Paul Coggins, managing director of Thorn Lighting UK and Ireland, discusses the shifts and challenges in the lighting market following its ‘State of the Nation’ research.
It’s no great secret that the internet is at the heart of some of the biggest changes in business operations today – from better communication, to changes in the way businesses interact with their customers and perhaps most crucially, how they buy their products. The online world is even revolutionising traditional industries such as the lighting market.
Yet, as the internet opens up new opportunities for customers to source products direct from new markets such as Asia, the shift does raise some questions about what this means for the industry in the UK.
Thorn recently launched a ‘State of the Nation’ survey which sought to give a voice to the industry on the current issues of concern.
The UK wide survey of 225 wholesalers, contractors and installers highlighted that more than 63% of respondents now see the internet as a vital sales channel to purchase lighting products. Notably, in parallel, more than half were concerned by the quality of cheap imports and the impact this is having on product returns and the total cost of ownership.
While price surfaces as an important consideration, customer satisfaction and the quality of installation must be factored into the total cost of ownership. The emphasis on price is likely to have stemmed from the recent recession, which forced the market to evolve in order to survive. Low cost procurement is a risky strategy – a cheap product isn’t so cheap if it requires three repeat site visits and a replacement for the customer.
The research also indicated that for contractors and installers, reliability is the most important factor when considering a product purchase, with 26% of respondents offering this as their highest priority. This statistic is twinned with 57% of wholesalers considering price as their most important factor when ordering products.
This only highlights further conflict in the market, for wholesalers in particular. In an effort to remain competitive, wholesalers are likely to concern themselves first and foremost with price, but as customers are more concerned with reliability it would seem they are being squeezed from both sides, trying to balance the requirements and needs of both manufacturers and customers.
For those operating in this market, short term cash flow predictions have been found to be a priority, as businesses look to secure their long term future. This is a noteworthy shift in buying priorities.
Thorn’s ‘State of the Nation’ research indicates that wholesalers and installers are also following the sustainability trends as they become increasingly concerned with the environmental aspects of products. As contractors and installers look for greener alternatives, be that of their own agenda or a specific customer request, being able to supply these alternatives is crucial to long term success.
There are also wider concerns of using the internet to source products. Managing stock levels, logistics and the ability to plan customer installations all add an extra element of complexity to the process.
In addition to the above, ‘State of the Nation’ provides an insight into the thoughts, perceptions and concerns of lighting customers. Contractors and installers expressed how they are perceived by the public as well as how they perceive themselves. Thirty-eight percent of respondents see themselves as engineers or consultants, with 28% believing that the general public see them as qualified tradesmen, a significant disparity.
This is important for lighting manufacturers as it means professionalism is a key factor for our customers, something that must be reflected in the way we do business and through our product ranges.
During the development of its new PopPack Pro product range for example, Thorn worked very closely with a number of customers, holding consultation sessions to ensure the new range met the requirements of our target customers, which has resulted in a product which is quicker to install and is a more sustainable option for the end user.
Many online activities, including social media, leave customers feeling that the personal element is being lost, especially in terms of the relationship between supplier and customer.
Wholesalers face a real challenge to make sure they engage with both the new breed of online customers while also continuing to service traditional buyers. Much has been made of social networking sites and how these channels allow wholesalers to communicate and sell products. Twitter and Facebook provide good examples, with many contractors signing up for updates from wholesalers and receiving special offers online.
Moving forwards, it is becoming increasingly important for those in the industry to quantify the total cost of ownership associated with products, monitor buying patterns, trends and priorities, and as the market develops, evaluate how social media and the internet changes the way in which the market operates and evolves.
