June 28, 2021
By David Gordon
The pulse of the lighting industry is strong. Channel Marketing Group’s recently concluded 2021 Q2 Pulse of Lighting survey revealed that each channel audience is seeing the lighting product category growing, on average, high single digits with over 65% reporting sales growth of over 5%. Many are reporting double digit growth, with some exceeding 20%. Similar, if not slightly higher, growth is expected in Q3.
Among the findings:
• All segments of the market are rebounding due to the economy re-opening and recovering. While the small and mid-sized renovation markets continue to be strong, the new construction elements of these sectors have also rebounded, as has the industrial renovation market. An emerging bright spot is that distributor respondents report indications that the large new construction market may be restarting. This bodes well for larger lighting companies.
• Distributor feedback is that larger companies are performing better and their entry into the contractor offering to compete with third tier imports has helped them, collectively, retain and in some cases recapture some market share. While all companies continue to experience some level of supply chain disruption, this is most prevalent for the smaller companies who have less ability to influence their suppliers.
• Distributor backlogs continue to increase due to supply chain disruptions. Some fear that the shipping delays, at some point, could push projects into 2022 given contractor labour challenges in completing projects.
• Pricing continues to go up. Most major manufacturers had price increases in Q2 and some (Acuity, GE Current, Universal Lighting) have already announced Q3 price increases. It is expected that more will occur in Q3 and almost all distributor survey respondents expect continued price increases in Q3. While this increases pricing now (and has some impact on inventory valuation), the question will become, “Will these price increases remain when commodity costs and supply chain issues revert (presuming they do)?” Will there be market discipline or a renewed race for the order?
• For this quarter, respondents were asked about lighting controls. One-third are seeing more quotation requests and more sales. However, most are not seeing much of a change. Marketplace adoption continues to be slow, but it is growing.
While the market is rosy, aside from the supply chain issues, respondent comments included:
• Activity continues to increase, and we are booking projects. The supply chain, and getting material is a challenge, and we are hoping does not jeopardize projects moving forward.
• Concern about rep consolidation and what that means for distributor support and market coverage of some lines.
• Material shortage is on front burner.
• Bid to project start has lengthened, Hyperinflation, Scarce resources.
• Component shortages, price pressures, clients slow to make purchasing decisions on large strategic projects, continued intense competition, limited “IoT” business case interest.
• Direct customer/end-user direct sales for LED products. Utilize energy rebate programs as incentive to customer management.
To obtain a complete copy of the 2021 Q2 Pulse of Lighting Report with the details and more commentary for only $29, click here to order.