% in the previous year. The market is driven primarily by new construction, which accounts for 69.7% of the total market. Housing occupies a dominant position with 86.9%. A closer look at the market reveals that there is no dominant product group. Mineral plasters account for 39.4%, followed by mortar (35.2%) and pasty plasters (25.4%). But taking the value as a starting point, it is the pasty plasters with a market share of 59.3% that account for the largest part.

Moderate Netherlands

The Netherlands will maintain its moderate growth in the coming years. The total market volume will amount to 1.5 million tons in 2021 with average growth of 1.5% per annum. The plaster and mortar market is being driven primarily by the new building with a share of 66.6%. Mortar is the clear number one on the Dutch market with a share of 66.6%. After that mineral plasters get 22.6% and pasty plasters with 10.8%

The global window market reached a volume of €68.8 billion in 2017, corresponding to a sales volume of 442.9 million window units and representing a growth of 2.4% over the previous year. According to a new study by Interconnection Consulting, annual sales will continue to rise by 3.3% until 2021.

China’s Bull Economy Stagnating
China is by far the largest global window market, with nearly one in three windows (30.8%) being sold there. In terms of sales volume, however, China’s market share of 15.9% is only third worldwide, lagging behind Western Europe (25.8%) and North America (21.5%). This disparity stems from China’s attempt to accomplish its massive urbanization efforts with inexpensive sash windows and simple metal frames, whereas demand in Europe, for example, is clearly for high-quality, energy-efficient windows (with a high R-value). On account of the cool down in China’s housing construction, due in part to anti-corruption measures adopted by the government, double-digit growth rates would seem to be a thing of the past. For this reason, Interconnection Consulting expects only a moderate annual growth of 2.9% up to the year 2021. By comparison, India is the region with the largest growth worldwide (+5.9%), stemming in part to gradually rising labor costs in China and South Korea, which, in turn, has resulted in a higher employment rate and increased construction activities in India.

North American Market Edging Towards Saturation
Growth in North America is expected to rise 3.3% this year, which is “already a sign of market saturation,” according to Laszlo Barla, author of the study. Market dynamics in recent years have grown increasingly weaker. In addition, the Trump administration has given rise to a degree of uncertainty among both buyers and lenders across the country. Similar growth (+3.1%) is forecast for Latin America in 2018. The most-recent economic figures have raised expectations that the national economies in South and Central America will continue to recover. Certain risks do remain, however. Certain South American currencies (the Columbia peso and the Brazilian real) are still among the most volatile in the world.

Low Interest Rates Bolster Europe’s Window Market
Not until 2015 did the Western European window market start seeing renewed growth following the heavy toll it took from the financial crisis of 2008. Currently, the region is benefitting from low lending rates, making investments in private housing construction attractive and thereby bolstering the window market. In the previous year, window sales grew 3.2%. Yet the window sector is threatened by ever-diminishing land available for construction and the concomitant rise in real estate prices. In similar developments, Eastern Europe also saw a turnaround in growth as of 2015 – though with even higher growth rates. Sales grew 6.0% in 2017. Low interest rates, rising salaries, and an efficient labor market with sinking unemployment are all factors enabling more and more people in Central and Eastern European countries to be able to afford a home of their own.

Housing Construction Gains Market Shares
Metal frames still manage to represent the highest-volume product group globally with 187.4 million units, followed by PVC windows (164.2 million units) and wood windows (73 million units). PVC windows are expected to register the largest growth in sales, with an average annual growth rate of 4.0% to the year 2021. Double-pane windows continue to be the dominant window type with a sales volume of 270 million units, followed by single-pane windows (104 million) and triple-pane windows (67.4 million units). Triple-pane windows also have the greatest growth potential (5.2% annually to 2021). In general, the share of housing construction to non-residential construction is increasing and is currently (2017) at 61.5%.

The industry for concrete fiber and concrete admixtures increased by 3.2% last year in the largest markets in Europe (Germany, France, Italy, Great Britain, Poland, Benelux). The turnover of the industry in the analyzed markets increased by about 68 million euros and amounted to 1.26 billion euros. By 2020, the growth of the industry should be 3.1% per year, as a study by Interconnection Consulting shows.

All markets profit from the increasing interest of companies and the state in investing. The growth market number one is Poland. In 2017, sales in the industry increased by 6.2%. The increase in the Benelux countries was also above-average in the past year, at 3.9%. Non-residential construction in particular saw a sharp increase in both the Netherlands and Belgium. In France, too, the concrete fiber and concrete admixtures market grew significantly (+ 3.2%). In Germany (+ 3.1%), Great Britain (+ 2.9%) and Italy (+ 2.6% in volume) sales were just below the overall average.

Concrete liquefier dominate

The strongest product group among concrete admixtures are the concrete plasticizers with a sales share of 48.6%. This is followed by flow agents with 19.3% and release agents with 10.4%. The latter group has lost a lot of shares in the European markets in recent years, while in the last few years the sales of plasticizer have increased above average compared to the other product groups. However, the biggest increases will be in the 2016-2020 period, with an increase of 5.1%.

Steel fibers set the tone

In the case of concrete fibers, a distinction is made between steel fibers, synthetic fibers and glass fibers. By far the strongest product group is the steel fiber with a share of 75.2%. In Germany, the advantage of steel fiber is even more striking. There, the share of steel fiber is even at 81.3% – and rising. Plastic fibers account for 17.1% of sales in Europe. Glass fibers only reach 7.7% – and the trend continues to fall.

Market concentration in Poland the strongest
The top 10 companies in the respective markets had the following shares last year: Poland (71.9%), Benelux (66.5%), United Kingdom (66.5%), Italy (64.8%), Germany (64.6%), France (64.0%).

Despite fierce competition from other flooring types, parquet and real wood flooring in Europe will see a 1.1% increase in sales this year, according to a new study by Interconnection Consulting.

Prices are increasing

The parquet and real wood flooring industry is in a challenging market environment, which also drives producers to optimize their processes and develop new strategies for their products. The most important influences for the industry are the macroeconomic effects (e.g., Brexit), construction activity, the scarcity of high quality lumber, the strong competition of other types of soil, and the demand structure of floor coverings. “Especially the last two points push the parquet and real wood floors more and more into the premium segment”, explains Jan Hudak, author of the study. This effect is also visible in the fact that sales grow much faster than sales. In 2017, the percentage increase in sales was 2.2%, while sales only increased by 1.2%. This gap is due to the price increase in this segment, according to interconnection, in the next few years further.

Germany is running out of steam

The largest markets for parquet and wooden floors are Germany, France and Turkey. However, especially at Europe
s largest market in Germany, the alternative floor coverings show their claws. In 2017, sales fell by 0.15% despite the construction boom. Stagnation can only be expected in the next few years. The strongest growth rates in the European market are recorded in Poland with a sales increase of 3.1% and Benelux with 3.4%. Countries such as Slovakia (2.9%), Turkey (2.7%) and Denmark (2.4%) also report healthy sales growth. Slightly less strong will be the sales growth in 2018. Only Benelux (3.4%), Poland (2.7%) and Turkey (2.0%) reach the 2% mark this year.

Parquet dominates

By far the largest product group with a share of 85.4% are parquet floors. In second place are the solid wooden floors with 12.1%. Accordingly, veneer floors only hold a negligible share. For the parquet floors, the strongest product group is the three-layer parquet, with long planks (40%). This is followed by the three-layer parquet with wide planks (31.8%) and the two-ply parquet with 26%. The dominating wood is still the oak with a share of 82,6%. This is followed by tropical woods with 4.0%, nut and fruit woods with 3.6% and ash with 3.3%. In Europe there are more than 160 producers of parquet and real wood floors. The top ten companies control around 48% of the total market. Important companies on the European market are Boen, Baltic Wood, Unilin, Weitzer Parquet, Hamberger, Tarkett and Parador.

After a difficult year, the market for pipe fittings can expect robust growth rates again in the coming years. Overall, the industries sales increased by 2.3% in the top 6 European markets (Germany, Italy, France, Great Britain, Poland, Benelux). For the next few years, Interconnection Consulting expects an average annual growth of 2.0% by 2020 due to a new published study.

Germany sets the Tone

The largest market for pipe fittings is Germany, which shows – despite the already large volume – an above average market growth. According to the Interconnection Study, the market volume is expected to increase by 4.4% this year. Around 6.000 additional pipe connections are to be set on the market. An even stronger upward trend is expected in France, where sales are expected to increase by 4.8% this year. Italy and Poland also have good growth prospects. Only Great Britain is slowly catching up with the Brexit ghost and is likely to record declines in sales this year (-0.3%).

Hot & Cold Water most Popular Application Segment

The biggest application segment for pipe fittings in the examined markets are hot and cold water installations. In Italy, this segment accounts for 78.2% of the market, Germany follows on the second place with a usage of 76.0%, UK has the lowest market share of 61.3%. In contrast, the usage of radiator connection fittings is correspondingly high in the United Kingdom, with a market share of 38.5%. Italy on the other side has the lowest share of 21.2%. A niche position is taken up by the pipe fittings in the area of underfloor heating and cooling. Pipe fittings are used in Italy (59.1%) and Poland (51.0%) very often for multilayer pipes. In the United Kingdom, most pipe connections are applied for metal pipes (51.5%) and in France plastic pipes are the highest-selling segment for pipe connections (52.8%).

Different Competitive Landscape

Across countries, the top 10 companies achieved a market share of 41.6%. The market concentration is the highest in the Benelux countries and in Germany. Big players like Wavin (NL), Geberit (DE), Viega (DE), KME (DE) are headquartered there. By contrast, the dominance of the top companies in Italy, France and Poland is significantly lower. This is mainly because these 3 markets have a large number of local production facilities and import only a small proportion of tubes. The decline in the market share of metal pipes is causing problems for metal pipe manufacturers such as Mueller Industries (UK) and KME (DE) as PVC and multi-layers are on the rise.

The market for automatic door systems has slightly grown in Europe last year. Overall, the increase in turnover and sales amounted to 1.8% in 2016 and was therefore significantly higher than in previous years. This trend will continue in the coming years.  According to a study by experts from Interconnection Consulting, by 2019 an average annual growth rate of 3% per year is expected.

Sliding doors are the unchallenged leaders

The largest product group in all analyzed countries are automatic sliding doors, with a market share of 46.8%. The second largest group is swing doors with 31.2%. Over the next few years, these two product groups will generate disproportionate growth and will thus further increase their market shares. Revolving doors and telescopic doors are far behind, with a share of 7.3% and 7.0%, respectively.

Great Britain and Poland are stimulating the market

Almost all of the analyzed countries were able to achieve at least minimal growth last year. Only Italy still awaits the long-awaited boom in the construction industry, which should give construction-dependent industries a boost. This will already be the case in 2017. Interconnection expects a hefty plus (+4.9%) for Italy for the first time after years of downturn.

The growth drivers of the European market last year were Poland and Great Britain. Poland achieved a sales upturn of 4.4% in 2016. A total of 11.414 automatic doors were sold last year, of which 59.4% were sliding doors. Compared to Polish sales, British sales figures were roughly three times higher. The increase was 3.7%. Despite the political and economic uncertainty caused by Brexit, this sector is expected to continue to grow rapidly, says Marianna Svartzova, author of the study. Last year, for the first time in a year of downturn, France was able to regain a slight growth again (+1.2 in value). This moderate growth (between 1.0% and 2.0%) is also expected to continue in the coming years.

Moderate growth for Germany, Austria and Switzerland

With a market volume of 176.5 million Euros, the German market is by far the largest market for door automation. Last year, the German market developed very moderately (+1.5%). However, the prospects for the next few years promise higher gains. Austria’s market for tourism has stagnated in recent years (2016: sales: +0.3%). Market consolidation has led to declining average prices in recent years. Next year, the industry is expected to experience significant growth again, Interconnection Consulting experts predict. The market for automatic doors in Switzerland is almost 10% larger than in Austria. Last year, sales increased by 2.7% and the Swiss market for automatic doors will continue to maintain its high growth level in the future. A total of 54.4% of all sales in Switzerland were for sliding doors.

Strong distinction of market concentration

As in many other sectors, there is also a tendency towards ever-increasing market concentration in the sector of automatic doors. In the UK, the shares of the top 10 companies are the lowest (83.4%). The shares of the ten largest companies in the overall market are highest in France (93.2%). The largest companies for automatic doors across Europe are Assa Abloy, Geze, Dormakaba, Record and Gilgen.

High interest rates and the increased need for equity in mortgage loans, caused demand for loans to fall dramatically. This is compounded by massive increases in construction costs, which far outpace core inflation. Building permits fell 13.1% in 2022. Construction completions in the DACH region will therefore also plummet by a double-digit percentage amount in 2023 (-11.5%), as a study by Interconnection Consulting shows.

Within the DACH region (Germany, Austria, Switzerland), the number of housing completions in Austria is higher in relation to the number of inhabitants than in the other two countries. While three apartments were built per 1000 inhabitants in Germany in 2022, the figure in Austria was 6.7. In Switzerland, 5.5 apartments were built per 1000 inhabitants. For this year, residential construction in Austria will also show a higher dynamic than in Switzerland and Germany, but at a lower level. In Austria, the decline will be particularly sharp at 15.5%. Whereas around 60,000 homes were completed last year, the number will fall to around 50,000 this year. A similar reduction in construction momentum is also evident in Germany. In Switzerland, the decline is still a moderate 5.2%. The number of completed apartments per 1,000 inhabitants is down to 5.6 in Austria, 2.7 in Germany and 5.2 in Switzerland.

Construction momentum for single-family homes plummets

Overall, there is a trend toward multi-story residential construction (MGWB) in the DACH region. This development is being further fueled in particular by the sharp rise in mortgage lending rates, explains Ernst Rumpeltes, author of the study. “Especially the construction of single-family homes is collapsing sharply.” In 2018, the ratio of MGWB to single- and two-family homes was 65 to 35. In 2023, nearly 71% of all housing units will be completed in multi-story housing. This proportion should not change much in the next few years.

Percezione del mercato delle finestre italiane attraverso agevolazioni fiscali

A causa degli incentivi fiscali del governo, i quali stanno dando i suoi frutti soprattutto nel settore delle ristrutturazioni, il mercato delle finestre in Italia crescerà del 4,4% nel 2019, secondo un recente studio di Interconnection Consulting. Complessivamente, lo scorso anno il mercato delle finestre ha raggiunto un volume di 1,57 miliardi di euro. Nei prossimi tre anni, si prevede che il mercato italiano delle finestre avrà una crescita annua del 2,7%, dovuta soprattutto all’incremento nel settore delle costruzioni.
Il settore delle ristrutturazioni è particolarmente vantaggioso
Lo Stato italiano assegna alle famiglie uno sgravio fiscale del 50% in caso di ristrutturazione. Inoltre, la fiducia nel settore delle costruzioni e delle finestre è alimentata anche dalla promessa di un cosiddetto “eco-bonus”. Ciò permette alle famiglie di avere un alleggerimento fiscale del 60-65% in caso di ristrutturazione delle loro case. D’altronde il settore abitativo continua a guidare il mercato delle finestre avendo una crescita media prevista del 6,4% entro il 2022, con una quota di ristrutturazione pari all’83,8%.
Il PVC prende il comando
Nel 2017, per la prima volta in Italia sono state vendute più finestre in PVC che finestre in metallo. Sei anni prima, le vendite di finestre in PVC erano dietro a quelle di metallo e legno, che erano tradizionalmente i componenti della produzione vetraria italiana. La tendenza del 2018, nella quale vede la quota di finestre in PVC al 36,9% e il metallo solo al 30,6%, continuerà con molto probabilitá anche in futuro. Nel 2022, Interconnection stima che la quota di mercato del PVC arriverá al 40,9%, quella del metallo si abbasserá al 29,1%, e le finestre in legno si aggireranno intorno al 15,6%. “Questa tendenza è dovuta alla richiesta di materiali più economici e all’ingresso sul mercato dei produttori di finestre polacchi”, spiega Vito Graziano, autore dello studio. Mentre in altre parti dell’Europa occidentale le combinazioni stanno vivendo una ripresa, in Italia il PVC/Metallo (+ 0,9%) e Legno/Metallo (+ 1,3%) continueranno a perdere quote di mercato nel 2019, con una crescita bassa.
Fornitori dall’Europa dell’Est con prezzi più bassi
I produttori dell’Europa orientale, in particolare, beneficiano della forte domanda di finestre in PVC. L’azienda polacca Eko-Okna, entrata nel mercato europeo come un grande principiante, è cresciuta lo scorso anno di circa il 40% ed è molto ben rappresentata in Italia. L’arrivo di molti produttori dall’est ha anche abbassato i prezzi delle finestre in PVC, facendo registrare un abbassamento intorno al 2,4% nel 2018. D’altra parte, combinazioni come PVC/Metallo sperimenteranno un aumento sostanziale dei prezzi. Difatti, entro il 2022 i prezzi di questo segmento aumenteranno dell’1,6% l’anno.

The market for curtain wall facades in Southeast Asia will reach a volume of $ 2.55 billion this year, which equates to a sales volume of 13.6 million square metres. In the ASEAN countries that were examined (Indonesia, Philippines, Thailand, Malaysia, Singapore and Vietnam), the curtain wall market will continue to gain momentum over the next few years. This is shown in a study conducted by Interconnection Consulting.

Urbanisation is Driving the Market

The market for curtain wall facades will increase by 6.9% per annum for a total volume of $ 3.1 billion until 2022. Progressing urbanisation, the development of the construction sector, industrialisation and regarding mainly Thailand and the Philippines tourism, are the main factors behind this sustainable growth. Indonesia and the Philippines are not only the most populous countries in the ASEAN economic area, but also the ones with the strongest growth. Vietnam is also one of the fastest-growing economies, with average growth of 6.8% annually until 2022. In this case, it is the relocation of factories from China to Vietnam that has lead to an increased demand. Malaysia, too, is showing no signs of slower growth, while Singapore and Thailand will be sluggish in the future. “According to our analysis, we can say that the ASEAN economy is currently heavily influenced by local economic development programs and the complicated dynamics of the US-China trade war,” said Vito Graziano, the author of the study.

Average Prices are Rising

As far as the materials used are concerned, the market is clearly dominated by aluminum-glass facades, with a share of 85.1%. Expert interviews show that this material remains the clear frontrunner because of its strength, durability and cost-effectiveness. Accordingly, steel and glass constructions only account for 8%. Overall, the new construction sector has a share of 85.7%, while the renovation sector hardly plays a role. Office buildings are the largest sales segment with a share of almost 30 percent. Of the three most important facade types, element facades show the biggest potential for growth, ahead  of post & beam facades and window ribbons. Although average prices have been stable in the past, they are steadily rising as a result of the US-China trade war.

The market for suspended ceilings in the top 7 regions of Europe (Germany, the Netherlands, Great Britain, Italy, Spain, France, Russia) experienced an abrupt fall of 10.0% this year due to the COVID 19 crisis. Interconnection’s forecast shows that market volume will not return to pre-crisis levels until 2022.

Southern Europe hit the hardest

The forecast numbers for this year are like an omen for the industry. As expected, the southern European countries are being hit the hardest by the crisis not only in terms of health but also economically. The Italian and Spanish markets for suspended ceilings plummeted by 12.0% and 12.8%, respectively. In the UK, the expected decrease amounts to 10.9% and in Russia the same figure is posited to be higher than 11.1%. In Russia, recovery will take a little longer than in the Western European countries, and therefore the market level there is expected to achieve pre-crisis levels in 2022 only.

In Rome, do as Romans do

Office buildings were the strongest area of ​​application in 2019 with a 26.5% market share, ahead of commercial applications, standing at 20%. “The COVID crisis could also lead to shifts there. For instance, owing to smart working, companies will need less office space per employee,” stated Vito Graziano, author of the report. However, there are also country-specific differences in the areas of ​​application. The share of the industry segment in Germany amounts to 23.1%, while it stays consistently below 10% in all other markets examined. In France, the healthcare sector records a disproportionately high share of 18.2%. In terms of materials, the cheap plasterboard gets the lion’s share with over a third of the total market, followed by mineral fibers and metal. An emerging material is veneer wood, which will continue to experience strong growth in the years to come in spite of the crisis. Plank ceilings represent the largest product segment with a share of 35.0%.

Strong market concentration

The market concentration varies greatly between countries. While the markets in Germany and the Netherlands are very concentrated, the markets in Italy and Spain are rather fragmented. Nevertheless, the European market for suspended ceilings is dominated by a few corporate conglomerates from Germany, France and the Benelux countries. The market share of the top 5 companies in Europe amounts to 48.6%.

The market for curtain walls in the ASEAN countries (Singapore, Malaysia, Indonesia, the Philippines, Vietnam, Thailand) is bound to plummet by 9.6% this year due to the COVID-19 crisis. However, the market will recover very quickly and by 2022 will have already exceeded the pre-crisis market volume, as a new report by Interconnection Consulting shows.

Good conditions for a quick rebound

The integration of the ASEAN region into the global industrialization process, as well as into global tourism and the construction sector, offers strong impulses for the construction industry. The wave of urbanization is also a strong driver of the construction industry and is even more dominant in the ASEAN countries than in Europe or the USA. These factors are decisive for the construction industry and thus also the market for curtain walls to keep going faster than e.g. in Europe.

Vietnam benefits from the trade war

Indonesia and the Philippines are not only the most populous ASEAN countries, but also the most dynamic markets, recording an astounding growth level. Indonesia is also the largest market for curtain walls in the ASEAN region with a share of 32.5%. Vietnam benefits from the trade war between China and the United States, as many foreign factories move from China to Vietnam to avoid trade tariffs. Therefore, despite Corona, the industry growth in Vietnam will average 2.4% annually over the next few years until 2022. By contrast, while Singapore and Thailand have poorer growth prospects, Malaysia has stable growth prospects.

Smart working instead of office presence

The most important material type is reportedly aluminum glass, with a lion’s share of 84.3%. Above all, it is the cost efficiency that speaks for aluminum and against e.g. Steel / glass, which only has a market share of 8.0%. The largest application area for curtain walls is office buildings with a share of 32.8%. In contrast to many other regions, the residential sector (e.g. apartments) remains a very important segment for curtain walls in Southeast Asia at 27.2% of the total. There could also be shifts in favor of co-working spaces in the future. “There will be more smart working and it is likely that there will be less office space for the same number of employees,” stated Vito Graziano, author of the report. Furthermore, it can be expected that the new development of hotels will only progress very slowly in the next few years due to setbacks in tourism.

Downward trend in raw material prices strengthens margins

Overall, the renovation sector makes up a small chunk of the market with around 15% of the total volume. Conversely, new construction makes up for a share of 85.7%, and this trend will not change in the next few years. But the corona crisis also has immediate positive effects for producers: in the wake of the corona crisis, raw material prices are on a downward trend worldwide, which should strengthen the margins of facade manufacturers overall.

The market for garage doors in Austria has experienced an upswing in recent years. However, the Austrian construction crisis resulting from the COVID 19 crisis will also affect the market for garage doors (2020: -3.7%). A new study by Interconnection Consulting shows a slightly negative prognosis for the years after 2020.

Renovation as a Glimmer of Hope

Interconnection assumes that the market for garage doors in Austria will only grow by an average of 1.0% per year until 2023. The renovation market, however, is profitable for the major European manufacturers in Austria. After all, garage doors in Austria are changed twice as often on average as in neighbouring countries. Thanks to the crisis, the renovation segment is becoming even more important. The share of this segment rose to almost 70 percent (67.1%) of the total market during the crisis. Before the crisis, the share was around 65%.

Steel and Sectional Doors Dominate

Steel accounts for the majority of garage doors in Austria, with a share of 86.7%. Aluminium is the second most used material with 8.2%. Whereby the share of aluminium is growing particularly in the area of up-and-over and folding doors. Wood represents an elegant but also expensive niche and therefore only accounts for a share of 2.9%. 82.7% of all garage doors are sectional doors.  “This product group has proven itself to be practical and convenient for many years, and is also no more expensive than rolling and folding doors,” explains Vito Graziano, the author of the study. However, up-and-over doors will develop best after the crisis. As a result of the crisis, average prices have also fallen a little, by -1.3%.

High Market Concentration

The Austrian market is characterised by a high concentration of the top 5, with top 5 companies accounting for around four fifths of the total market. The top ranks are occupied by European players.  Domestic companies have mainly created niches in their original federal states, often by marketing their products via direct distribution. Together, however, they account for less than 15 percent of the market.