Your Lighting Line-Up in a Changing World

The lighting industry, known for perpetual change given the rapid adoption of LEDs (think of the frequency of new products let alone new manufacturers) continues to evolve. Consider recent developments of GE Current acquiring Hubbell Lighting as well as the recent LightFair show. An ever-changing market means that distributors need to constantly review their line-up (linecard) to determine which lines to support.

This is important given that distributors seem to go one of two ways.  Either they

• Proactively manage their linecard and try to have some discipline, providing direction to their lighting specialists and sales organization while recognizing that there will always be some exceptions as well as lines need to engage with that are specified by the customer, or
• “Let the inmates take over”. This means that they buy / sell from almost anyone who will authorize them / accept their POS or give them a “good deal”. Sales and lighting specialists acquiesce to customer and manufacturer rep requests and want to play “the nice guy”.

The first approach is disciplined and provides a profitable approach to the market where the distributor should be in control of inventory, pricing, training, marketing, and sales guidance … with the manufacturer / reps’ assistance.

The second approach leads to either too much, or too little, inventory and supplier / agent-driven goals and inevitably lower profitability for all (but some sales for many!)

Schaedler Yesco recently announced that they took a disciplined approach to their linecard and added Signify. Their press release shared:

“If we’ve learned anything over the last 18 months, it’s that our customers rely on us to provide them with the products and services they need to succeed,” said Farrah Mittel, President. “We need to be diligent in maintaining a relevant offering and reliable inventory.”

With no shortage of lighting manufacturers in today’s marketplace, determining the best solution for their customers’ needs was critical in retooling the company’s lineup.

“We’re very pleased to now stock Signify’s Philips and Advance brand lighting products,” explained Steve Shepps, VP of Construction and who is responsible for Schaedler Yesco’s lighting strategy. “Signify is a world leader in lighting innovation, and brings a forward-thinking approach, combined with high-quality, energy-efficient, wireless and wired solutions, that we and our customers need, to grow now and in the future.”

Signify rounds out Schaedler Yesco’s professional offering, which also includes Acuity Brands and Hubbell Lighting.

“We are proud to strengthen Schaedler Yesco’s offering with our trusted Philips and Advance brands,” said Keith Eagle, Vice President and General Manager, US Professional business, Signify. “Customers can feel confident about their choice of quality, sustainable and connected lighting products and solutions from Signify.”

Why A Change in The Lighting Line-Up?

Given that it’s a little unusual for a distributor to share that they added a line, and after talking to others in the marketplace, there seems to have been some “shuffling of line-ups / relationships” in the market (and we understand that the issue was not due to representation issues) so we reached out to Schaedler Yesco and asked “In considering lighting lines, what criteria did you use in reviewing various lines? What advice would you have for other distributors as they evaluate their linecard?”

Steve Shepps, VP of Construction for Schaedler Yesco and responsible for coordinating Schaedler Yesco’s lighting strategy in conjunction with sales, marketing, purchasing and finance, shared how they evaluate which lines to support. The criteria, in no order, include:

• Cultural fit with the distributor
• A desire to support manufacturers rather than “resellers”, while recognizing that value-oriented lines will trend more to resellers. For “top tier” lines want manufacturers.
• A demonstrable commitment to product innovation and R&D
• A preference for manufacturers that are with agencies that carry multiple lighting lines (to support a project) and, ideally, carry some supply-oriented lines. When asked “why”, Steve commented that agencies with supply lines are calling on their branches regularly so can support the branches on any discretionary needs. These types of firms typically have a strategic relationship with the distributor.
• Accurate manufacturer data. Schaedler Yesco believes in verifying manufacturer data and does its own photometric studies.
• Consider the correlation between performance vs price and the appropriateness of that correlation. Is it “top performing” or a value for their customers while delivering performance?
• Marketplace acceptance of the brand and how well it will be supported with marketing support for the distributor
• A desire to limit the number of competitive SKUs stocked, especially those at the same price point.
• The manufacturer must be, operationally, easy to do business with (or easier than other incumbents.)
• There must be appropriate back-end support (recognizing that Schaedler Yesco is an AD member.)
• Genuine executive support, commitment, and relationship with the manufacturer (as the power of relationships is still important.)

Schaedler Yesco wants a balance of brand names and “value-oriented brand names” to support, conceptually, a two-tier (or a multi-tier) pricing strategy. Steve is not a fan of carrying many “me-too” companies, especially in the fixture space.

The “whom” to align with is dependent upon a distributor’s strategy. Schaedler Yesco is self-sufficient in many areas and has a strong lighting group that can do everything from design to layout, from audits to order fulfillment and is known regionally for their lighting support. For this reason, they are a “desired” distributor and can support multiple top tier lighting lines while providing all of them with growth opportunities. Inevitably, there is enough business to go around and keep all content.

After a lengthy review, Schaedler felt it was time for a change based upon its criteria. Unfortunately, there is little that lasts forever.

The key, as a distributor, is to become a “desired” partner and, when you (a distributor) are in this role you should be asking prospective suppliers “what is your value proposition?” And existing suppliers should continuously remind their distributors, and expand upon, their value proposition.

Sometimes change is needed. Sometimes less is more. Sometimes it’s all about “fit”.

Questions to Ponder

• Distributors … who manages you lighting line-up? You? Your sales organization? Your suppliers?
• Manufacturer … can you answer, “what is your value proposition” or “why you” and how you can enhance a distributor’s linecard or, is it all about you?
• Reps / Lighting Agents … remember the game “monkey in the middle?”
  • Do you understand your distributors well enough to know their decision criteria so that you can communicate this to your manufacturers? Do you know their value proposition? Will the factory listen when you express distributor needs? Can you bring the parties together so that 1+1=3?