Channel Marketing Group’s Q3 Pulse of Lighting Report

This quarter’s report gathered insights from over 200 respondents across the lighting channel. Key takeaways include:

• Minimal growth expected in Q3, with distributors and manufacturers showing a slight underperformance.
• Price decreases continued slightly, with 75% of respondents not anticipating price hikes in Q4.
• Large-scale projects remain slow, while the renovation market, especially in sectors like education, healthcare, and IIJA-funded initiatives, shows more activity.
• Distributors and manufacturers report increased backlog, often due to project delays.
• Q4 is projected to be relatively stagnant, with some expecting a small uptick from utility rebate programs.
• Market sentiment remains cautious, with concerns about potential slowdowns in the next six months despite interest rate cuts.

Additionally, the report explores lighting controls, addressing challenges and potential growth drivers in the industry.

The Pulse is Barely Beating

By David Gordon

Our Q3 Pulse of Lighting report had a little more than 200 respondents with about one-third coming from each element of the channel.

Overall

• Each element forecasted that Q3 had minimal, if any, growth. Compared to the Acuity lighting results, they slightly underperformed the feedback we received from distributors and manufacturers, but by a whisper.
• Price degraded a little more than Q2, but minimal overall. This is in aggregate as, for any given major order, price discounting can be aggressive according to respondents. And 75% do not expect price increases in Q4.
• The large project market, whether new or renovation, is very slow in most markets. There is activity in the small to mid-sized market with more towards the renovation segment. Some key market segments, and it changes by geography, were education, healthcare, multi-family, IIJA-funded initiatives and, in some instances, commercial projects driven by return-to-work initiatives.
• Distributors are comfortable with their inventory and are not seeking to add lighting to their inventory.
• Almost half of distributors reported backlog being up. Some report that this is from holding projects for customers, some is due to switchgear delays. Similarly, almost half of manufacturers reported backlogs are up. This could be a combination of sales activity as well as holding for projects that are delayed.
• Q4 outlook is for, essentially, more of the same, perhaps a slight uptick due to finishing end-of-year projects as well as utility-rebate enhanced opportunities although reps / lighting agents feel that there could be a decline. This could be due to lack of end-of-year project inventory build to meet rebate goals.
• All audiences shared that they are winning projects based up VEing them and that this is increasing, especially with more contractors doing design/build. They also shared that project approvals … whether it quote approval or submittals being approved – are taking longer than ever and hence delaying order finalization and hence delivery.
• When manufacturers and reps were asked about specifier outlook, they shared that more are expressing concern or expecting a slowdown, looking out over the next 6 months. Whether this is a significant or modest decline, the fact is that there is not much optimism in the market at this time, even with the Fed’s recent ½ point rate reduction and projection for another ½ point by the end of the year.

With this report, we also asked respondents a couple of questions regarding lighting controls and future market growth. The questions were:

• What percentage of your lighting business does lighting controls represent?
• What do you think the challenges are to growing lighting control sales?
• What do you think could drive lighting demand or is the lighting industry a market share game?

Aggregated insights to identify trends as well as verbatim responses were included in the report.

Survey respondents were provided the opportunity to receive the report for free. The complete report is available for only $35.

Take Aways

The lighting market is essentially flat/nominal growth, which, anecdotally, is lagging the overall lighting market which is being powered by the industrial market as well as selected segments (i.e., data centers) with the residential and most of the commercial construction market “challenged.”

This Year’s Previous “Pulse of Lighting”

Q2 Challenged Lighting Market Affirmed – Q2 Pulse of Lighting Report – US Lighting Trends

Q1 Essential Insights from the Q1 Pulse of Lighting Report – US Lighting Trends