The household LED lighting market will grow at a 30% clip from 2014-2016, according to LEDinside, a subsidiary of the Taiwan-based market intelligence firm TrendForce.
LEDinside has analyzed the 10 key trends affecting the household LED lighting market. Please find below analyses of five important trends:
Key Trend 1: Price defines the household lighting market
Price is a decisive factor in the household lighting market. Indeed, consumer price sensitivity in this market is extremely high. Despite the C/P ratio that lighting products offer, consumers still hesitate to purchase products with the highest absolute price. In the global light bulb market, there have been large-scale price cuts owing to government subsidies for energy-efficient lighting and manufacturers discounting products.
Key Trend 2: 100% coverage of household lighting applications
Only LED lighting can be used as a comprehensive replacement for fluorescent lighting. Indeed, it can be used throughout the home, including in the living room, dining room, bathroom, kitchen and more. It is available in both cold and warm color temperature varieties, is color tunable and can be dimmed. Additionally, solid-state lighting can be applied in any field of lighting. What’s more, users can become familiar with LED lighting in a relatively short period of time. By contrast, other lighting technologies like HID, CFL and even OLED have more restrictive applications.
Key Trend 3: China is the main LED lighting manufacturing hub; strategic procurement determines cost competitiveness
China is a manufacturing hub for the world’s leading lighting products, including wafers, PCB, power drivers, thermal dissipation modules and a variety of accessories. For global lighting brands, China has become the one-stop shop for LED OEM. Nevertheless, lighting products made in China are of varying quality, with a large disparity between product prices. That makes sourcing a challenge for manufacturers. Consequently, it is imperative to have an in-depth understanding of each of the main components as well as the technology used in their manufacturing in order to keep costs low while maintaining quality.
Key Trend 4: Control over distribution channel = control of sales
The lighting market itself is mature. The distribution model for LED lighting products is similar to other fast-moving consumer goods (FMCG). The key to success in the FMCG industry is having excellent retail channels. The household LED lighting market uses the same retail channels as traditional lighting: supermarkets, convenience stores and hardware stores. Only with a mastery of the retail channels can a sales team negotiate favorable prices with retail operators.
Key Trend 5: The importance of product design in LED lighting
At the beginning of the product cycle, it is paramount to make technological breakthroughs, but retail channels become more important as the technology matures. Strong marketing campaigns that attract consumers can boost retail sales. Eventually, the specific application design for LED lighting products will become more important than functionality. For instance, the DIALux software allows lighting designers to simulate 3D images of the lighting effects of the products they are using for a project. Thus, application design is more critical to healthy sales than product technology.
According to LEDinside, after 2017, the LED household lighting industry will plateau as demand slows and growth rates cool. The industry will become more integrated with a more focused use of resources. Prices will also become more reasonable.
