Water retail risks becoming two-tier market as innovation favours larger customers

Posted: Wednesday 27th February 2019

In April 2017 the water sector in England and Wales opened up to further competition allowing all eligible non-household customers to choose their provider of water and wastewater retail services. Previously, this was only reserved for business customers of large size, but now all eligible customers have the right to switch.

With this new competitive sector fully up and running, Cornwall Insight has published a review of new products and service offerings in the market in its latest insight paper Innovation in the Water Retail Market: One Year On, which is supported by Water Plus. The paper assesses the extent to which innovation and progress have occurred, considering this fundamental shift in the market.

Key findings from the report are:

Steven Britton, Senior Analyst at Cornwall Insight, said:

“Progress is being made across all areas of the market; however, it appears that quick gains have been hard to secure. Realistically, since the market opened in 2017 and over the past year the industry has been adjusting as retailers, wholesalers and customers get to grips with the new market. This has meant their attention has been more focused on getting the basics right rather than developing new service offerings.

“Despite improvements, several barriers to innovation in the market still remain. For instance, margins from simple retailing are low, which makes it harder for retailers to differentiate themselves. Poor data is still leading to inaccurate billing and frustrating efforts to provide new and better services to customers. Also, there is still confusion over which parties are responsible for certain issues.

“Until these barriers are overcome, the market will continue to find it difficult to reach its full potential. The most significant area for opportunity right now is customer service, as this is where the market has furthest to go.

“As things stand just now, there is a real risk of a two-tiered market developing as the savings opportunities are currently greater for larger organisations. From early on there were many reports and warnings to Ofwat that the market was working for large consumers, but SMEs were being left behind. While it is understandable that retailers will focus on those customers where water efficiency savings and margins are highest, the idea that it is harder to offer more bespoke services to SMEs will become a self-fulfilling prophecy if the market metrics and processes don’t change.

“The first year of the new competitive water market has showcased some of the innovations that are now possible. However, there is still a long way to go before all the benefits of the new arrangements are realised.” Normal 0 false false false EN-US X-NONE X-NONE




Read the magazine online

September 2019

About the magazine »
Magazine archive »


Advertisements

Information for advertisers »

Sykes Pumps
Xylem Prominent Fluid Controls Water Aid British Water Verder Pulsar Button June 13 Harvey Communications Huber buttonwood marketing wateractive
ATI UK