Q2 Pulse of Lighting Survey Shows Improvement Over Q1
After a faltering start in Q1, the lighting market experienced a slight uptick (low single digits) in Q2, according to results from the quarterly Pulse of Lighting survey compiled by sister publication Electrical Trends in partnership with analysts at William Blair.
David Gordon of Channel Marketing Group, which publishes Electrical Trends, noted, “The rebound, which was to be expected, reflects Q1 being impacted by weather and delays in Q1 caused by tariff announcements.”
In fact, the volatility of the tariffs over the spring months caused projects already in the pipeline to be paused and restarted as tariff deadlines were pushed farther out. Similarly, manufacturers and distributors had to continually make pricing adjustments, which also made assessing gains harder to determine.
Gordon added these insights from feedback received by the 200+ survey respondents:
• A guardedly positive outlook for Q3 with many saying, “depends upon tariffs.” Overall, the projection is approaching mid-single digits. Some/much of this is due to price realization. If manufacturers resist negotiating for projects, the market could grow — although this would not represent unit growth.
• Given that, reportedly, there is an agreement with China, it is safe to say there will be some tariff impact, but not as severe as expected. What this means for eventual pricing of product sourced from China is unknown. What may be more concerning for many is tariffs on other APAC countries as lighting comes from Thailand, Vietnam, Cambodia, etc. Mexico sourcing is not much of a concern as long as it complies with USMCA guidelines. Products that are Made in America, or USMCA, will have an inherent advantage, which can be a price negotiation tool for distributors to use with Asian-made products.
• The large new construction market is “challenged.” Look for a small to mid-sized renovation market.
• Many commented on the impact of interest rates as it relates to stimulating the new construction market.
• Backlogs seem to have been “worked down,” which is a little bit of a future warning.
Some expressed economic concerns; however, this could be localized or regional. Those in the southeast/southwest, anecdotally, reported “good” markets.
• Manufacturers expressed concern about agency consolidation as it limits their choice; however, they admit, that there is not much they can do. There is a sense that they would welcome “options.”
• Looking beyond 6 months, manufacturers and reps are sensing that specifiers are “less concerned” than they have been.
• Average pricing was mid-to-upper single digits, on average, with most of this coming into effect in June/Q3.
In this latest edition of the Pulse of Lighting survey, a question was added relating to lighting agents/reps quoting direct. The feedback is that about 60% of agents do this regularly, representing about one-third of distributor quotations. Margins are in the 10-15% range (sometimes lower). For supply reps taking on lighting lines, this model is “different,” however, will become more prevalent based upon findings in the upcoming 2025 Rep of the Future report (sales reps, please email David Gordon to get on the early distribution list.)
The full Pulse of Lighting report, with all of the details and over 100 comments to open-ended questions is available for only $35.
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