2008 Registration Document - Rexel

associations. These purchasing associations includenational distribution networks as well as independentdistributors that manage one or more branches.The fragmentation of the market for the professionaldistribution of low- and ultra-low voltage electrical productsin certain countries, as well as the quest for productivitygains and economies of scale favor the consolidation ofdistributors. The potential consolidation varies from countryto country.Various competitive positionsCompetition in this market is connected to differentstrategic choices made by the Rexel Group and its maincompetitors.These players have taken on different market positionsbased on, in particular:− their targeted customer base (electricians, key accounts,contractors operating in a number of markets, institutions);− their product offerings (aimed at end-users in generalor with a concentration in certain end-markets or endmarketsegments) and services (for example, training ofcontractors);− their commercial structure (number of travelling salesrepresentatives, number and size of branches, callcenters and technical support);− their logistics organization and distribution channels(density of branch network, size of warehouses, deliverymethods); and− their purchasing policies (number of suppliers andpartnerships with the main market suppliers).While certain market players, similarly to the Rexel Group,focus on professional distribution of electrical products,other distributors offer less comprehensive product rangesand cover different segments of the market (such asconstruction or plumbing materials, industrial equipment,maintenance and repair products).3.2.1.2 Breakdown of the professionaldistribution marketGeographic breakdown of the professionaldistribution marketBased on the Rexel Group’s estimates, North Americaconstitutes the largest market for professional distributionof low- and ultra-low voltage electrical products worldwide,representing approximately 38% of the market in 2008(€62 billion). In 2008, Europe represented approximately29% of the market (€47 billion) and the Asia-Pacific region(excluding Japan) represented approximately 13% of themarket (€22 billion). The Rexel Group estimates that theJapanese market was worth approximately €6 billion in2008, while the other geographic zones (Latin America,Africa and the Middle-East) would be worth approximately€27 billion.Breakdown of the market of professional distribution of electrical products by major country (1)CountryUnitedStatesGermany Italy France UnitedKingdomCanadaSize (billions of euros) 58 9 7 6 4 4 10(1) Source: Rexel estimates.ChinaEnd-markets for the installationof electrical productsThe professional distribution of electrical productsencompasses three end-markets in which customers ofdistributors of electrical products operate:− the industrial market, which covers the use of electricalproducts in the construction, expansion, maintenance,renovation and compliance upgrades of factories andother industrial sites;− the commercial building market, hereafter referredto as the “commercial market”, which covers the useof electrical products in the construction, expansion,maintenance, renovation and compliance upgradesof stores, schools, office buildings, hotels, communitybuildings and transportation infrastructure; and− the residential building market, hereafter referred to asthe “residential market”, which essentially covers the useof electrical products in the construction, expansion,renovation and standardization of houses, housingdevelopments, apartment buildings and public housing.Rexel believes that the breakdown of Rexel Group sales in2008 by end-markets would be as follows:End marketReportedIndustrial 32%Commercial 43%Residential 25%REXEL 2008 | PAGE 29