Chris Brown

Not today, not tomorrow, not next year, but Illumigeddon is coming. SSL is changing everything….. exciting changes for many, disastrous for some. Great opportunities for Electrical and Lighting Distributors but only those who can adapt to a new reality…..this ain’t your grandpa’s lighting business!

Since my original brief ‘Forecast Calls for Pain’ from last summer, Philips, Samsung and Siemens announced that they are leaving the lighting business. What do they know that we don’t? And what are Apple, Google, Cisco and Intel thinking about, coming into our business? And is Opple (not Apple!) coming to the U.S.? And let’s not forget Amazon Supply and its impact on physical distribution of lighting and electrical products.

Illumigeddon won’t happen in a Hollywood instant: it is a process that is already in play today. How many of us were even aware of Smart Lighting and The Internet of Things (IoT) two years ago? Was ‘disintermediation’ in our vocabulary? How about Light as a Service and that at least two major lighting manufacturers are talking about doing it? What will be distribution’s role in getting lighting products into Light as a Service ceilings? The same question applies if lighting products are developed by the GE/Armstrong and Osram/Corning relationships. And according to EdisonReport, GE Lighting is moving away from a direct sales force and towards a network of independent representatives. Is there a long-term implication to that move?

Think about how tough a sell the first couple of generations of LED lamps were. Now there is a general acceptance of A, PAR and MR16 lamps in the market. And we are still converting the proverbial low hanging fruit. However, as we do that, fewer and fewer available sockets will be targeted by more and more manufacturers, reps, distributors, big box home centers and other retailers, ESCO’s and other service providers. More and tougher competition along with lower priced LED product is not a positive development. And yes there will be some opportunity for LED-LED retrofit as product gets even more efficient. But, I don’t agree with the analogy of LED-LED retrofits compared to how people dispose of working phones every two years for a new phone with more bells and whistles. That analogy just doesn’t compare to how business retrofit decisions will be made, especially with significant warranty hours left on the original LED install. And yes, Smart Lighting products will offer new opportunities, but who will be selling them? The Internet of Things and the integration of Smart Lighting products into building systems have enormous potential…..but for whom? Traditional ED and LD will need new levels of high technical competences and new services/solutions to elbow their way to the table. And who will they be competing against in addition to traditional competitors? Do the new technology players in our business respect our 100 year old business model? Should they? Are we as efficient as their distribution models? Here is where I can envision a major shift in how lighting products get into a ceiling, and the most threatening disruption ED/LD will face. I’m reminded again of a phrase from another recent conflict….”We don’t know what we don’t know”.

So, while I agree with Sunshine Bill Attardi’s optimism about great opportunities ahead, at some point we need to deal with the harsh reality of Illumigeddon. Whether 3, 5 or 10 years out, it is coming and we need to start dealing with it now. Let’s have an ongoing conversation dealing with the new lighting industry issues. Let’s share and talk about the faint signals and distant thunder we’re hearing, if we’re listening. For instance, what do you make of the fact that GE and Osram had NO LIGHTING PRODUCTS in their large booths at LuxLive Lighting trade show in London recently. As also reported by the Edison Report, Osram focused their efforts on cultivating relationships with customers, while GE was discussing Smart Cities, Connectivity and the Internet of Things. A hint of disintermediation to come?

If you’re a Lighting Distributor, what keeps you awake at night, besides excitement about new technology and the opportunity to reinvent your business? Again, let’s have a conversation.  Let’s not be passive observers of SSL disruption. I’m not Chicken Little…at least not yet. I love that the disruption that’s going on in lighting is once-in-a-career cool. And, our businesses don’t have to end up becoming this generation’s Kodak.

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  1. Chris, Your peering into the future as every distributor must do. Your thinking reminds me of a key statistic that came our of our research to write our NAW book INNOVATE! How Successful Distributors Lead Change In Disruptive Times. What we found is that 85% of leaders in distribution we surveyed believe they must reinvent their business before someone else does. I think this is what you are talking about. Lighting distribution and electrical distribution is being reinvented as we speak. That reinvention can be viewed as disruption. You make a great point that as a result of this disruption – “traditional ED and LD will need new levels of high technical competences.” I agree. But, I don’t think we can stop there. These businesses are going to need other new competencies beyond technical. For example . . . for years distributors for years have been struggling with “how to get paid for services.” When Lighting as a Service takes hold – and I believe it will – it will require a new business acumen and sales strategies to get paid for selling the service vs a “thing.”

    And finally I agree … we need to be having this conversation. Let’s keep talking!

    Thanks for the post.

  2. Len Costello says:

    Fascinating perspective and very thought provoking. I have been involved in the inner circle of “model shifting” and I can tell you that a few of the major manufacturers have already developed models that could potentially eliminate the services the Distributor provides. One of ” the bigs” has a long term plan that will provide the services, including long term lease and finance options directly to end users. Obviously, this is not a new concept but there is now focus from the C-Suite and that is the catalyst to make it happen. There will need to be smart compromise within the industry to make this a reality and that’s where conversation need to be had.

  3. BillAttardi says:

    Very interesting lead in.

    Lighting is changing as “we’ve” known it and it will be the end of many technologies. The good news is I don’t think Light is going anywhere. I heard a thing earlier this year that said that as light becomes more efficient, the demand for it only grows. Kind of makes your head spin with the possibilities. Not sure there has ever been a time when lighting had more advance publicity than now.
    Steve Byrne, FSG

  4. BillAttardi says:

    Steve Byrne sent me a very interesting article Who can Sell this Stuff by Prudence Thompson of Egret Consulting. The complete blog is on their website:
    SSL brings tremendous complexity that has to be absorbed and clearly presented to the arbiters of quality lighting. While it becomes ‘easy’ to laden SSL with a variety of cool additional tasks: security, sensors, controls, data transmission, etc., it doesn’t improve the quality of lighting. And it confuses the message, which lessens the discussion dedicated to lighting. And it makes it harder to actually sell.

    Lost in the shuffle is the customer. And who can get to the customer with the technical acumen to effectively ‘sell’ the capabilities of smart SSL? The challenge for every manufacturer of SSL will be to attract people who can sell smart SSL systems. The trick will be in developing training regimens to ensure they understand not just the electronics, but that they can also understand the nuances of selling into the legacy electrical industry.
    The smarter lighting gets, the dumber the buyers become.

  5. Jim Pinto says:

    With the inexorable shift to LED lighting (theoretical “infinite” life) the replacement business simply disappears. What’s left is “rentals” (for occasional lighting) and “service” for everything else.

    For the agile (thinkers and doers) this represents enormous potential. Already, passenger aircraft don’t have exit signs – just sequences of lights pointing the way to the safest exits (which may change, depending on the emergency); this will happen everywhere. Home-lighting could be controlled with AppleTV smarts. Stadium event lighting could have all kinds of entertainment, advertising (think customized entertainment at each seat), crowd-control for improved safety – the possibilities are there for the forward thinkers, and leadership in big markets represent the prize for the first-movers.

    The possibilities are “Illumigeddon”!

  6. Ross Reida says:

    Amen Chris, you are right on the money here. Not only lighting as a service, but other creative forms of project funding are entering the fray as we speak! I completely support your approach with the exchange of ideas, and talking about the future.

  7. Skip Monk says:

    I think the first step to solve throughout the industry as pointed out in a recent symposium is Color, Clarity and Consistency.

  8. Greg Ehrich says:

    From Greg Ehrich, LC Premier Lighting
    While I agree that there are some issues facing traditional lighting distribution with the advance in LED technology I think overall there is now more of an opportunity than ever to grow your lighting business. There are billions of sockets in the US alone so it will take a long time to convert them all to LED. I know that it has taken over 20 years to convert T12 to T8 fluorescent (still going on) so I believe it will take at least that long to convert to LED. 20 years from now there could be another new technology to take over LED. There is no telling the future so the important part now is to educate yourself and your employees with as much knowledge about all aspects of lighting. Understanding LED technology is important, but you also need to understand traditional lighting to truly be able to sell light. Attend conventions (NAILD, Light Fair, etc..), participate in webinars, take online courses and research. Lighting has always been confusing and will get to be even more so as LEDs advance. The companies that take the time to understand the available options and how they work as well as their customer’s current lighting system will be the ones that succeed.
    Great discussion and one to keep expanding on.

  9. Chick Huber says:

    Chris — interesting prospectives. Not to worry though– obviously my opinion. It’s a situation not unlike the comments that were made about 50 or so years ago. Back then it was said that ” everything that can be invented has been invented” and there won’t be any or at least many new patents. Lighting will — like technology in general — continue to evolve. Remember when we thought we had the potable phone of phones when we carried around the “bag phone” and its car-like battery.
    What we see currently as LEDs continue to evolve is lighting controls — all types and shapes. They are now one of the drivers. Another is the application of lighting in many new ways. I’m not telling you anything you don’t already know– I’m sure.
    As to Distributors and Reps, the key will be to evolve as a business. And the evolution of lighting will not be so much how the industry evolves, but being able to be nimble, open to change and flexible. Smaller light sources, unbelievable optics, color changing, probably light wave lengths that reduce bacteria/viruses and maybe even treat medical illnesses just by being in a normal space– these will all be “things” that we will sell as Lighting Distributors and Reps. I could go on, but I’ll leave you with just 2 more thoughts: (1) the future will be all about adaptability to survive and complacency will result in demise and (2) remember when people said gee ” a 50K mile tire” will put the tire manufacturers out of business. That hasn’t happened nor will 50K hour LEDs put the lighting or Distributor/Reps out of business either. They just have to adapt as I note above.
    Look forward to your future reports.

  10. Jeff Miller says:

    Real progress will be seen when the so-called ‘LED Industry’ begins to seriously engage with the needs of the people who use their widgets. Talking about subjects such as the ‘Internet of Things’, the Lighting Controls revolution, and SSL as a communications protocol is the stuff of dreamers and schemers looking for another killer app. The real winners will be those who actually succeed in improving the lives of others, not just selling another gadget.
    Jeff Miller

  11. BillAttardi says:

    From Bill Brown, Chairman, A.L.P. Lighting
    My feeling is that there is always concerns about distribution channels……….that’s why Walmart displaced Sears and why Costco is growing….every company has to make sure that they are relevant to the markets that they serve…Intelligent buyers are always evaluating their options and choosing what makes the most sense to them…

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