The Italian share of the overall European commercial and industrial security market is moderate, mainly due to weak economic growth and the lack of a high-spending commercial and industrial sector, which counters any potential from relatively undeveloped domestic markets.
Italy has a population of over 58 million, making it similar in size to France and the United Kingdom. However, although it is viewed as a major industrial nation, the divide between the wealthy, industrialised north and the under-developed, subsidised south creates a challenging socio-economic divide. Initiatives aimed at developing the economy in the southern region, known as the Mezzogiorno, repeatedly fail.
The commercial and industrial sector is characterised by a plethora of small low-tech businesses, which are typically more vulnerable to economic fluctuations. The security equipment market remains dominated by a demand for low-value products. More sophisticated security technologies – such as IP network solutions and biometrics – are not expected to offer significant growth in the near future.
The fire detection equipment market in Italy is still relatively undeveloped with a low level of penetration compared with other European countries. The total market size in 2004 was estimated to be approximately $151 million, which represents less than 11% of the total European market. In a repeating theme, demand is dominated by the large northern industrial cities, with this market approaching maturity. The southern region is unlikely to see any significant growth in fire detection systems over the next few years.
Concerns about increasing crime rates and terrorist activity have, however, raised the profile of security equipment, the market for which is currently estimated at around $196.7 million. Such concerns are fuelling growth of the intrusion detection market, with high demand in the commercial and public sectors. These factors combine with relatively low historic penetration rates to offer exciting growth potential.
Valued at about $106.5 million in 2004, the access control sector in Italy is dominated by demand for basic standalone equipment, such as key pads and smart cards. Large industrial customers concentrated in the north, and the public sector, are the only areas with higher security requirements. It is expected that the demand for low-value access control equipment will continue to grow over the forecast period, while demand for more complex, integrated access control systems should remain low.
Low penetration
The video surveillance market in Italy has one of the lowest penetration rates in Western Europe. The market is dominated by northern city applications, particularly in and around Milan, where the market is already becoming reliant on replacements and upgrades. The market has also recently been fuelled by initiatives to monitor and protect historic sites; these schemes should provide continued growth over the period covered by this study, despite weak economic growth.
The security services market in Italy is seriously limited by the fact that monitoring of security systems can’t be carried out by security companies that sell and install the equipment. So global security groups are unable to operate monitoring services divisions in Italy, and the market in 2004 remained small at around $213 million.
Estimated at $197 million in 2004, the Italian installation market is relatively large in proportion to other security sectors. This is largely due to the extremely fragmented nature of the market, which is dominated by traditional ‘Aofather and son’ small businesses. It is estimated that there are at least 4000 small companies installing fire and security equipment in Italy, a large section of which are clustered in the more industrial north of the country, where demand for electronic fire and security equipment is at its greatest. Overall, high barriers to entry in the monitoring sector, combined with a relatively fragmented commercial and industrial market, is allowing small installers to maintain their position in the market.