Q4 Pulse of Lighting Report & 2019 Outlook

LDS 1 CS Q4Pulse 400

January 5, 2019

Just before the holidays, Channel Marketing Group launched its Q4 Pulse of Lighting survey to gain industry insights about market performance during Q4. Over 200 distributors, manufacturers and sales agents responded. 

As most know, the market was “eventful” in Q4. The quarter started with talk of U.S. tariffs impacting the industry, which came to fruition in October and culminated in many but not all manufacturers instituting some type of price increase in late October. The impact of the tariffs appears to have increased average selling prices for many, pulled some business forward to early in the quarter, and perhaps motivated some distributors to purchase “pre-tariff” and increase their inventories.

However, as Channel Marketing Group learned from interviews, the market appears to have slowed throughout the remainder of the quarter. Whether it is uncertainty about the originally proposed end-of-year tariff increase (now pushed to March) or a market slowdown or that the business was pulled forward, no one seems to know.

Additionally, respondents shared feedback from conglomerate efforts to support their “contractor grade” brands. One area commented on is that a number of these companies have reduced lighting agent commissions on these lines. Since the factory needs to be “more competitive,” they feel everyone needs to “share” (as they also have margin objectives). The challenge is that these lines require lighting agents to be more focused/engaged with electrical distributors and take them somewhat out of their normal sales cadre. Earning less provides less motivation. The commission reduction issue seems somewhat backwards, especially as supply reps report no change in commission from their lines and, in fact, some are benefiting from overage when their lines are “too” low on a quote (and the rep is protecting price integrity in the marketplace). More work to sell a lower dollar item at a lower commission rate because the company has a premium name? Perhaps this is why we’ve heard of agents having multiple line cards and / or expanding the number of lines that they represent?

Some insights from the survey conducted with William Blair

  • Sales increase ranged from 7.25-8.4%, depending upon the surveyed audience.
  • ASP (average sales price) increased 4.87%, however, also heard of declines in some areas based upon competitive challenges and product mix. Some “tier 2 and 3” lighting suppliers, who frequently are conglomerates strongest competitors for “white goods” business delayed, or didn’t implement in Q4, price increases that were tariff induced.
  • Growth continued strong in small and medium projects, the target audience for conglomerate’s new “contractor grade” offerings. If these companies can gain traction, these companies’ sales could grow at a faster rate.
  • Inventories grew a little for many and backlogs flattened for an increased number of distributors.
  • 2018 lighting growth overall exceeded industry growth projections of 5.8% by DISC.
  • 2019 outlook is mid to high single digit increase.
  • Many commented on quality issues … overall marketplace improvement, and when there are issues, they cut across all types of manufacturers.
  • Continued controls confusion in the marketplace is hindering widespread adoption, although there does appear to be more interest in controls.

Some other lighting tidbits:

  • 60-80% of some lighting agents’ business is focused on new projects/larger opportunities. With the research showing distributors are seeing strength in small to mid-sized projects (new and renovation), perhaps this is an indicator of why conglomerates have had less than market growth within the industry?
  • Legrand acquired Kenall Manufacturing. It appears that Kenall had 2017 revenues of US$100 million. Given this, it appears that through its acquisitions of Finelite, Pinnacle Lighting, OCL (Original Cast Lighting) and now Kenall that Legrand’s US lighting business is US$200-250M combined, with a focus on architectural / spec grade commercial lighting. It would be fair to speculate that this is also a strategy to expand Legrand’s commercial lighting control business as well as benefit wiring devices and, perhaps longer-term, elements of Wiremold, Ortronics and OnQ.
  • Maxlite has hired a new President/COO. Spencer Bolgard, formerly of Phoenix Contact, Cooper Industries, Seagull Lighting and AD, has joined Maxlite. Rick Schuett, formerly of Cimcon Lighting, Echelon and others, including spending 14 years with Lutron, is now VP Business Development.

Request a copy of the Q4 Pulse of Lighting Report for US$19: www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=7QK9TWPWW9DX6

Related Articles


Changing Scene

  • Contact Delage Announces New Partnership with Zilux

    Contact Delage: New Representation Agreement – Zilux

    Contact Delage is pleased to announce a new partnership with Zilux for the representation of their products in the regions of Montreal, Laval, Estrie, Lanaudière, Laurentides, and Montérégie. Specializing in the design of aluminum lighting and urban furniture, Zilux, a Quebec-based manufacturer, combines innovation and durability to enhance your outdoor design projects. Their expertise in… Read More…

  • Mac’s II Agencies Announces Jamie Capell as the New Sales Manager for Lighting Specification

    Expanding Expertise: Mac’s II Agencies Strengthens Lighting Division

    Mac’s II Agencies is pleased to announce the expansion of its lighting division with the addition of Jamie Capell as the Sales Manager for Lighting Specification. Jamie brings 25 years of experience in the lighting and electrical industry, most notably serving as the Director of Sales for a local lighting agency in British Columbia. With… Read More…


Design

  • Light ARchitect Is Revolutionizing Lighting Design for Architects & Designers

    Light ARchitect Is Revolutionizing Lighting Design for Architects & Designers

    Traditionally, lighting design could be a tedious process, often involving physical mockups, time-consuming calculations, and static renderings using multiple software tools. With advancing technology, these traditional methods are giving way to more sophisticated tools that enhance precision, speed, and visualization. On the downside, many of the new tools are not particularly intuitive and the learning… Read More…

  • Project Story: Sainte-Thérèse High School Outdoor Lighting Upgrade

    Project Story: Sainte-Thérèse High School Outdoor Lighting Upgrade

    August 6, 2024 Built in 1980, the building that houses Sainte-Thérèse high school, in Quebec Canada, was looking a little worse for the wear. Renovation work began with two major projects: introducing a multidisciplinary sports centre, as well as redesigning the parking lots.  The employee and visitor parking lots were completely reconfigured during phase 1… Read More…


New Products

  • Magic Lite: New 5-Channel High-Performance LED Amplifier

    Magic Lite: New 5-Channel High-Performance LED Amplifier

    Designed for professional-grade LED systems, the 5-Channel High-Performance Amplifier delivers precision, scalability, and reliability. Using advanced MOSFET technology and high-speed 10Mbps optical couplers, this amplifier ensures robust power output and flawless signal transmission across large-scale, synchronized LED applications. Whether expanding capacity for PWM controllers or enhancing system stability, this amplifier simplifies complex lighting designs while… Read More…

  • Eureka: Lattice – 3D Printed Ceiling Suspended Fixture

    Eureka: Lattice – 3D Printed Ceiling Suspended Fixture

    Lattice is a one-of-a-kind 3D metal printed fixture. Layer upon layer of intricately braided aluminum branches meld into one of three comprehensive shapes. The result is a stunning glowing light fixture that will add a luxurious feel to ambient environments. EXCLUSIVELY AVAILABLE ON DEMAND. Read More…