Are LEDs Plugged in All Home Lighting Points?

 

In 2013, about a billion and a half lamps were sold in India; half of them being Bulbs (incandescent) followed by CFLs (31%), Tube-lights (16%) and a negligible share of LEDs. In Jan 2015, the EESL (a JV of PSUs under Ministry of Power) launched a programme to promote LED bulbs in Indian households, UJALA - a non-subsidized and advance version of Bachat Lamp Yojna (by BEE) for CFLs. Since then, UJALA scheme has sold 300Mn LED Bulbs and 6.5Mn LED Battens. EESL tenders gave manufacturers an opportunity to achieve economies of scale, thus, bringing downmarket prices down by 1/10th in the last 3 years.

These developmentshave also spurreddemand for LED lights in the electrical retail channel.Here, brands can get higher prices than in the tenders.A large number of new players have been attracted by the huge opportunity presented by the LED market. An intense competition is still playing out. This is signaled by continuous decline in prices, evolving warranty terms and increased visibility of new brands at the retail stores.

Association of lighting manufacturers, ELCOMA, has committed to phasing out CFLs and this is being witnessed in the marketplace. Over the past year, sale of LED lamps has crossed that of CFLs. We expect the latter to be phased out completely over the next 12 - 18 months.

Our research shows that sale of LED lighting products has more than doubled sales over the last 1 year. Large sale volumehas been registered forfrom LED Bulbs (~300Mn) followed by LED Panel lights (~50Mn) andthen LED Batten (~35Mn).

Home segment isthemain contributor to LED lampsale volume. Till date, LED lamps have got into new lighting points and replacement sale has been very low. Since, LED lamps are designed to last much longer (almost 5 - 6 times as compared to CFLs),it is important to ascertain the lighting points still not having a LED lamp. This penetration gap will help marketers gauge future demand and make investment decisions accordingly.

Here, we have taken the first to decode the penetration of LED lamps. The following table presents the scenario in 2013.

LED Actie Lighting Points 2013 Reports based on inputs from Elcoma and Market Pulse

With this background if we analyze the recent trends/reports then majority of Bulb (~800Mn) active lighting points should have been converted to LED lamps while the rest would be on the verge of conversion. Some of the leading indicators are:

  • Two of the central government schemes are pushing for LED adoption in homes very actively
    • UJALA targets to replace another 470 million lighting points by Mar 2019; after facing execution issues (quality, replacement), they have proposed to have BEE Star labeled products
    • Saubhagya scheme is delivering electricity to 6 Lakh Homes/month, along with the connection every household is getting 1 LED Bulb free of cost
  • Nearly all the New construction and Renovations will adopt LED solutions as it will be the only lighting solution available in the market
  • Flurry of new entrants with smart &connected products will create demand for value added products and force the traditional lighting brands to follow them in the retail market
  • GST framework will impact the indirect trade (particularly wholesalers) hence create pockets of strength for brands as not many will be able to afford pan India distribution
In light of these facts, it is a no-brainer that all the ALPs (Active Lighting Points) will be LED based;however there are many new dynamics that will define the success of growth plans. Basis the market developments and dynamics, some of the hypotheses:
  • How fast will growth for LED lamps slow down?
  • Will LED reduce the lighting points while new homes with electricity supply increase the same?
  • Will the shift from wall to ceiling light point will impact the preference for LED categories?
  • Are the LED panel lights only getting installed with false ceiling and replacing battens?
  • With controls & connected devices on rise, will there be multiple light sources connected with each ALP (Active Lighting Point)?
  • Will glass return as the outer coat for LED light source or plastic will continue to meet consumer expectation especially for decorative lighting solutions?
  • Will white LED light source be the majority of ALPs (Active Lighting Points) or colors especially yellow will make their way into Homes?

If you are in search of confirmation for above and other hypotheses, then feel free to connect with me as we are working towards an omnibus yet flexible study design to decode the Truths before they become Facts in marketplace.

The design will encapsulate dynamics for each elementin end consumer decision making process with separate modules for retail sales trends (from our flagship offering mpELECTRIC), shopper scanning for ZMoT (Zero Moment of Truth) and home segment research on installations & preference of lighting solutions.

We are confident that this first of its kind, integrated research design through a syndicated route will drive velocity of decision making in your organization.

Please write to Nishant Singh at nishantsingh@marketpulseindia.com or call him on his mobile +91 98110 26820.

Market Pulse is closely tracking the retail market for LED lamps and luminaires through a nation-wide monthly research. Already, 5 leading companies are subscribing to this research to gain critical market insight.

 

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