2020 has been … unpredictable.
Lighting retrofit businesses that thought they had their year’s projections all planned out have since had the rug yanked out from under them. And they’re still finding their footing on slippery new ground.
But as each of us tries to figure out where this new path is taking us, it’s interesting to stop and reassess the lighting retrofit market as a whole. To help with this, we spoke with three industry experts who have previously contributed to our Insights articles: David Ingram of DLL, Steve LoJacono of Graybar, and Walter “BJ” Pidgeon of GE Current.
What Trends Are Currently Influencing the Retrofit Market?
Ingram: The biggest trend is the uncertainty as to what businesses will look like post-COVID-19. Companies both large and small are re-evaluating workspace configuration, employee population, safety standards, and in some cases, visitor and customer engagement. Virtually everyone has a different perspective, but one thing is common … it will be different.
Additionally, I feel that a smart lighting system or a system integrated with other devices could become a viable solution in the “new normal”.
Pidgeon: Future proofing. There’s a lot of talk about the benefits of networked controls, such as increased energy savings, enterprise control/visibility and non-energy-based outcomes such as increased worker productivity—and we sell a lot of these complete deployments.
However, a new trend is emerging among the customers who may have been a traditional lighting-only client in the past. These customers are increasingly intrigued by the capabilities of networked controls systems but need to move on a lighting program today. What can this customer do today to be poised to take advantage of the ‘killer controls app’ that may be developed for their business tomorrow?
The answer is to install controls-ready fixtures today and turn the controls on tomorrow. The cost of a controls-ready smart fixture is minimal vs. the traditional “dumb” fixture. However, if smart fixtures aren’t installed today, the customer who wants to upgrade later has two choices: (1) wait out the 12-, 15- or 20-year life cycle of the fixtures and lose out on the benefits of networked controls in the meantime, or, (2) pay more to purchase and install smart fixtures in a year or two when they are ready to switch. It therefore just makes sense to have the latent capability deployed and ready to go.
LoJacono: Energy savings are still preeminent. However, I’m starting to see a lot of B and C general office spaces renovate simply to replace older lighting for aesthetic purposes. Typically, these spaces are renovating, and rather than retain their old fixtures, they are deciding to update. In the industrial space, the primary driver is employee safety, with a secondary of productivity.
What Trends Do You Think Retrofit Companies Can’t Afford to Ignore?
LoJacono: The provision of more detailed photometrics and 3D renderings is critical to pushing a client to close. If they can visualize their new look, it’s about as close to a sale as you can get. I see it as “trying on the pants in the store so you can see how they fit before you buy them.” Having someone who is well versed in either AGI32, ElumTools, RevIt, or SketchUp is critical to increasing your success rate.
The other trend will be to use software like SnapCount that provides a graphically intensive, intuitive look at not only the energy savings, but also the financial metrics required to sell the project internally for your customers.
Ingram: From my perspective, conservation of capital will be even more important to their customers, so to be successful, retrofitters will need to not only deliver a system solution that addresses their customer’s facility requirements, they also need to deliver a convenient, cost-effective method to procure the system for their customers. Cost savings is important but may not be enough to secure the project if the customer can’t come up with the cash. Offering some form of financing, leasing or service contracts, will be very attractive to customers, helping retrofitters score more wins.
What Industry Practices or Habits Do You Think Will Change or Be Discarded?
Pidgeon: I see a shift away from calculating ROI based on lighting energy. As existing lighting becomes more and more eﬃcient, the energy savings from lighting upgrades will naturally be an increasingly smaller sliver of an increasingly smaller slice of the energy pie. Anyone who has been in the industry for a while has seen this. In 2005, you could easily save 224 watts by replacing one highbay. In 2015, that replacement might only save 114 watts. The less energy a fixture uses, the less dramatic the energy savings will be when you upgrade it.
The sale of the future is going to have to rely on other metrics and we, as an industry, are going to need to substantiate and quantify these metrics. The good news is that, if a direct link can be made and the gains can be quantiﬁed, non-energy ROI could easily be orders of magnitude larger than traditional ROI.
- Networked controls: Can energy savings from non-lighting systems contribute to an ROI? Does the need for enterprise control/visibility trump ROI altogether?
- Being a responsible corporate citizen: Do local laws and ordinances require measures that are otherwise unjustiﬁable in an ROI world? How about marketing ‘green’?
- Human beneﬁts: Do ethics dictate that workers are entitled to human centric/circadian lighting? Or, is there a quantiﬁable payback in increased worker productivity/retention?
- Disinfectant lighting: The ROI for reducing infections/liability for hospitals could be oﬀ the charts; could this also be the case for an oﬃce environment in a post-COVID world?
- Productivity gains: How can we quantify and prove the productivity gains based from apps using controls data?
How Do You Think COVID-19 Will Reshape the Industry in the Short and Long Term?
Pidgeon: Short term, I see a switch to servicing customers who have prospered during the COVID crisis simply based on having the discretionary cash to move forward with a lighting project. Grocery stores are an example.
Long term, I think the market will recover and equalize within 24-48 months and we will be back to business as usual. However, the re-emergence of disinfectant lighting along with the introduction of new technologies in this space is extremely exciting. The applications are almost limitless and customers who have never thought about disinfectant lighting will suddenly see the light! For example, a grocery store could install disinfectant lighting over the area where they store carts.
Ingram: In the short term, customer and contractors are racing to complete projects before facilities begin opening up in certain locales. We’re encouraged by a number of manufacturers, ESCOs and contractors that are planning now with innovative solutions, promotions, and sales strategies to aggressively attack the market once it opens up again.
LoJacono: Honestly, I don’t think there will be a big change here. Yes, projects have been put on hold. However, renovation projects have typically been inelastic from a demand standpoint. Once we get past the pandemic, I foresee things pretty much returning to normal. Color me an optimist.