July 3, 2024
Pulse of Lighting: The Latest Report
Guest 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, the US lighting market remains "challenged." The market continues to lag behind the overall sales of the electrical distribution industry, with distributors and manufacturers reporting flat to nominal growth. Representatives, particularly those dealing with architectural lighting, noted mid-single-digit declines.
The market's price competitiveness and reliance on large projects, which are currently underperforming, further exacerbate the situation. Despite cautious optimism for nominal growth in Q3, factors such as economic concerns, interest rates, and limited restocking by distributors contribute to a conservative outlook.
Challenged Lighting Market Affirmed
The US lighting market continues to be “challenged” according to our Q2 Pulse of Lighting (click here if you’d like to order for only $35) report and affirmed by this Acuity’s Q3 earnings report this morning (they are on a fiscal year.)
Based upon information from DISC, the lighting market continues to lag total sales for the electrical distribution industry.
Overall:
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Distributors shared that they are flat to nominally up, especially when the data is converted to COGS. A significant percentage of distributors reported growth over 5%, however, not “strong” growth.
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Manufacturers report their business is flat to nominally up
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Reps / lighting agents reported mid-single digit negative, however, a vast majority of reporting reps were lighting agents. This correlates to Acuity’s sales organization and this could hint that spec-oriented, architecturally-oriented, lighting manufacturers are more challenged than suppliers that many consider “value-oriented / lines that they can value-engineer projects.”
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Distributors and representatives shared that the market is very price competitive, especially for projects.
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A key driver for lighting growth is large projects. Unfortunately, this is not a strong, or even “okay” segment of the market. Many of the large projects that are under construction in the country are data centers, which do not use much lighting, and industrial facilities. Further, there are a number of market dynamics (switchgear, contractor labor, economic concerns, interest rates, etc.) that continue to inhibit the lighting market and are expected to hang on the market for awhile.
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The outlook for Q3 is for continued improvement, however, it is cautious optimism and for a nominal growth rate.
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Less than 25% of distributors report that they have increased inventory. The lack of “restocking” speaks to distributors being conservative, indicating that they are not confident in local markets to warrant restocking or supplier performance minimizes the need for distributors to carry much inventory.
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All report that their “opportunities” are primarily in the K-12 and the healthcare markets. The WFH challenges continue to inhibit the office renovation market, which is a key segment for many lighting markets.
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Pricing is benign and the most doubt this will change. Suppliers cannot push price increases through, and field-based pricing is very competitive.
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When manufacturers and reps / lighting agents were asked about what they are hearing from specifiers and ESCOs, their feedback is about half of the market feel that the market, over the next six months is “slowing down / they are concerned. This could be a presumption that the market slows due to uncertainty regarding elections as well as longer-term impact of interest rates.
Overall, an improving but a challenging market with good news that it will continue to improve, albeit fractionally.
The Q2 Pulse of Lighting Report is available to non-survey respondents for only $35. Click here to order via PayPal. It will be emailed to you within 24 hours.
