Construction + Economy, Lighting Industry

Lighting Industry Grew High Single Digits In Q3 But Will Slow To Low Single Digit Growth

Channel Marketing Group’s Q3 Pulse of Lighting survey was completed by 200 distributors, manufacturers, reps, and lighting agents.

Image courtesy Channel Marketing Group

Overall, they reported that:

  • Sales performance for Q3 approximated the projections that they shared in Q2, which is high single-digit numbers. This is consistent with the sales growth that occurred in Q2.
  • The difference, however, is that pricing increases grew at a slower rate, resulting in greater organic growth.
  • Distributors reported that the large new construction market appeared to slow, whereas the small and medium new and renovation markets continued to be strong.
  • From an inventory viewpoint, a lower percentage of distributors increased inventory, with over 50% maintaining inventory size.
  • At the same time, fewer distributors reported that their backlog grew. Most reported it remained flat, indicating that supply chain issues remain. Some distributors shared that their “hold till complete” inventory has increased, inevitably requiring only a few SKUs to complete an order.
  • Distributors were asked about their through-stock sales rate. Only 33% shared that they are selling more through stock, whereas 63% stated it has remained the same. At the same time, almost 40% have either reduced their inventory or have it “under consideration.” Some of this is due to product innovation/acceptance of selectable wattage and CCT products.
  • Some manufacturers shared that project sales cycles are taking longer.
  • All audiences reported that supply chain issues persist, and end-users are open to alternatives to avoid supply chain delays.
  • Much of the design community continues to work remotely, which hinders agent/reps sales interactions.

Looking forward:

  • All audiences foresee a lighting slowdown. While there will still be growth, the growth rate slows to low single digits.
  • Most do not see price increases being implemented in Q4.
  • Both manufacturers and agents/reps report that 40-50% of lighting specifiers/design build contractors look at their future project activity over the next 6 months, either slowing or they expressed concern.
  • Growth segments appear to be commercial retrofits, education, healthcare, and lighting for infrastructure projects.

The complete report is available for a fee from Electrical Trends.

  • Pat Treadway October 15, 2022, 9:09 AM

    The “Flash sale” trend may actually trace back to the start of the pandemic & slightly before with the China Trade tariff implementations. Many companies got caught with a mix of new launch/old stock to move, and mix of pre-tariff costed goods vs higher burdened goods. This forced many to try to find alternate means to move inventory. Often these issues could not be moved downstream into Distributor inventories, but had to get resolved at the importer/OEM levels.

  • David Shiller October 19, 2022, 12:04 PM

    Thank you, Pat. Great points.

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