January 8, 2024
Pulse of Lighting: The Latest Report
Author: David Gordon
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Each quarter Electrical Trends issues the Pulse of Lighting report based on a survey of electrical industry professionals.
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The survey's audience tends to skew towards electrical distributors and the manufacturers and agents that sell standard general lighting products for distributor inventory.
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Below are some of Electrical Trends' insights from the just-published quarterly Pulse of Lighting report:
According to Electrical Trends' latest Pulse of Lighting report, 2023 finished slow for lighting manufacturers and the outlook for the lighting market among various lighting stakeholders in 2024 is cautiously optimistic, with expectations of low to mid-single-digit growth.
The market in the first half of 2024 is expected to be challenging, primarily due to macro-economic factors like interest rates and supply chain issues, including switchgear delays and labor constraints. However, there is hope for improvement in the second half as interest rates might drop. Growth areas include renovation projects and sectors like education, healthcare, and multi-family housing, particularly in stronger economic regions like the Southeast and Southwest.
According to the report, the market remains competitive, with manufacturers and distributors focusing on key projects, new product launches, and lighting controls to drive growth. Despite some layoffs and strategic price adjustments, overall price increases are not anticipated to be significant in the near term.
Q4 Pulse of Lighting was Weak For Manufacturers; 2024 Projection
It’s time for the Q4 Pulse of Lighting report, with a projection for 2024.
But first, a belated Happy New Year and I’m sorry haven’t shared anything in a bit, however, between some projects that had to get finished the week prior to the holidays and being sick over the holiday season (but thankfully not Covid or the flu), productivity wasn’t what it should be, but …
One of the projects that was completed before Christmas was our Q4 Pulse of Lighting Report. We had a strong response, providing good insights into the end of the year and insights into what electrical distributors, lighting manufacturers and supply reps and lighting agents are thinking for 2024.
Closing the Year … Apparently on a Whimper
First, it’s important to remember that the results are national. The reason I mention this is that there is disparity in some of the data. There are some companies that are doing well, others doing poor. Anecdotally we saw some regionality. We also noticed that conglomerates and architecturally-focused (spec) lines seemingly underperformed versus lines that distributors consider more as “value-engineer” lines. The reason … the small and mid-sized markets are performing better than the large market and the new construction market continues to be more challenged than the renovation market.
The macro-economic environment (interest rates), coupled with supply chain issues (switchgear), and contractor labor, continue to constrain the market.
Q4 Feedback
- Distributors
- Distributor performance exceeded expectations, up mid-single-digits, however, if some top performers were excluded, response would be low single-digit. While higher than expected, this could be due to 1) distributors are based upon billings, which has a time lag, and could represent backlog fulfillment, 2) could be filling small to mid-sized discretionary orders from stock. The results could also have been skewed due to responses from the Southeast / Southwest, where markets have been stronger.
- Almost a third of respondents shared that thru-stock sales had increased and 40% commented that they have had projects delayed due to “other products” (switchgear) delays and 20% stated that they have had some projects cancelled due to costs or labor issues.
- Most project-types reported a “slowing” environment.
- SomeQ4 inventory adjustments for year-end.
- VE activity is increasing.
- Key verticals are education, healthcare, multi-family in the Southeast and Southwest, some industrial
- Distributor performance exceeded expectations, up mid-single-digits, however, if some top performers were excluded, response would be low single-digit. While higher than expected, this could be due to 1) distributors are based upon billings, which has a time lag, and could represent backlog fulfillment, 2) could be filling small to mid-sized discretionary orders from stock. The results could also have been skewed due to responses from the Southeast / Southwest, where markets have been stronger.
- Manufacturers and Reps / Lighting Agents
- Flat market with only a quarter of respondents having more than 5% growth according to manufacturers whereas reps / lighting agents reported higher, which can be an indication of which suppliers are “winning” given that reps / lighting agents represent a broader array of lines as well as more VE-related lines.
- A third of manufacturers shared that their backlog had decreased.
- While quoting activity has slowed, the quote to close cycle has lengthened
- They are seeing more interest in BABA compliant products
- Some manufacturers are using “strategically using pricing” (SPAs) and being aggressive on selected projects. Indicates a competitive market but an unwillingness to drop pricing overall. Also indicates supporting selected distributors in specific markets.
- Some layoffs were reported
- Target, product-specific price increases reported from some manufacturers, but not widespread.
- Reps report greater VE acceptance.
- Additional input
- Price increases were inconsequential, essentially reporting flat.
Looking towards the 2024 Lighting Market
There may be some light at the end of the tunnel, but it isn’t expect to reveal itself until the second half of the year.
Projections included:
- Low to Mid-single-digits for the year reported by all audiences
- 50-55% of manufacturers / reps reported that specifiers are expressing a concern / slowdown over the next 6 months.
- Few expect price increases in Q1 and, those that due, question what will be realized.
- Top 3 manufacturer lighting drivers for 2024 are:
- New product launches
- Focusing on key projects in the market
- Change in sales representation
- Top 3 rep / agent lighting drivers are:
- Focusing on key projects in their market
- Selling lighting controls
- Supporting new products
- Top 3 distributor lighting drivers are:
- Focusing on key projects in their market
- Targeting specific vertical markets
- Selling lighting controls
- (Supporting new products was tied for 4th.)
For distributors it’s a tale of where you are, what projects you are focusing on, and whom you are aligned with (meaning contractor) to win the business. For manufacturers, it’s a slugfest with architecturally-oriented companies the most impacted.
The lighting market continues to be impacted by switchgear project delays; however, this is an uncontrollable event. Looking to 2024, it’ll be a tough market for the first half but as interest rates drop, it is hoped that the market will pick up in the second half of the year. The renovation / discretionary project aspect of the market is where there continues to be opportunities, especially in markets where the economy is better.
The report is available for $35. Click here to purchase the report.
