Change is Rapidly Descending Upon the Lighting Industry
LED lamps (lightbulbs) are proving to be a disruptive catalyst creating a very different dynamic in the long established lamp distribution channel.
While the transition to LED technology in the light fixtures for new construction and/or building renovation is being smoothly managed by the established eco-system of independent specification agents and established electrical distributors, the impact on the existing sales and distribution channels and their respective supporting processes is being felt.
The Economics of LED Technology Captivates Building Owners and Operators.
Historically, lightbulbs, such as compact fluorescents (CFLs) have subscribed to the razorblade model: when one burns out, you simply replace it with a new one. In the commercial real estate market, facility managers typically support these lightbulb maintenance requirements out of their MRO (maintenance-repair-operations) budget which covers everything from toilet paper to cleaning supplies.
Specialty distributors that focus exclusively on servicing the day to day operational needs of commercial buildings supply the lightbulbs as needed, on an ongoing basis, and develop relationships with their customers based on service, support, responsiveness, and price.
Along comes the LED lightbulb which offers a very different value proposition than the standard, shorter lived bulb. It has the potential to capture the interest of other personnel involved in owning/operating a building. The energy and maintenance savings that can be realized by shifting to LED technology can have a significant impact on the operating expense of a building. In some cases, the economics can be so compelling that they can trigger a “project” whereby all of the existing lightbulbs are removed and replaced with LED bulbs. This sets up the “turf war” scenario.
The Impact of LED Lightbulbs on the Sales and Distribution Channel.
Specialty distributors have relationships with the facility staff (the buyers of lightbulbs). Historically, independent lighting agents (which have historically not participated in the light bulb business) have expertise in developing and managing light fixture projects from design through to final construction. However, their interest in lightbulbs has intensified by the reality that LED lightbulbs have the ability to create replacement demand in installed fixtures and facilities, unlike the fixture business, which is tied to the construction market that ebbs and flows based on macro-economics.
