2022 Q2 Pulse of Lighting Report: Signs of Slowing

July 7, 2022

The Channel Marketing Group (CMG) received input from 225 distributors, manufacturers, and independent sales representatives in the lighting industry on their estimated Q2 business. Overall, it appears that the lighting market has slowed a little from CMG’s Q1 report, and the Q3 outlook indicates continued slowing.

Distributors say their lighting performance lags electrical sales; however, their overall results are further inflated with price increases, and, in some cases, backlogs being filled. According to DISC, Q2 performance was projected around 20% for the industry.

Highlights from the report include:

• Mid to upper single digit performance, on average (and remember, distributor performance should be higher as it includes their gross margin) across all three audiences, hence the industry performance is pretty “range-bound.”

Feedback is that “real” growth is in the low single digits (and some report that there is no “real” growth.)

• There is a significant disparity in performance within each audience. Some are down significantly, some are up significantly, and then there is a group that coalesces around the average. Consider it a sine curve.

• Similar, if not slightly lower, sales performance is expected in Q3.

• Realized price increases moderated this quarter. There were still price increases, but not as high. And essentially everyone expects more to come in Q3.

• Key industry issues continue to be supply chain- and labor-driven. Backlogs have grown.

With a recession being discussed, it was surprising to find that less than half of the reporting distributors track unit sales. This may result in distributors not realizing that their stock/discretionary business has declined until it is too late (as filling backlogs will mask their overall performance.)

The supply chain continues to be exacerbated, from a components viewpoint, due to China’s zero COVID policy.

• Transportation (freight) costs are impacting sales, and costs.

• In our “question of the quarter,” respondents were asked about the impact of tariffs potentially being removed/rolled back. The feedback is that it would have “no difference” with the caveats that 1) it depends upon the competitive environment, 2) manufacturers need to work through their inventory and 3) sales dollars would decrease (presumably GM dollars would decrease also). A nominal percent think that it could increase business with new projects being released, however, others feel those projects have either been cancelled or postponed due to other cost increase considerations.

Click here to obtain a complete copy of the 2022 Q2 report with data specifics and verbatim respondent feedback for only $29. Survey respondents receive a complimentary copy of the report and advance notice of results.

Special thanks to the respondents for their assistance in gathering this information for William Blair as well as the industry.

The quarterly Pulse of Lighting report is a service of Channel Marketing Group.