ASSA ABLOY is currently the world-leading supplier of total lock and door solutions. As the Group has grown, its product portfolio has expanded and evolved to cover the widely varying needs of airports, schools, hospitals, offices, homes and more. Growth in the security market is mainly fueled by increasing prosperity, urbanization and a general trend toward higher security. Another factor is that crime, violence and terrorism have increased. The underlying trends and growing uncertainty in the world put security high on the agenda, driving the development of increasingly advanced solutions and upgrades of existing security systems. The total security market consists primarily of security services and electronic and mechanical security products.
ASSA ABLOY estimates the total security market to be worth about EUR 200 billion. The Group has concentrated its efforts on electronic and mechanical security products as well as security doors. The segment in which the Group is active represents about 15 percent of the total market and ASSA ABLOY has a market share of over 10 percent but with large variations between different markets.
Electronic and mechanical security products
In the field of electronic security, ASSA ABLOY’s product range includes electronic cylinders, automatic doors, secure identification and various products for access control, some of which use radio-frequency identification (RFID). As a rule, electronic products offer high functionality and high security, making them ideal for commercial applications. Focused product development in this area is continuously expanding the areas of use of ASSA ABLOY’s electromechanical products.
The annual growth of the market for electronic security products is estimated to be two to three times higher than for mechanical security products. Today electronic products represent about one-third of the Group’s sales, and that share is increasing every year.
In addition to locks, mechanical security products mainly include products such as door closers, emergency exit devices and window hardware. ASSA ABLOY is also a major manufacturer of security doors and door hardware. Development in the field of mechanical security products is mainly driven by renovations and replacements of old locks in existing windows and doors, as well as new construction. The market is growing in tandem with each country’s GDP (averaged over a business cycle). The market for mechanical security products is relatively stable for ASSA ABLOY, both because the large aftermarket makes this market less sensitive to shifts in the economy, and because ASSA ABLOY is active in a large number of countries with different economic cycles.
Today only 3–4 percent of all doors are electromechanical, but the percentage is steadily rising. There is great potential to upgrade traditional mechanical locks to electromechanical lock solutions in order to enhance security and functionality. ASSA ABLOY is the market leader in electromechanical lock solutions such as electromechanical lock cases, access control and electric door closers.
Complete security solutions
ASSA ABLOY works with architects, authorities and large end-customers to offer the best security solutions for different types of door opening. The requirements for different areas vary greatly and the security solution for each door must be adapted to the location and type of use of the door – an entry to a building, or the door to a computer room or a conference room.
The functions of the door must also be adapted to needs for security and convenience – for example, whether it is an interior or exterior door, how often it will be opened, how many people will use it, and special requirements such as fire safety. Customers are also increasingly demanding that the products should be simple to integrate into new or existing security systems and IT networks.
The total security market
ASSA ABLOY’s sales by product group
Differences between markets
Americans spend more than twice as much on emergency exit devices as Europeans. Conversely, northern Europeans spend three to four times as much on high-security locks for their homes as Americans. Automatic doors are also much more common in Europe than in the United States. The prevalence of electromechanical products is significantly larger in the commercial segment than in the residential segment. If the demands for security and evacuation solutions were equally great in Europe and the United States, the overall market would roughly double – representing great potential for ASSA ABLOY.
In global terms the lock market is still fragmented; however, the market in each country is fairly consolidated, because companies in the industrialized parts of the world are often still family-owned and leaders on their home markets. They are well-established and have strong ties with local distributors. In less-developed countries, however, established lock standards and brands are less common.
Distribution channels
In the security market today, manufacturers of security products such as ASSA ABLOY mainly reach their end-customers through a variety of distribution channels. Many of ASSA ABLOY’s products are sold in small volumes to many end-customers with very different needs, leading to a largely local and fragmented distribution of mechanical and electromechanical security products.
Specification of security solutions of growing importance
Bringing new and innovative solutions to market requires working closely not only with distributors, but also with architects, security consultants and major end-users. This collaboration stimulates demand from distributors and customers. Construction and lock wholesalers and locksmiths have a key role in delivering the products specified for various construction projects. ASSA ABLOY has developed a close collaboration with architects and security consultants to specify appropriate products and achieve a well-functioning security solution. Many door and window manufacturers install lock cases and fittings in their products before delivering them to customers.
In contrast, electronic security products go from manufacturer to end-user mainly through security installers and specialized distributors. The products are also sold through security integrators who often offer a complete solution for installation of perimeter protection, access control and, to a growing degree, computer security too.
Distribution channels for the security market
The role of distributors
One of the most critical parts of a well-functioning total door and security solution is the installation of the various components. ASSA ABLOY works closely with its distribution channels to offer end-customers the right products, a correct installation and thereby a well-functioning security solution.
Distributors also have a key role in providing service and support after installation. This role can vary between different customer segments. In the commercial segment, distributors on some markets act as consultants and project managers to create good security solutions. They understand the customer’s needs and ensure that products meet local regulations.
As technology moves toward more complex security solutions, distributors need increasing skills levels. On many markets specialized security distributors may be locksmiths with expert knowledge of mechanical and electromechanical security products. They buy directly from the manufacturer or via wholesalers, providing advice, products, installation and service. Some locksmiths now have an increased focus on electronics, while IT integrators are beginning to add physical security solutions to their offer.
Customer segments
ASSA ABLOY’s main customer segment is the non-residential segment with institutional and commercial customers who account for 80 percent of sales, while the residential segment accounts for 20 percent.
What drives demand?
ASSA ABLOY’s total sales by region
Major customers
This segment consists of institutional and commercial customers such as universities, hospitals, offices, airports and shopping malls, through which a large number of people pass daily. ASSA ABLOY usually has primary contact with the customer’s head of security, a person well acquainted with security needs who actively participates in planning security solutions. Lead times for this kind of project are often long and based largely on custom solutions. Distribution and installation are largely handled by installers and locksmiths.
Small and medium-sized customers
This segment is characterized by the customers’ need for professional advice and installation. This need is primarily met by specialized distributors and installers, such as locksmiths. ASSA ABLOY works actively to train distributors and to develop more standardized solutions for small and medium-sized companies such as stores and offices.
Private customers – the consumer market
The majority of sales are replacements or upgrades of existing security products. Private consumers have a great need for advice and installation assistance. ASSA ABLOY has developed a number of home security concepts to meet consumers’ needs. Depending on the geographical market, ASSA ABLOY also works with door and window manufacturers or specialized distribution channels such as home improvement stores and locksmiths.
Heightened demand for electromechanical products
The heightened demand for electromechanical products is one of the clearest trends in the security market. This is accompanied by greater technical standardization, making it easier to integrate different components in the security solution with each other. ASSA ABLOY’s products aim for open standards to allow them to be easily connected to the customers’ other security and administrative systems.
Changing demand
Customers’ preferences for different security solutions are becoming polarized, and there is a change in demand patterns for security solutions at different levels. There is increased demand for complete security solutions in the higher segment, but also for good-quality products that meet basic security requirements.
Competition
Although some consolidation has taken place over the past ten years, the security industry is still fragmented in the global perspective. Some countries have one strong manufacturer that holds a large share of the local market and focuses on that, often with limited international activity.
Globally, ASSA ABLOY is the market leader; its main competitors are five other major players who are active in parts of ASSA ABLOY’s segment: Ingersoll-Rand, Stanley Works, Dorma, Kaba and Black & Decker. Three of them are based in the United States and two in Europe. All competitors are strongest on their home markets and also have a presence on some other markets, although none of them has international market coverage comparable with ASSA ABLOY’s. The Asian market is still very fragmented; even the largest manufacturers have quite modest market shares.
Common sales force
In order to compete effectively in a global market, ASSA ABLOY’s sales force is working more and more across corporate boundaries. The common sales organizations work under the master brand, ASSA ABLOY, but at the same time they work as representatives for the local product brands with which the customer is familiar. Thus the sales representatives do not handle just a single brand but several product brands to solve customers’ security needs.
Brands
ASSA ABLOY’s brand strategy
Through its many acquisitions, ASSA ABLOY owns a broad variety of well known brands and has the world’s largest installed base of locks. To take advantage of and manage these valuable assets while benefiting from the Group’s size, ASSA ABLOY’s logo is being combined with the individual product brands. This approach preserves the link to the installed base while increasing the visibility of ASSA ABLOY as the master brand, which will continue to be developed. Under the ASSA ABLOY master brand the Group can offer an array of complete security solutions that no single product brand can offer on its own.
The Group complements the master brand with several global brands that are all leaders in their respective segments in the market. These brands are HID in RFID and access control, Yale in the residential market, Besam in automatic doors, Mul-T-Lock and ABLOY in high-security locks and VingCard/Elsafe in the hospitality and cruise-ship market.
The growing visibility of ASSA ABLOY as the master brand for complete security solutions demonstrates the great breadth of the Group’s product range as the world’s largest provider of security solutions.
The brand strategy has been developed to take advantage of the Group’s size and product range:
- ASSA ABLOY as master brand. Sales departments will be unified under the ASSA ABLOY master brand.
- Product brands that benefit from the large installed base and are adapted to local rules and safety standards.
- Complementary global brands, where the products’ leading position and market positioning in their segment are unique or overlap that of ASSA ABLOY.
The intelligent door
Complete security solutions using the entire Group’s product range
A complete security solution from ASSA ABLOY includes products of many different types. At the main entrance there may be automatic doors and access control, for example, and there may also be access systems on each floor of offices. Inside the offices there may be security doors, high-security cylinders, mechanical cylinders, handles and hinges as well as interior doors. Access cards may also be used to log on to computers and networks. These are examples of products from ASSA ABLOY that make up a complete security solution.
The intelligent door is connected to a network over which each individual component around the door can communicate interactively with other systems, such as security or maintenance systems. The advantages are secure information about each component, simple installation through standardized connections, and remote configuration over the network, which can also be connected to the Internet.
Read