At European level, CSIL forecasts a drop of 7.1% of the lighting market for the year 2020. This projection has been published in May and discussed in July in a zoom meeting with a number of VIP stakeholders of the lighting sector. This projection is perceived as optimistic from the majority of our testimonials at the Zoom meeting. Indeed, many companies operating in the industry expect to register a double-digit decline for 2020. It is also important to distinguish between areas. The geographical differences regard both the impact and the responses. For example, the Nordic markets have been suffering much less than countries like the UK, Italy and France and there is still potential for several projects. On the other hand, not only the UK has been hit stronger than others but its government has been delivering confusing messages in term of its economic response. Much will depend from the second half of the year. A possible solution will be to offer two scenarios: a bad one, including a possibility of other lockdowns in the coming months; and a good one, assuming there will not be any further lockdowns. Also the recovery projected for 2022 and 2023 may be overestimated. Only by 2023, the market will return to the same level of 2019, even with differences from market to market.
In term of public funding and financing the largest stimulus will be addressed hospitals and public administration building. Other initiatives regard home renovations and energy-saving interventions. A further push to the industry will be provided by the face out of conventional lighting. Regarding education facilities, street lighting, and infrastructures, the magnitude of the public helps will depend on whether the funds for the recovery will be intended to the development of economic activities or towards investment in infrastructures.
Technical lighting is projected to strongly drop in 2020, remain flat in 2021, and hopefully start recovering in 2022. The hospitality and retail segments will be among the harshest hit by the Covid-19 crisis. Especially, the retail segment will suffer a lot also because of the competition coming from Asia in term of prices, while for the hospitality segment the crisis could arise also new opportunities. Office lighting won’t register positive performance in the coming years as smart working is flourishing and it also will suffer from pressure, in term of prices, coming from the Asian competitors. Some opportunities for the business could come from new layouts for traditional offices. However, part of the office lighting sales will be absorbed by the consumer market in the form of home office, which is projected to remain flat at worst but not to decline. In particular, the high-end residential segment is expected to benefit the most from government support.
For the contract business, the uncertainty arising from the crisis is the biggest threat because it forbids to plan projects. Activities are expected to restart in 2021. On the other hand, e-commerce is expected to increase its share in the coming years. Still, the performance of e-commerce varies across segments. In fact, e-commerce has emerged to perform much better for the mass market rather than for the technical one. In addition, it is going to becoming a more and more struggling topic in the future because of the bad quality of many products that are available online.
In terms of the competitive system, the process of consolidation is expected to continue especially towards the concept of omnichannel.
A final rumour regards UV lamps. There is the possibility to employ UV lighting for the sanitation of public areas. But it is still a question mark.
In the United States, the lighting market registers an -18% performance for the quarter ending 31st May 2020 (we use the Acuity data as a reasonable good proxy for the National level) and a decrease by -11% for the last nine months. The 2020 results could be worse in the United States than in Europe, but it is also true that the market could be more resilient in the mid run (2021-2023).
The first answer to the crisis for the US lighting industry is in the direction of consolidation: Hubbell is simplifying its organization (from three to two business units), Ecosense is acquiring the prestigious LED lamps activities of Soraa ……but the consolidation trend has started already in 2019: Signify with Eaton, Delta with Amerlux, Acuity Brands that acquires The Luminaires Group, ALW acquired v2 Lighting Group (a move that further strengthens ALW’s position as an industry-leading manufacturer of specification-grade architectural and decorative LED luminaires),H.E. Williams, Inc. Acquires Platformatics, Inc., Viscor was acquired by Leviton (sixth lighting company).
Also to be mentioned how the outdoor lighting business is changing: LED Roadway Lighting (Canada) for example is investing in its Liveable Cities division, that provides a full solution for smart cities, including LED streetlights, network technology, smart sensors and software, in cooperation with Sierra Wireless.
Main applications are traffic analytics, environmental and noise sensors.
Another innovation field is the so called human-centric lighting. About it, RAB (one of the leaders in the US mass market for lighting products) has recently launched SmartShift: with one click, enabled lighting fixtures on a Lightcloud system will set themselves to your time zone and begin adjusting your light level and colour temperature to match the natural pattern of the sun… a soft glow in the morning, energizing light during the day, and a warm hue in the evening.
The EZPAN family of edge-lit panels is the first of many RAB products that will be offered with integrated SmartShift technology. They are a low-profile panel solution for adding circadian lighting to offices, education, hospitality and healthcare facilities.
In India, sales decrease during the worst months peaked to -50% in some cases, also due to the interrupted supply chain with China for some components. But the entire year will probably register a lower decrease than in Europe or in the United States. There are even margins for growth in the healthcare, hazardous environment, emergency lighting segments. The street lighting market, thanks also to public contribution, performed well in recent years and probably will still go on. But perspectives for the professional market in the short run are not optimistic. Connected lighting will probably see growth also with new actors, as Panasonic Life Solutions, together with Signify (Philips), Crompton and Bajaj.
Author
Aurelio Volpe
Market Research Director, CSIL
