Market
B&B TOOLS focuses on the industry’s demand for industrial consumables, industrial components and related services for its MRO processes. At present, B&B TOOLS’ main geographic markets are Sweden, Norway and Finland.
Market structure
Historically, the Nordic market for industrial consumables and components has been highly fragmented. The industry is now being consolidated like all other industries. Old patterns are being broken and new patterns are being established. Industrial customers’ increased awareness of potential efficiency gains as a result of professional management of MRO products and services is a driving factor behind this consolidation. The potential for streamlining the value chain (in a market as large as industrial consumables) is another reason behind the consolidation. B&B TOOLS is playing an active role in the consolidation of the market and the Group management believes that this consolidation has reached about halfway in the Group’s principal markets. The total market for industrial consumables for Nordic industry is estimated to amount to approximately SEK 45 billion.
The market comprises players with a variety of profiles:
• A few large companies with operations within a broad range of products. These companies typically have their own logistics and IT solutions. Some also have a local presence through proprietary resellers within a country or a region.
• Niche players that specialise in narrower product areas and typically market their products throughout a larger region or within a certain country. Competitive tools: competence within the product area and field of application.
• Local resellers that focus on the industry in the local area concerned. Competitive tools: proximity to customers and accessibility.
Market trends
Continuous efforts in the industry to streamline its MRO processes are now beginning to have an effect in the area of consumables. An increasing number of industrial companies are recognising the potential of integrating their consumables supply into their MRO processes in a professional manner. Another distinct trend is that customers want to reduce the number of suppliers, and consequently transferring greater responsibility to selected suppliers.
Moreover, many larger companies are demanding multi-location agreements, whereby a supplier satisfy the needs of all units regardless of where they are located within a country or region.
Another market trend is that individual reseller businesses are increasingly coming to the conclusion that they will not be able to invest enough in infrastructure and competence in the long term to maintain their competitiveness. This trend is contributing to the consolidation of the market.
More intense focus on services
The market for industrial consumables and components is a relatively mature industry. To a large extent, overall demand for products follows the general economic trends in industry and construction.
B&B TOOLS believes that services will become an increasingly important area of focus and will account for a progressively larger proportion of growth over time. The potential is significant. Products themselves will not create greater efficiency. However, new services, combined with traditional products, could generate substantial potential for industrial customers in terms of efficiency.
Competition
There are today no players in the Nordic markets with the same profile as B&B TOOLS. The only players that currently have a presence in all three of our principal markets (Sweden, Norway and Finland) and similar qualifications in terms of structure are the Swedish company Ahlsell and the German company Würth.
At every individual location, B&B TOOLS encounters competition from one or more local resellers that work in limited geographic markets. At the national level, the Group encounters a few major national players in each country. Many small and mid-sized niche players exist that normally remain within a welldefined product area.
In certain areas of technology, large international companies are also represented. These companies operate primarily within selected product areas, in which competitiveness is based on strong brands and a high level of niche expertise.
Although the number of players is substantial – and the competition intense – significant opportunities exist for a company to develop its market position and offerings – particularly for companies that have the capacity to participate in the ongoing consolidation in the market.