The safety and security sector represents 23 different security segments in France, which can be loosely grouped into the following areas: anti-terrorism, electronic security, monitoring, guarding, physical security, health and safety products, fire security and cash in transit. The total market was valued at approximately 16.6 billion Euro in 2007 with a total growth valued at +6% over the previous year.
Within the French safety and security industry, the segments enjoying the highest growth rate are anti-terrorist equipment (+21.6% in 2007), personal protection services (+16.4%), video surveillance (+15.1%), and private investigation services (+11.7%). Segments such as industrial security materials, fire equipment, retail theft protection, remote industrial and residential monitoring services, personal protection equipment, anti-intrusion alarms and guard services remained flat or showed an a decrease in 2007. Overall growth is expected to rise by about 5 percent in 2008 and slightly lower in 2009. This growth is mainly driven by just a few segments of the market and price wars are common in this highly competitive environment. In fact, only about 70% of companies operating in the security sector in France in 2007 turned a profit. In many segments such as fire protection and guard services, there are simply too many players on the market; fierce competition coupled with low prices continues to drive a high number of firms out of business.
The evolution of this market is closely linked to France’s general economic growth, which is weak. While over the last few years France has invested heavily in security infrastructure and has caught up to her European neighbors, that spending is now slowing, especially in segments such as monitoring or anti-intrusion equipment. The sector has also suffered from a price war over the last several years, driven by competition from Asia, which has slowed growth in several areas, such as access controls and video surveillance where price is usually the deciding factor, according to industry studies. Furthermore, the global financial crisis is sure to negatively impact the industry; the French government is expected to maintain most of its orders, but inevitably will insist on price renegotiations and decisions and investments will be spread out over longer periods.
The safety and security market in France is thus divided into two distinct parts; a small number of relatively healthy segments and a large number of areas where the situation is morose. The birth of security industry giants, which have greater financial resources and which are capable of deeply influencing the market, have shut out many of the smaller players. The homeland security/anti-terrorism segment is driving the market; but contracts for port, airport and other highly sensitive sites require complex, sophisticated systems that integrate technologies from diverse origins.
Since 2006, penetration of the security market by foreign companies has stabilized in France, but at an extremely high level. Entire sub-sectors of French private security industry in France are dominated by foreign groups, as opposed to less than 20 percent overall ten years ago. For example, in the cash in transit sector, non-French groups control 86 percent of market share in 2008. Similar ratios exist in equipment/services for, professional monitoring and many other market sub-sectors. Overall, foreign firms control more than 40 percent of the industry. Fortunately, there are a few bright spots; homeland security equipment demand is expected to be sustained, as with residential monitoring, CCTV, especially for digital systems, and industrial security materials (lighting, gas detectors, hazmat warehousing equipment, etc). The subsector expected to suffer the most is guard services, as prices are in a downward spiral.
U.S. equipment and security technologies are well known for their innovation and quality. Imports should remain strong, although competition is extremely severe from both French and third country sources.
Homeland Security products, including those for the police and other public order entities, enjoyed a spectacular growth rate, at 21.6%. The persistence of terrorist threat has fed the need to pursue investment in protective measures. The market is sustained by sales of global solutions, integrating several types of equipment (cameras, biometric access controls, physical barriers, for example), which are interconnected by customized software also able to manage vast databases of information on individuals – travelers, employees, etc. While this sector represents the most opportunity for sustained growth in the industry, it is largely served by French giants such as EADS, Thales, Sagem, Gemalto or Canberra (Areva Group), making it very competitive for American firms.
Amongst the many technologies, the French are particularly interested in automatic facial recognition systems, tracking video systems that analyze behavior and intelligent cameras. Biometrics and RFID technologies are generating a plethora of new interesting products, such as “all in one” cards for health insurance, transportation services or identification, for example. Closed Circuit TV (CCTV), especially for digital systems, represents an ongoing growth area in the industrial security market in France. Municipalities continue to install IP CCTV systems.
In the mid to long-term, the residential market represents an enormous potential for suppliers of surveillance services – far fewer French homes are equipped as opposed to in other EU countries. The high growth in high-speed Internet connections is driving demand, as the major French telecom service providers are now teaming with home monitoring service firms to provide widespread marketing and low cost services via high-speed connections. The lack of equipment in French homes is equally applicable to basic protective devices such as anti-intrusion alarms, fire alarms or fire extinguishers, none of which are required by French home insurance policies and with which few French homes are equipped at this time.
The market in France is extremely fragmented and competitive, and it is very important to work with a local partner or through a local sales office, which many U.S. firms choose to establish. Some kind of local presence becomes essential when working with government ministries or responding to public tenders.