The UK Lighting market was estimated to be worth over £1.7 billion in 2014, with a positive outlook in 2015 for good growth of around 8-9%. Key drivers of this growth include the following:
- Returning confidence in the new housebuilding market
- Growth in consumer confidence for the repair and maintenance sector
- Recovery within the private commercial construction sector
- Growth of the LED lighting sector
LEDs gain significant share, penetrate non-domestic sectors
According to AMA Research, forecasts into the medium term remain optimistic with growth projected at 4-6% per annum until 2018, driven by the above factors, also by an increased demand for energy efficient lighting and in particular - LEDs. Expectations are that the existing European Directives will continue to impact the supply and sales of certain lamp types. This will drive the trend for retro-fitting of more efficient lamps into existing luminaires.
LED lighting has gained significant share in recent years, particularly in non-domestic sectors such as retail, offices, industrial and public sectors. One of the key end-use sectors where LEDs have captured share is street lighting, particularly in combination with control systems that allow for lights to be dimmed or even switched off during off peak periods. This has been driven by the need for local authorities and central government departments to reduce overall budget costs on top of increasingly onerous carbon reductions and energy savings targets. Overall, the lamps and bulbs market sector is expected to see annual growth rates of 7-9% 2014-16, followed by more modest growth rates in the medium term as the impact of LED growth recedes.
The market for luminaires, on the other hand, is expected to remain relatively steady, with growth driven by new product developments concentrating on energy efficiency and improved light rendering in particular. We also expect that integrated LED luminaires will continue to gain share in the medium term.
Efficiency drives double-digit growth for lighting controls sector
Prospects are even brighter for the lighting controls sector, which has seen double-digit growth for a number of years due to the focus placed on efficiency and cost savings within most non-domestic end-use sectors. Key to this recent growth has been the ‘step change’ experienced in the technologies of solid state lighting controls and recognition of the need for more efficient lighting systems for all end-use sectors. Growth is expected to gradually slow down to single figures from 2017 onwards; however, the market will continue to outperform the majority of other lighting product sectors.
The controls market is currently in a particularly innovative stage where new products are introduced on a regular basis, thereby underpinning good value growth. The concepts of zoning, directional and space lighting have been brought into sharper focus by the effects of the recession and the need to cut costs, carbon emissions and save energy. In addition, the trend to use a variety of light sources at a single location should also result in increased demand for lighting controls.
The spread of LED technologies and the increased demand from the lighting market for integrated lighting solutions in future years, is also likely to benefit the controls sector. Controls for street lighting is likely to remain a key growth area, with local authorities recognising the savings that can be made by either switching off or dimming street lights between the hours of 12 midnight to around 4 am.
There is good potential for growth from the domestic sector as the take-up of LED systems offers increased scope for a reduction in energy-use, improved controls, and is no longer limited to dimmers. However, an increasingly competitive market is also likely to mean downward pressure on average prices, thus, limiting the potential for significant value growth into the longer term.
Into the longer term, it is likely that more lighting controls will become integrated into building management systems either in the design stage or at a later date. This is likely to benefit those organisations targeting the lighting market but with expertise in other controls sectors.
UK lighting supply structure sees shift
The supply structure to the UK market is in a state of change with a move towards more integrated products using LEDs, also with the influx of electronics/controls/semi-conductor manufacturers realising the potential provided by the lighting market. In addition, existing lighting suppliers are also adding both LED technologies and other lighting products to their ranges – some achieved through acquisition strategies.
Given the specialist nature of the non-domestic lighting market, it is unsurprising that the distribution market for non-domestic lighting products is dominated by the wholesalers/distributors. Direct supply has been gaining share in recent years particularly for larger-scale projects, though the fact that there are fewer large-scale public sector projects currently is affecting this share.
In summary, prospects for all sectors of the UK lighting market are bright, with the key driver across all market sectors being LED lighting, which has gained significant share in recent years. In the longer term, however, the introduction of these more energy efficient products may have negative implications for the market, in particular the replacement market, reflecting increased life-cycle expectations associated with these products.
More information can be found in AMA Research’s report, Lighting Market – UK 2014-2018 Analysis, or browse their related reports on the lighting industry. Plus, to learn how your organization can utilize market research to achieve success, download our free eBook.
Editor's Notes:
This post was written by Anna Eriksson, AMA Research.
About AMA Research:
AMA Research has been established as a specialist provider of market research information for the building, construction and home improvement industries for more than 20 years. With over 150 reports available, they are widely recognised as the UK’s leading specialist provider of published research within this sector. All reports are researched, analysed and written by marketing professionals with experience of the building products industry and our clients include many of largest suppliers of building and home improvement products in the UK and abroad.
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