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the State of the contractor marketIn this special research report, en investigates the perception of the Uk's shell and electrics contractors in light of increased consolidation, margin squeeze and changing organiser 23he merger of Stanco/Opex Group and Early Action Group in February is arguably the biggest story of 2011. An alliance of two of the top three largest shell and electrics contractors to the UK exhibition industry raised immediate questions about the viability of the rest of the companies sitting underneath them. It also triggered debate about the impact a combined and rebranded SO Group would have against market leader Melville Exhibition and Event Services. Finally, the merger posed a game-changing question: What influence will the new duopoly have on contractor pricing, services, quality and innovation within the exhibition market and how organisers choose their suppliers?Given the significant repositioning at the top, Exhibition News was keen to look at the health of the contractor market today and how far consolidation can go. After all, mergers aren't new to the market - the alliance of Opex Group and Stanco created its own waves back in 2007.We also wanted to gauge how smaller brands are being perceived by organisers and felt it was important to detail how organisers choose which contractor to work with and where things could change and improve.In a bid to find answers, EN partnered with newly-formed research company Zing Insights to take a comprehensive look at the state of the UK contractors market today and the impact of the latest consolidation activity. For the purpose of this research, Zing focused on contractors providing shell and electrics services. Many of the players on this list also provide carpet, registration, security, floral, furniture, signage, lifting, logistics, show layout planning, feature design, innovation, AV, exhibitor portals, visual aids, CRM and research services. The contractor list drawn up included 12 brands: SO Group, Stanco, Opex and the Early Action Group, Melville, The Index Group, Hire, Showlite, Dimension 8, Anchor Exhibitions, Joe Manby and Moyne Exhibitions. The research was undertaken in Ttwo stages. In the first instance, Zing conducted in-depth interviews with organisers of both trade and consumer exhibitions to gain an impartial and detailed perspective on the relationship between organiser and supplier. Those participating in the first qualitative research stage included operation managers, MD, CEOs and chairmen at organisations contracting shell and electrics across multiple events as well as single events. The qualitative responses were used to inform a quantitative survey of a broader base of organisers to gauge their perceptions of the contractors they maintain relationships with. The second phase is based on 150 exhibition organiser responses. Sixty-three per cent of individuals that participated run up to five events, while 37 per cent run more than six. On average, these events covered 7,800sqm gross.Notably, 51 per cent of respondents ran only B2B exhibitions, 11 per cent consumer-only and 38 per cent did both.

xhibition organisers do still have a choice of shell and electrics contractors today, but organisers are in no doubt of the shrinking pool of options. In light of the merger of Stanco/Opex and Early Action Group (EAG) into the SO Group, organisers participating in Zing's survey who wanted full-service delivery from a single supplier felt they had lost a third contender and now only had two options in the marketplace: Melville and SO Group. As a result, contractors underneath the top two players have failed to secure a position as a viable third option.Not surprisingly, Melville received the highest market awareness score of 88 per cent, followed by the former Stanco (83 per cent), Opex (60 per cent) and EAG (50 per cent). The report included SO Group and its former parts as it was important to look at awareness and usage of the separate RESEARCH24 in context alongside the consolidated group. Zing found awareness of the new branding was still low. Many respondents also referred to their supplier using the old names and were still dealing with the same people they did pre-merger.According to Zing, the extreme weighting towards the two largest players is due to a belief that smaller contractors can't provide the infrastructure, scale or back-offi ce support necessary to support shows. When asked which shell and electrics contractors they had ever worked with, 73 per cent of respondents said Melville, and 68 per cent went with SO Group and its historic component companies. The gap between the third most used contractor, Joe Manby, was signifi cant: Just 17 per cent said they had used the Harrogate-based player, and interviews suggested Joe Manby wasn't necessarily considered an option away from the Harrogate International Centre. Rounding off the list were Achieving a partnership that works for both sides means that organisers are taking some responsibility for maintaining contractor marginsHirex (used by 11 per cent of organisers), Showlite and Dimension 8 (9 per cent apiece), The Index Group and Anchor Exhibitions (8 per cent apiece).Organisers also showed a preference for the top two as their primary contractors: 41 per cent of organisers said they used Melville as their main contractor, while 33 per cent used the combined SO Group. Just 13 per cent of those surveyed claimed not to use a main contractor. Zing Insights director Joe Walther compared the SO Group/Melville duopoly to the brand dominance of Coca-Cola and Pepsi in the soft drinks market."Melville could be considered Coke to SO Group's Pepsi," she claimed. "People have a favourite and they pretty much stick with it. Unless Melville or SO Group do something dramatically wrong, that's unlikely to change very much." It's not impossible, however. Walther pointed to Coca Cola's 1985 New Coke launch as an example of a major marketing failure which threatened to turn loyal consumers away from the brand.MARGIN SQUEEZEA popular explanation for consolidation in the contractor sector has been the recession. Less money spent being spent on shows by organisers, exhibitors and visitors, combined with rising energy charges, forced everyone to cut their costs and fi nd more value for money. It was the COMPETITIVE LANDSCAPE010203040506070809010088836050453528242523211673643425171188311199Contractor usage Contractor awarenessMELVILLESTANCOOPEXEARLY ACTION GROUPSO GROUPJOE MANBYSHOWLITEHIREXDIMENSION 8MOYNE EXHIBITIONSTHE INDEX GROUPANCHOR EXHIBITIONSleft: UK organiser awareness of shell and electrics contractors including the former companies that make up the SO Group, and the percentage of organisers using each for one or more exhibitionsECONTRACTOR AWARENESS VERSUS USAGEIn this excerpt from Zing's research, we look at perceptions of UK contractors and their services, how organisers choose suppliers and the future needs of both