With 41% of respondents to Mintel’s COVID-19 Tracker stating that they were avoiding the use of cash where possible as of mid-November 2020, we expect an acceleration in the declining usage of cash for as long as COVID-19 remains a public concern.

COVID-19 has caused immense disruption to the economy. For the manned security market this impact has been indirect and felt through its effects on other businesses, such as in the retail and leisure sectors that manned security operators serve.

The financial pressures induced by the pandemic will draw clients’ focus towards cost, and favour the implementation and integration of digital security system devices to enhance value without introducing significant costs through additional personnel.

With further increases to the minimum wage expected, labour costs (particularly in the cash-in-transit segment) will be a serious drag on the sector’s profitability. This will incentivise investment in technological solutions, such as smart safes, that enable more efficient monitoring to accurately determine the number of collections required, and therefore reduce labour costs.

The implementation of similar security devices in tandem with manned guarding activities will also offer opportunities to reduce the impact of labour costs by enhancing the capability of existing personnel. The digital integration of security devices, meanwhile, promises reductions in maintenance costs over the long term, while offering enhanced capabilities such as AI and data analytics.

• The impact of COVID-19 on the manned security market

• Trends in cash usage and what it means for the future of the cash-in-transit segment

• Developments in the UK prison system and what it means for the custodial services segment

• How the emergence of digitally-integrated security systems will shape the sector’s future

• Changes in industry structure and their drivers

• Company activity and responses to COVID-19

The first COVID-19 cases were confirmed in the UK at the end of January, with a small number of cases in February. As the case level rose, the government ordered the closure of non-essential stores on 20 March.

A wider lockdown requiring people to stay at home except for essential shopping, exercise and work ‘if absolutely necessary’ followed on 23 March. It wasn't until 15 June that non-essential stores were allowed to re-open, followed by pubs, restaurants, hotels and hairdressers on 4 July, and many beauty businesses on 13 July.

By September, it had become clear that the UK was at the start of a second wave, and social distancing measures were intensified. Continued increases in infection numbers led to Wales implementing a two-week national lockdown from 19 October, England announcing a full month-long lockdown from 5 November, and Scotland introducing a new five-level system of coronavirus restrictions.

In November, it was announced that the month-long lockdown in England would come to an end on 2 December as planned. However, the country was set to return to the regional tiered approach in force before the lockdown, meaning that large parts of the country still faced heavy restrictions.

Economic and other assumptions

Mintel’s economic assumptions are based on the Office for Budget Responsibility’s central scenario included in its November 2020 Fiscal Sustainability Report. The scenario suggests that UK GDP could fall by 11.3% in 2020, recovering by 5.5% in 2021, and that unemployment will reach a peak of 7.5% by Q2 2021, falling to 6.8% by the end of 2021.

The current uncertainty, however, means there is wide variation on the range of forecasts, and this is reflected in the OBR’s own scenarios. In its upside scenario, economic activity returns to pre-COVID-19 levels by Q1 2021. Its more negative scenario, by contrast, would mean that GDP doesn’t recover until Q3 2024.

The Welsh and English lockdowns will inevitably have an impact on GDP and consumer finances, potentially shifting the UK closer to the OBR’s downside scenario. The market forecasts in this Report reflect this new reality.

From the start of the outbreak, we have made the assumption that an effective vaccine would not be widely available until well into 2021. On 9 November, Pfizer and BioNTech announced highly encouraging results from trials of their vaccine, followed by similarly positive results from Moderna. This means that a vaccination programme may be brought forward, but a full rollout will take many months, meaning that Mintel is still making the assumption that we will be living with COVID for some time to come.

For the purposes of this Report, Mintel has used the following definitions:

Manned guarding includes uniformed guards and guard patrols, with or without dogs, and either permanently or periodically on site. Also included are guards and plain-clothes detectives in retail premises, keyholders, and personnel monitoring and responding to alarms. The manned guarding market also includes personnel involved in air traffic security, such as airport guarding, and baggage, cargo and mail screening. Diplomatic and anti-terrorist security, involving vehicle escort services, anti-bug sweeping and the detection of explosives, are also included in the sector.

Cash-in-transit involves the transportation of cash and valuables. The sector includes the counting and processing of money, and the restocking of bank and building society cash dispensers.

Custodial services include the design, construction, management and financing of private prisons, together with prisoner escorting and curfew enforcement via electronic monitoring.