Retail market activity stagnates as businesses hit by pandemic impacts

Ofwat’s fourth State of the Market report on the situation of the business retail market in England paints a picture of customers hit by Covid impacts, and a market that has progressed little and – in some areas deteriorated – since the third report.

Key findings for 2020/21 included:

• 63% of business customers’ ability to operate had been impacted by the pandemic; 61% stated Covid had also impacted their water consumption;

• awareness levels in the market decreased, with 43% of business customers aware that they have a choice of retailer compared to 58% in 2019-20 and 53% in 2018-19;

• the number of customers that were active in the last 12 months increased slightly to 9% compared to 8% in 2019-20 – the figure was 28% for large customers; and

• incumbent retailers remain responsible for the large majority of market share. New entrants gain around 1% of supply points each year; and of the total supply points lost by incumbent retailers, over half were acquired by other incumbents.

• On market frictions, Ofwat noted there has been significant progress on improving wholesaler/retailer interactions via MOSL’s Bilateral Hub. But it highlighted poor quality market data as still needing major attention.