Collective switching could be a major game-changer in the UK retail market

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1 May 2013, Gas, Electricity

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Datamonitor Energy's new research "The Rise of Collective Switching in the UK Market" analyzes the new phenomenon of collective switching initiatives that have been launched across Britain, mainly through the public sector. The Department of Energy & Climate Change has funded over 30 initiatives stimulating consumer groups and local authorities with the intention of reaching "unengaged" customers who have not realized the savings that can be made by switching energy suppliers.

The engagement of the major energy companies has been patchy; some have won switching bids, although smaller brands appear to be more nimble in their ability to appeal to consumers. The latest round of switching negotiations might see a change in this attitude, although claims that discounts offered to switching customers are unfair to longstanding "loyal" customers will have to be squared. To some, collective switching provides both large and small suppliers with the opportunity to grab market share prior to any further restrictions imposed by Ofgem.

Switching rates in the UK energy market are falling back from an initial high seen in 2006-07; however, this is apparent in the telecoms markets too. So is switching a good measure of healthy competition in a market? Some would argue that collective switching will not be the solution - the reduction in opportunities to "sell" the idea of switching (with no doorstep selling and fewer opportunities instore to persuade householders to switch) will have a long-term effect.

The next 12 months will be crucial: what will those taking part in mass collective action do on the anniversary of their switching supplier? Will they be persuaded to switch again, and if so will they be able to find as good a price as previously? These questions ensure that 2014 will be an interesting year.

"The Rise of Collective Switching in the UK Market" (EN00009-023) will be available from the end of April 2013. It examines the impact collective switching has had in the UK over the last 12 months, and considers the future of such initiatives. / / @DatamonitorEN

Source: MarketLine

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