October 11, 2022
By David Gordon
As Q3 turns to Q4 and summer turns to fall, so we can now share the results of our Q3 Pulse of Lighting survey.
For our Q3 report we heard from 200 distributors, manufacturers, manufacturer reps and lighting agents.
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 percent of distributors increased inventory with over 50% maintaining inventory size.
- At the same time, less 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 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 remote, which hinders agent / reps sales interactions
Lighting Outlook for Q4 and Beyond
Looking towards Q4, and beyond,
- 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 that they are concerned.
- Growth segments appear to be commercial retrofits, education, healthcare, and lighting for infrastructure projects.
We’ve also heard of manufacturers conducting promotions and “flash sales”. Cooper Lighting Solutions is currently running a promotion to help distributors “clear” residential product sales. Here’s a link to their “overstock” webpage and a link to the promotional flyer showing the discount by product family.
So, while business was “good” based upon lighting standards (other product categories are higher, however they have “benefited” from commodity price increases), there are concerns looking forward.
The complete report, with more detail, is available for only $29.