The Q4 Pulse of Lighting reports that 2025 was a disappointing, essentially flat year for the lighting industry, with tariffs hurting project activity and masking weak unit volumes behind modest price-driven revenue stability. The quarterly Pulse of Lighting reports are produced by Channel Marketing Group (CMG).
For Q4 2025, the Pulse of Lighting surveyed about 200 manufacturers, reps/agents, and distributors. It found revenue performance clustered around flat, with nearly half of distributors within plus or minus 2 percent of prior-year sales. Flat performance likely means units declined, reinforcing that tariff-related price increases rather than true demand growth sustained sales totals. The small to mid-size renovation segment is identified as the main source of steady business, while most other segments are characterized as slow. Within this renovation-driven environment, value-engineering opportunities and design/build contractor work are key pockets of activity.
Channel behavior and preferences also shape the current landscape. Distributors show a clear bias toward recognized brands for retrofit and conversion work, associating established names with trust and lower risk. Separate proprietary research indicates that companies investing in brand-building are achieving stronger revenue growth and market share, reinforcing the commercial payoff of long-term branding efforts. Operationally, backlog and inventory levels are largely flat, though about one-fifth of respondents report declining inventory, signaling cautious stock management in an uncertain demand climate.
The selling environment is described as slow and administratively bogged down. Submittal and project approval cycles are characterized as very slow, delaying revenue realization and creating repeated requoting cycles. Competitive intensity is high, with aggressive pricing pressure as players “fight for the business.” Price increases have cooled to low single digits, suggesting limited additional price-driven top-line upside going forward.
Looking ahead to 2026, the report notes a cautious but noticeable improvement in sentiment. Manufacturers and distributors express the greatest optimism, projecting mid-single-digit growth, while reps and lighting agents remain more skeptical, expecting low-single-digit gains that are close to flat.
Several end markets emerge as the most promising for 2026: warehousing, healthcare, data centers, office retrofits, municipal & state government projects, and K–12 facilities. These sectors reflect both ongoing infrastructure needs and targeted investment areas where lighting upgrades and controls can deliver energy and operational benefits. To pursue growth, companies are prioritizing a small set of strategic initiatives: sharpening value-engineering capabilities, expanding lighting controls and smart lighting offerings, emphasizing design/build contractors, and focusing on specific market verticals rather than broad, undifferentiated coverage.
Distributors, in particular, emphasize the importance of training staff to effectively support value-engineering, highlighting the need for deeper application knowledge, cost-optimization skills, and comfort with controls. The article concludes that, although modest growth is forecast for 2026, the market lacks a strong external catalyst or “rising tide” and will instead reward disciplined execution. Success is framed as a matter of blocking and tackling: aggressively targeting select projects and segments, developing strong expertise in lighting controls, and building teams capable of redesigning and optimizing projects to win business in a fiercely competitive environment.
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Image above: Courtesy of Channel Marketing Group.
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