Q2 2018 Pulse of Lighting Report

Earlier this year we launched our quarterly Pulse of Lighting study in conjunction with William Blair, a leading investment analyst firm. The Q1 report may have surprised some of the larger lighting companies with feedback from distributors.  Now we have Q2 results.

• We recently received feedback from over 200 distributors, manufacturers and manufacturer reps. Key highlights of Q2 performance include:
• 5-7% sales growth (changes by audience).
  • Appears to be stronger sales growth from supply (NEMRA) reps than lighting agents
• Distributors continue to report a higher unit sales rate.
• Growth segments are the small to medium sized renovation projects with industrial retrofits gaining some traction. The large new construction market is the slowest growth segment.
• 34% stated that they have increased their inventory levels
• More reported an increase in their backlog
• Strong expectations for Q3 … above Q2 performance from both distributors and manufacturers
• Slow adoption and requests of IoT initiatives but decent support for lighting controls on projects
• Perhaps a decline in the share of sales for the top 7 lighting companies as distributor input report a 3.2-point decline (something we’ll watch in the future). The number of distributors sharing that 76%+ of their business was with these companies declined from 44% to 31%.  Question … who is the beneficiary and will the new “contractor grade” lines help these companies reacquire business?

Additionally, key comments included:

• Continued speed, and at times frustration, with the pace of new product introdutions.
• Some economic / marketplace concerns
• Continued concern and emphasis on imported lines
• Continued price erosion, albeit moderating a little (after a while, it needs to otherwise might as well give it away!)
  • More manufacturer comments lamenting price competition than distributor comments.
• Reps succeeding by “partnering” with selected distributors in a market … focusing on discretionary business.
• Manufacturers are seeing about 4% continued price erosion due to competition and a continued increased mix / substitution to lower average selling price (ASP) products. Additionally, they comment about the marketplace’s challenge in selling / appreciating “value”
• Some concern regarding tariffs. Currently, there are no tariffs on lighting sub-assemblies. Therefore, U.S. OEMs will be structurally disadvantaged having to pay a higher price for aluminum, steel, and LED chips.

The full report was shared with survey respondents.  To encourage survey participation there is now a nominal fee ($19) to access the quarterly report inclusive of respondent feedback and William Blair’s analysis and recommendations.

Click here to order the report.  Click here if you’d like to be added to the list to receive the survey at the end of Q3.

What are you seeing in the lighting space?