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Be connected… also in the lighting market
2020-11-12
by Aurelio Volpe
lighting fixtures sales by distribution channel

World. Breakdown of lighting fixtures sales by distribution channel, 2015 and 2019. % share in value


According to CSIL, the worldwide market for lighting fixtures is expected to decrease by -7% in 2020, to fuel new growth in the next three years.

Focusing on lighting fixtures only, it means a slowdown from 93.6 billion USD in 2019 to 87 billion in 2020 and a forecasted recover close to 99 billion USD (at current exchange rates) within 2023 (around 115 billion USD including lamps and lighting controls).

These synthetic figures come from a projection of a -7% contraction in conventional lighting consumption on average per year and an annual average increase of 4% of LED-based luminaires between 2019 and 2023.

In terms of quantity, approximately 2 billion LED luminaires have been sold in 2019 on approximate total of 2.5 -3.0 billion units (LED and Conventional).

On a stock of around 26 billion existing luminaires, some 9 billion are installed LED luminaires (35% on rough average), to reach 60% in 2023 (17 billion units on a stock of 28 billion).

During 2020 LED lighting sales will be dramatically reducing for commercial destinations and for outdoor, whereas they will be growing for industrial and residential purposes.

Growth from technological innovation

Already in 2021, sales of LED lighting will be in excess of the value peaked in 2019. Growth will be fuelled by technical innovations, first of all connected lighting. Connected solutions are of primary importance for both indoor (offices, schools, healthcare) and outdoor (street lighting, urban centers) solutions, offering additional services.

Presently, indoor lighting systems can utilize the building network infrastructure for control (and sometimes power) instead of using dedicated (and often expensive) lighting solutions.

Standard IP connectivity for lighting also enables much easier interoperability with other systems, such as Building Automation Systems (BAS), smart grids and cloud services that all are moving or have moved away from dedicated connection and protocols towards IP-backbones.

LED streetlights will transform cities and municipalities across the globe over the next decade. Networked 'smart' streetlights help cities further reduce costs through off-peak dimming and lower maintenance expenditures they will serve as part of larger 'smart city' concepts, where communications networks can be used to link items such as power and water meters, traffic lights, and parking meters.

The trend is towards a global network of smart lights jam-packed with sensors for moisture, ambient light, seismic activity, radiation, wind, temperature, air quality, audio, MAC address tracking to detect cell phones, audio and high-definition video, all joined together via a 5-gig wireless system that supports both point-to-point and mesh networks, connects to intermittent Internet backbone and uploads. In 2019, connected luminaires weighted around 2% on sales (in quantity) and 1.5% on stock, to reach 10% on LED lighting sales (and 2.35% on installed LED lighting stock) in 2023, respectively.

Estimated stock of LED luminaires worldwide for the year 2020 can be quantified close to 40%. Approximately 65% of new luminaires sold are LED based. The breakdown by application shows a range going from around 20% for residential lighting to 65% for street lighting.

Around 45 million LED connected lights will be sold this year (2020), that means around 3% of the items.

E-commerce and connected lighting

As LED lighting grows to become the main technology in the market and lighting shifts from a consumable purchase to a durable good (and then to consumer electronics purchase with connected LEDs), the weight of e-commerce and web marketing is evolving.

Today, more product evaluation is done before purchasing. When it comes to connected lighting, roughly 70% of customers who purchase these products online read product reviews to get informed.

Innovation and profitability

Any innovative sector will sooner or later generate profits. The average profitability ratio for lighting innovation in terms of EBITDA has been decreasing during the past five years, from 10.3-10.4% in the years 2014/2015 to 9.4% in the year 2019. Nevertheless, it is still remaining over the standard of more mature sectors, where average is around 4%. Relevant growth rate of the EBITDA (as a percentage) is shown in the last year for example for Signify (formerly Philips Lighting), Zumtobel, Opple, Yankon, Eglo, Glamox, Rangdong, Alto Lighting.

It is worth mentioning more innovations available today, such as horticultural lighting, UV lighting for healthcare uses, OLEDs (now in demand for TV, but also for jewelries for example), Li-fi (for retail projects and customer tracking).

 
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