In a nascent market like non-household water retail, the incumbent is king. Without the advantage of a ready-made customer base, new entrants have little choice but to fight for market share – be that through acquisition, in the case of Castle Water and Business Stream, mergers, or organic growth via a tempting customer offer. However, so far, the market has seen little differentiation between offerings.
Ofwat was expecting 30-40 applications for water supply and sewerage licences ahead of market opening. As it happened, there weren’t that many, and although the market operator MOSL and the regulator claim that there are 25 retailers in the market, the actual number of active companies is closer to 14 or 15. Meanwhile, MOSL figures show that 91,960 switch requests have been made since the market opened. This may sound like a lot, but it is important that we contextualise this number and remember that it is out of a possible 2.6 million SPIDs.
Despite a lower than anticipated influx of new entrants and modest switching rates however, aspirant new players are certainly making an active effort to chip away at the market share of incumbent business retail arms
All of the retailers in the market inevitably claim they will offer high levels of customer service, and respond quickly to customer contacts. They also say their businesses will bring something new to the market. However, it isn’t clear yet what that is. The closest any company has come to a unique offering is The Water Retail Company – whose offering is based entirely on lowering the bills of large water users through water efficiency measures. However, the company is as yet unable to extend its offering to smaller businesses, which chief executive Rupert Redesdale worries will be neglected in the market.
Will the latest additions to the market bring with them a genuine USP?
Utility Week rounds up six of the new entrants hoping to take the market by storm, and what they claim differentiates them.
Gains and losses in the open water market
As at 2 January 2018
- Founded: 2015
- Chief executive: Josh Gill
- Headquarters: Billingham, England
- Supply points gained: 13,357
Everflow was granted its licence for the Scottish market in October 2015. It has since sold water and wastewater services to businesses in Scotland, and was granted its licence for the English market just before it opened.
The retailer is arguably the most successful new entrant to the English market, having gained the highest net number of supply points since the market opened – 13,357. Some notable contract wins for Everflow have been the Hurlingham Club in London, car rental company Europcar, and Newcastle United Football Club.
Clear Business Water
- Founded: 2013
- Parent company: Verastar
- Chief executive: Chris Earle
- Headquarters: Lanarkshire, Scotland
- Supply points gained: 2,816
Clear Business Water has been active in the Scottish open water market for a number of years and, as such, it has a relatively well-formed customer proposition. The retailer is part of Verastar – a little-known company trading under many different brands in the telecoms, water, energy and broadband space, and focusing on small business customers.
The company believes its top competitors to be the incumbent suppliers, at least when it comes to the English water market, there is lack of competition because of the tight margins providers face. I would say our biggest challenge is customer apathy.
Looking at MOSL’s numbers, Clear Business is the fourth most successful retailer in the market so far – after Everflow, SES Business Water and Business Stream – having made a net gain of 2,816 customer supply points.
The Water Retail Company
- Founded: 2016
- Chief executive: Rupert Redesdale
- Employees: 6
- Headquarters: London
- Supply points gained: 364
The Water Retail Company is the brainchild of Energy Managers Association chief executive Lord Rupert Redesdale and former Waterwise managing director Jacob Tompkins. The company’s primary focus is on helping larger organisations save water – and, therefore, money – through improved efficiency measures.
“Our approach is very straightforward,” chief technology officer Tompkins tells Utility Week’s sister title Water.Retail. “No complicated contracts, no spend-to-save options, no fancy websites. We simply offer a wholesale charge plus percentage model and as part of that we do water efficiency and implement technology for free.”
One of the Water Retail Company’s aims, set out when it started up, was to gain 20 businesses in the first year. According to MOSL data, it has gained 364 supply points. However, it is impossible to translate this into customer numbers. The firm has a target to secure £30 million of turnover in its first year, £100 million in its second year and £200 million in year three.
The company’s founders are outspoken critics of the retail market. Redesdale claimed, before the market opened, that it would be a “damp squib”. He also insisted the 36,000 switches reported by MOSL in its first quarterly report “is not success”.First Business Water
- Founded: 2017
- Employees: 8
- Managing director: Nish Dattani
- Headquarters: London
- Supply points gained: 6
First Business Water evolved from energy and water efficiency consultancy Green Assessors, which works with businesses to help reduce their energy consumption. Managing director Nish Dattani said when the company was granted its licence late last year that, having evolved from a background in energy efficiency, sustainability is “at the core of our company values”. He said: “We not only want to supply water but empower businesses to use water more efficiently.”
Dattani tells Water.Retail that the company is investing in innovative tools and software that will “allow customers to understand and benchmark their usage against industry standards”. Gaining a water supply and sewerage licence was the first step in the firm’s journey to become the “UK’s leading water retailer”.
The latest figures published by Market Operator Services Limited (MOSL) show that First Business Water has won 6 supply points in the market so far. Asked if the company has any plans to operate in other markets, Dattani tells Water.Retail it is “open to all opportunities in the future”. However, he adds, “at present, our priority is to do our best to serve customers in the water market, listen to them, and help them benefit from competitive pricing and enhanced customer service.”
- Founded: 2013
- Parent company: Yü Group
- Employees: 105 (Yü Group)
- Chief executive: Bobby Kalar
- Headquarters: Nottingham
- Supply points gained: 0
Yü Water is the latest addition to the Yü Group portfolio. The Nottingham-based business recently received its water supply licence (WSL) from Ofwat. The company is too new to have gained any customers yet. It is planning to commence supply to selected business customers in spring 2018, ahead of a wider launch later in the year.
Yü Group describes itself as a “disruptive brand” and says it is fast gaining a reputation as a “supplier of excellence” in the commercial gas and power markets. Chief executive Bobby Kalar says the company is already “making itself known as one of the fastest growing business energy suppliers in the UK”. “The launch of Yü Water will allow Yü Group to extend its principles of excellent service and competitive prices into the business water market,” he tells Utility Week.
The plan is that Yü Water will complement the group’s existing commercial gas and electricity supply business, Yü Energy, and allow the firm to offer a multi-utility service to businesses, who will be able to access “bespoke utility packages across gas, electricity and water from one supplier with one point of contact to suit their individual needs”. “This will make it easier for businesses to manage their utilities, allowing them to focus on running their business,” says Kalar.
Yü Group is one of the first suppliers in the UK to offer all of these utilities under one roof. Others include Wave – a joint venture between NWG Business and Anglian Water Business – and Business Stream, as part of its partnership with Utilitywise.
- Founded: 2017
- Managing director: Nathan Welch
- Headquarters: Cardiff, Wales
- Supply points gained: 0
Aquaflow Utilities is the newest retailer to the water market, having received its licence at the beginning of January. Hailing from South Glamorgan, Wales, the retailer claims to be “committed to offering eligible businesses in England and Wales exceptional levels of customer service, a highly competitive pricing strategy and a technology and efficiency driven approach to reducing their water consumption”.
The group’s managing director Nathan Welch tells Utility Week’s sister title Water.Retail the company will be “unswerving in its commitment to offering timely, accurate billing and to communicate clearly with its customers”.
Asked what his view on the number of retailers operating in the market, he says the company is “confident in its offering”, and “not unduly concerned” about retailer numbers. The company is too new to have won any customers yet.