Security industry surviving and thriving despite COVID-19
While the world at large has been turned upside down by COVID-19, the security industry is performing relatively well, according to experts
Despite the COVID-19 pandemic’s detrimental impact on the world at large, the security industry continues to perform relatively well, according to experts.
Alper Cetingok, managing director, head of diversified industrials at Raymond James, said that the security industry has always been resilient — an attribute that is carrying the industry through the pandemic.
“It’s pretty rare that organizations or even individuals decrease their spending on security, because it’s such a mission critical function for them,” Cetingok said in a recent interview with SP&T News. “There’s certain sectors within security that are, quite frankly, thriving in this environment.”
According to Cetingok, one such sector is perimeter security, which has experienced positive momentum due to mandated lockdowns that forced the closure of many businesses.
“In many cases, we have observed that business owners or decision-makers have elected to increase their security, particularly in environments where high-value assets reside outdoors such as car dealerships or construction sites, because they’re just simply not around to watch and protect their merchandise.”
Cetingok also shared that other recent developments have had an impact on the security industry.
Referring to the recent social unrest in the United States, Cetingok said that recent events have helped to heighten attention around security and ensuring that people and businesses are protected.
“We’ve seen guarding companies get an uplift,” Cetingok said. “The logic is that if there are going to be less police officers available to respond to incidents, then business owners or Security industry surviving and thriving despite COVID-19 decision-makers have to take matters into their own hands, leading to potentially increased spending on outsourced guards to provide added security.”
While the security industry is surviving, Cetingok argues that some system integrators have not fared as well during the pandemic due to the project-based nature of their businesses.
“Those organizations that have more of a recurring revenue, managed services business model have prospered, whereas the ones who are purely project-driven have really had a tough time,” Cetingok said.
Blake Kozak, principal analyst at Omdia and author of Residential Remote Monitoring Report – 2020, observed that the COVID-19 pandemic has had the biggest impact on door-to-door sales and new installations, while noting that the DIY (Do-It-Yourself) trend “can potentially thrive during this time, especially for those that rely on the professional alarm monitored hardware.
“DIY providers like Comcast and Rogers, and other providers with traditional security providers continue to do quite well and I think that one of the main reasons for that is that they have that longevity and the brand recognition,” Kozak said.
Kozak predicts that in a post-COVID world, the biggest change in the industry is the same level of people going into the office as there were prior to the pandemic.
“Dealers are going to have to figure out how to keep their bases engaged to arm and disarm the system, which could mean focusing on more home automation and keeping things comfortable within the home,” Kozak said.
While it remains to be seen if the security industry will continue to thrive as the year rolls out, Cetingok is optimistic that the industry will see more investment opportunities.
“We are encouraged by the current transaction activity levels, and I think you’re going to see more and more investment in 2021 which will likely include first-time investors building exposure to the industry,” Cetingok concluded.
“We’re fully confident, based on all of our conversations, that the industry will grow over the near- to intermediate-term, leading to strong M&A and financing activity for a sustained period of time.”