• Jenny Heinzen York

Lamp and lighting vendors look to 2014

Housing improvements, new channels, interesting products drive optimism

Lamps have been a strong-performing product category in the home accents industry for the last few years. Lighting fixtures are poised to join them as the housing market continues to show steady improvement.
And vendors from both sides of the equation say they are ready to "light it up" as we move into 2014.
"We're very excited about the year ahead and anticipate that 2014 will bring us gains in sales as compared to 2013," said John McKearn, president of Flambeau Lighting, which produces New Orleans-inspired lamps and fixtures.
"We think the economy will continue to recover and the relatively affluent consumer will spend for home furnishings and lighting. Depending on how the economy fares overall, we may enjoy greater increases a year from now, in the fourth quarter of 2014."
"Consumers are feeling better about the economy and spending money on their homes and enriching their personal lifestyles; I'd say that the lighting category is very healthy," said Brad Kleinberg, president of fixture specialist Crystorama.
For companies that produce both lamps and fixtures, both are performing well, suppliers said.
"The categories are still very strong for us and continuing to grow," said John Haste, VP of sales for Elk Group International, parent company to Elk Lighting, Dimond and Sterling, among other brands. "From a percentage growth standpoint, lamps are seeing a larger growth. But both are very strong as we're working to get larger market share - that's one of the places where being a single source program helps - people are tuning to us because we can be a single source for them."
Improvements in the housing sector - both existing home sales and new construction - is key to growth in hard-wired fixtures.
"While portables are generally the stronger category for us, we are currently seeing greater growth of fixtures and believe this to be tied to the housing market," according to Stan Drake, VP of sales for Lite Source, which sells about 60% lamps and 40% fixtures. "As new home sales continue to gain momentum, as well as custom and remodeling projects, we think we'll continue to see growing sales in this category. Portable lamp sales are growing on a smaller scale, and we think that's because the industry has lost so many furniture stores, resulting in fewer customers to whom we can sell portables."
The lighting showroom channel is an area Flambeau is working on for 2014.
"We feel that the lighting showrooms generate the majority of fixture sales at retail and we know this is an area of distribution that offers us tremendous growth opportunities," McKearn said. "That's another way of saying that we haven't made the Suryain-roads we had hoped with showrooms, however we find many are simply afraid to offer designs that are outside of the mainstream. ... Regardless of the upturn in the housing market, if you don't show it, you won't sell it."
The lighting showroom channel is heavily driven by the state of the housing market, but for AF Lighting, that's less important business, according to Karen Fallon, national business development manager for the producer of lamps and lighting.
"We do not really believe the housing market to be as much of a driver for AF Lighting as we do the overall consumer confidence index," Fallon said. "Being a specialty lighting brand, we are not tied as closely to the traditional lighting showroom channel as other manufacturers with large fixed wire collections."

Challenges Still Present

Despite the recent successes in the categories, there are still headwinds in the business; governmental regulations and Asian factory concerns are at the top of the list.
"The real challenges are the usual ones such as: creating innovative designs and dealing with cost increases from our factories overseas. We have all seen attrition in Chinese factories and many have shut their doors," Drake said. "Our emphasis continues to be on quality control, shipping and pricing. We are affected now by so much government regulation and this also is a concern and adds to costs of products."
For Flambeau, cost increases and quality control are posing problems.
"The ongoing challenges are always dealing with cost increases from our factories overseas as well as consistency in production runs," McKearn said. "We are all over quality control with them and have seen marked improvements in the manufacturing. We are all affected so much by government regulations, and unfortunately these add to the costs of products. Our solutions are innovative designs; it's one of Flambeau's greatest strengths and enables us to provide value to our customer's customers."
For AF Lighting, price increases also pose a significant challenge.
"Our biggest challenges in regards to manufacturing continue to be the ever-changing cost increases. Raw materials and carton costs, combined with new labor laws and EPA regulations in China make it difficult for us to maintain the price points we would like to be able to present to our customers," Fallon said.
On the bright side, the issues are shared by everyone, Haste said.
"It's out there, you have to deal with it, but so does everyone else - it's part of doing business," he said. "There are challenges in China right now as far as the factories and changes there, everything from wages going up, labor shortages in certain areas, those types of things. It's not really something new."
There's also the underlying issue of being but one piece of the discretionary income pie.
 "As an industry, we are all challenged to get the attention of consumers with discretionary income," Kleinberg said. "We need to educate consumers how exciting and fashion forward our products are and collectively we must advertise and promote our industry."

Exciting the Consumer

To meet that challenge, lamp and lighting vendors are putting forth a lot of great products and working to target retail price point "sweet spots."
"The consumer is much more aware of style and fashion and they are looking for different and updated looks for their homes, especially with the portable category," said Lite Source's Drake. "Price points are key as the retailer knows, or claims to know what is their sweet spot for retail price points for lamps and fixtures. Portables seem to be anywhere from $75 to $199 retail and fixtures, depending on size and type, from retail price points of $199 to $799 and higher. Styles that are simple and showcase clean looks and work transitionally will be the winners. Of course they must have a certain flair and panache. The Restoration Hardware look is very popular as well as rustic, and a more utilitarian look such as Urban Warehouse. Transitional styles will also continue to gain ground."
Haste agrees that transitional styles are most important at Dimond.
"Table lamps are selling more in the $269 to $399 range; floor lamps, $499 to $599. Styles would be more transitional, maybe leaning a little back toward traditional, but transitional overall," Haste said. "In High Point, we introduced four colors - and it was very well-received - pLite Sourcearticularly the orange and the blues. Mercury glass is still selling very well."
AF Lighting offers a wide range of products and pricing, with the most success coming from licensed collections with designer partners Candice Olson and Angelo Surmelis.
 "Our retail pricing on portables ranges from $69 to $749, from bright colors to subtle hues, depending on the designer," Fallon said. "Each designer has their own point of view and we try to translate this into an affordable and stylish choice for our customers."
And Flambeau specializes in unique, McKearn said.
"Distinctive is what sells for us. As long as it's unique and speaks to our design mission it's selling for us," he said. "Price points are harder for me to provide you an answer. We're not a low-or low-to-middle end line. So, in table lamps we see strength in the $249 to $399 range at retail, $299 to $599 for floor lamps, fixtures or chandeliers $599 to $1,399. We find great success in Old World finishes, patinas and of course gold and silver."
One newcomer to the lamp business is Surya, which launched its first collection October in High Point. Satya Tiwari, president, said he was interested in pursuing the sector to provide his customers with coordinated accessory packages.
"Entering into the lighting category was a natural extension for Surya," Tiwari said. "We understand that customers are no longer simply looking for one accessory or accent piece within their living environments but instead are seeking to build coordinated looks that reflect a specific mood and express their personal style. That's why we have focused this past year not only on expanding into additional categories but also on integrating our product lines according to lifestyles and color stories. By offering a variety of accessory categories - including lamps, pillows, throws, wall decor and so on - from a single source, we are able to streamline the shopping experience for customers while also making it easier for them to match colors and textures and see how various products will work together."
The move has not come without some challenges of its own, though, he said.
"Customers still view Surya as a rug company, so it has taken some time for the market to fully understand our strategy and integrated accessories approach. We have always been very aware that other key market players exist within every category that we've entered into," Tiwari said. "We are very committed to the success of our lamps and other accessories categories and are incrementally building out each of these categories to ensure that we offer our customers the best products and solutions possible. Retailers have told us they are looking for affordable, high-quality lamps in a variety of styles and colors that coordinate with their furniture offerings. It's really about offering customers more choices and convenience."

Opportunities Ahead

All vendors agreed that 2014 looks promising for the categories, particularly as consumers become more aware of the fashionable and functional nature of lighting products, as well as the advances in technology that have everyone talking about lighting in general.
"There is a great upside as home furnishings is a growing industry, and lighting is the leading the way with technological advances and fashion-forward thinking at great price points," Kleinberg said.
 "We look positively at 2014 yet have realistic expectations,"
Drake said. "We anticipate that 2014 will bring modest gains in sales as compared to 2013. We believe that as the economy continues to recover and consumers begin to spend more of their discretionary incomes in the lighting and furnishings categories, we could see even greater increases by the fourth quarter of 2014. We do believe that in the fast-paced world we all live in today, that the home continues to become more of a haven, our sanctuaries if you will, and people ultimately want to make their homes both more beautiful and comfortable."
In terms of retail channel, vendors are looking to e-commerce sites, interior designers, lighting showrooms and hospitality as their best opportunities to post significant growth next year.
"We feel very positive about 2014," Haste said. "We just came out of High Point with a large introduction of lamps, and will have a large fixture introduction in January in Dallas. We feel good about it, but it's still a situation where you really have to work at it - it's not just automatically happening. As they say, you are looking for wind in the sails, but we're still having to paddle. The economy is coming along, but it's still not where you can coast. You have to make things happen. You have to work at it every day - that means new products, sales and marketing efforts, all of those details that are important you have to continue to do - if you don't do, you're going to lose out."

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