Security System’s Revenue To Increase In 2010
The residential burglar alarm and monitoring market is apparently on pace to grow 9 percent in 2010, and 27 percent over the next three years, according to Park Associates, leaders in research and analysis in digital living technologies. This is a much-needed projection for the multi-billion dollar industry that was indeed affected by the economic downturn.
Home security sales across the United States took a hit in 2008 and 2009, primarily because the real estate market quickly tanked. A hurt economy resulted in far fewer new homes being constructed, meaning fewer new customers. A widespread tightening of consumer budgets also hindered potential sales. When an existing home with an alarm system is sold, alarm companies have the opportunity for two new sales. First, the homebuyer is likely to keep the existing system and become a new customer. Second, the home seller is likely to hire the alarm company to install a system in the new house. An additional market sector arguably came out of the recession, the fear driven consumer.
According to the Security Dealer Magazine (SDM), home alarm security systems continue to be a necessity in America’s homes and businesses, even in these turbulent and unknown economic times. The proof is found in the solid numbers, showing a 6 percent growth in the monthly monitoring rate, and a 2 percent rise in the total annual revenue.
Many companies felt the effects of the global recession. There was a new increased focus on customer retention as many customers struggled to pay everyday bills. Like with any industry, those companies that prepared early, improving operation efficiencies and cost cutting, managed to weather the harsh economic storm. Recessions often force companies to think more critically about spending both time and money with respects to efficiency and profitability. They bring about new thinking and change.
The outlook for 2010 in the alarm industry remains relatively positive. More than half of all alarm security dealers, according to the SDM, believe that after a better year in 2009, the next year holds potential for increased revenues. Parks Associates estimates the U.S. residential intrusion and monitoring market will account for more than $9 billion in 2010. Nearly 75 percent of the consumer-level spending will come from monitoring revenues ($6.7 billion), while just under 20 percent will come from hardware purchases ($1.8 billion), and only 6 percent of revenues will come from installation labor ($521 million). Ultimately, the alarm industry will continue growing and morphing as it looks to bounce back from an unusually poor year.
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