The Results Are In: Pulse of the Lighting Industry Report
May 7, 2022
Last month, Channel Marketing Group (CMG) released the results of its semi-annual Pulse of Lighting survey, compiling the findings of 230 respondents who are distributors, manufacturer reps, and lighting manufacturers.
While growth, for lighting, continued to be “strong”, the performance lagged the overall electrical industry for Q1, according to the latest DISC quarterly report.
Overall, lighting’s average performance was high single digit/low double digit. According to CMG principal David Gordon, “If your lighting business is not up by at least 6 percent, your trending backwards as the survey feedback is that realized price gains averaged 5-6 percent, with more price increases forecasted for Q2. Q1 results are a slight improvement from the 2021 Q4 report.”
There are bright spots as the market is very uneven with a number of respondents reporting 20+ percent growth. The inference, according to Gordon, is that geographically the market is uneven for distributors and reps whereas, in the manufacturing community, the business is moving around.
Gordon has observed a trend toward branded companies; however, he noted small manufacturers might have strong months to report because they won a few projects. The smaller a company, the more they may tend to have volatile sales swings. The same holds true for smaller distributors, as these companies do not have much, if any, “stock and flow” business and are challenged in repetitively winning smaller discretionary business on a frequent basis.
2022 Q1 PULSE OF LIGHTING REPORT HIGHLIGHTS
Distributors
- Average growth in low double digits
- Growth remains mid/small size projects with some seeing a number of “new” in these sizes
- With the growth in the renovation space, “stock/flow,” or white goods, suppliers are doing better than spec-focused suppliers.
- Inventory levels staying similar, although some distributors are increasing when they can take advantage of supply chain opportunities
- Brand name manufacturers are benefiting from line changes, and companies that are solely importers are “struggling.”
- Backlogs continue to be elevated.
- Q2 is expected to slow somewhat, but could change based upon the fulfillment of back-orders
- True “longer-term” growth could be masked based upon back-order fulfillment. This will help distributors if the economy slows.
- Price increases are expected to continue into next quarter.
- Supply chain issues persist, impacting deliveries as well as lead-times.
- Distributors report, through follow-up calls, that they see Acuity taking some share and that Signify is having issues with drivers as well as labor issues in Mexico.
Manufacturers
- Growth at lower than distributors; however, this is most likely due to margin differences and possibly business mix/ability to ship orders to therefore recognize the sale.
- In Q2, we’re hoping for a little better performance.
- We see continued price increases, supply chain issues, and difficulties with freight costs. These supply chain issues are expected to continue for a while longer.
- Some survey respondents commented about price increases not being realized due to competitive marketplace pressures.
- There has been strong quotation activity
- Component shortages remain. Those who manufacture in Mexico are having a supply chain, and possibly cost, advantage.
- The field-adjustable fixtures seem to be gaining marketshare and there is some adoption in controls (it’s a crowded market that, because of the array of “choice” available, creates confusion for distributors and contractors.)
Reps
- Reps report strong growth, comparable to distributors when margin is taken into account.
- Although a slowdown is predicted for Q2, performance will still be “strong.”
- Inventory/supply chain issues, along with price increase issues, will continue.
- Mostly remodeling/renovation work and some light commercial. There are fewer large projects except warehouses.
A full copy of the Pulse of Lighting report is available for $29.
