Are LEDs Lighting Up Your Sales?

We’re continuing to see a correlation between a distributor’s focus on selling LED lighting and their sales performance.  Perhaps it creates an opportunity to get in front of a customer and eventually sell them additional products; perhaps it’s solely to address their lighting needs; perhaps the customer just is willing to hear something new; perhaps because the typical LED sale is a higher dollar value, but, whatever the case, there is a correlation.

While this should not be construed that LEDs are the right lamp for every application, it is an indicator of consumer awareness (after all, commercial buyers are also consumers) and an interest in cost-effective energy efficiency initiatives (sometimes financed by rebates).

Over the past month we’ve observed a number of interesting LED-oriented activities / articles we felt worthy of mentioning:

• It looks like Cree poked the proverbial bear. Philips’ LEDs are now very prominent at Home Depot and, perhaps more importantly, Philips is now actively advertising their LEDs on television. Could this turn into “battle of the bulb”?  Can Cree financially compete? … enough to win the awareness war (they’ve definitely earned a place at the table).
  • And click here if you want to read an interesting article in Fast Company that mentions Philips as one of the most innovative companies of 2014.
    • Seems like their PR engine is revving up to compete with Cree’s, which highlights case studies and technological advancements.  Both appear to be outpacing the competition (or at least out-marketing!)
• Speaking of Cree, there was an article in yesterday’s WSJ entitled “An Incandescent Stock Darkens Cree’s Bright Idea for LEDs”.  Some interesting excerpts:
  • The article comments on its decline in gross margins as it transitions, somewhat, from a semiconductor line into what is termed a “commodity” business with “thin” margins. Its corporate margins have gone from 33.7% to 27.9% (sounds like ‘welcome to Home Depot’ and possibly the cost of continuous product research, development and new production methodologies whereas most in the electrical industry, and lighting, were used to longer product life cycles where they could recoup development costs).
  • According to Canaccord Genuity, 667 million LED bulbs will be sold worldwide … almost a 100% increase over last year (correlation to distributor sales?)
  • It’s felt that Cree’s entry into Home Depot is essentially a marketing effort (my term) to gain increased awareness for the commercial market (which supposedly has better margins for them).
  • The article mentions that the commercial market has many more competitors and will take more time for Cree to develop.
  • Personally, I wouldn’t be surprised to see LED prices at the consumer level drop further. As consumers we’ve been conditioned to purchase “inexpensive” lamps for our homes … the incandescent lamp set the bar and eventually CFLs got close.  The initial cost to retrofit a home can be expensive (and consumers consider their out of pocket cost more than the lifetime value proposition) and then there is the issue of lamp compatibility and getting the same type of LED lamp for all socket sizes (consider different bases for candelabras, spots, A lamps, etc) … some also consider this the “spouse test”.
• Speaking of LEDs financial costs, I received BriteSwitch’s newsletter. BriteSwitch helps companies find lighting rebates. Some tidbits:
  • Here’s a link to information on LED rebates
  • And here’s information on lighting rebate trends for 2014
  • The question then becomes … are you THE lighting rebate information source for your customers? for your marketplace?  Is your marketing department promoting this to your customers? How do your salespeople / branches become aware of this information?
• NAILD (National Association of Independent Lighting Distributors) is holding their annual meeting next month in Florida. The agenda has a strong LED educational focus headlined by
  • Rogier Van der Heid from Philips speaking on The Future of the Distributor is Now with a highlight on how will distributors create value in a market where manufacturers increasingly reach out to the end user themselves.
  • Jack Curran on Lighting Has Arrived – Now What? (focused on LED as Jack is known for work at the Department of Energy).  He’ll touch on the likely future of LED lighting, in residential and commercial / industrial market segments. He will discuss new skills and capabilities that distributors must master to succeed in this future LED world. Topics to be covered will include a vastly expanded lighting controls landscape; color and human factors; the concept of Personal Lighting; and the sensors that, by necessity, become an integral part of the future lighting marketplace.
  • Plus there will be workshops on LED standards, lighting controls and selling lighting services
  • NAILD is offering non-members “day passes” for only $350/day to attend the conference (and see many lighting manufacturers) or a non-member can attend the entire conference. If you attend the entire conference, a portion of the fee can be applied to membership if you decide to join.  If you are a distributor in the area or have a commitment to the LED market, I’d encourage you to attend. Contact Linda Daniels at NAILD for more information.
  • And click here for their archive of LED articles from their weekly newsletter. A quick compendium of useful information.

What are your observations regarding the LED market, Cree v Philips? Are you marketing rebates (and LED rebates) as a sales tool?