Hey there, we’re back with another installment of the HMI Blog’s “New Year, New Challenges” series: electrical trends! Each week, we’ve been looking at one of the various industries our clients deal in and discussing what’s coming up for them in the new year. While you’re here, check out our other installments!
Today, in this “New Challenges” post, we’ll take a look at the electrical supply industry.
As with every industry we’ve covered in this series so far… well, it’s been a year. Electrical commodities are ubiquitous in the modern world and are only going to grow more essential as digital continues its conquest of the analog world. But even a growing industry faces challenges, and nobody was completely impervious to the challenges brought on by the COVID-19 pandemic.
As we enter spring of the new year and begin to take steps back to pre-pandemic normal, the electrical supply industry has a host of challenges, uncertainties, and hopes for the future. Let’s take a look at what’s in the cards for electrical in 2021.
Let’s get the obvious out of the way first: the global economy took a hit due to the COVID-19 pandemic. But even though every industry was impacted to some extent, experts in electrical are forecasting a speedy recovery in 2021.
The second quarter of 2020 saw a slump for the electrical industry – no prizes for guessing why. Things still weren’t looking great later in the year: according to the electrical distribution blog ElectricalTrends, back in October 2020 industry leaders were predicting only incremental growth in the coming year.
But more recent developments have given cause for optimism. Q3 saw the majority of distributors bringing their teams safely back into the office. The development and rollout of vaccines has led experts to look forward to the second half of 2021 as a return to normal, or as close as we’ll be for a while.
Best of all, just this week ElectricalTrends revised its 2021 predictions to project double digit growth for the industry in 2021, as opposed to the low- to mid-single digit growth it had been predicting earlier. Coming off a year none of us will be likely to forget anytime soon, that’s pretty impressive.
Smart technology is still in its nascent stages, but it’s pretty clear that it’s here to stay. Ever since the first motion-activated light turned on and blew our minds, we’ve been obsessed with finding ways to make our lighting smarter. Lighting products today might feature color-temperature controls, full-building automation, or data-gathering capabilities. “Connected lighting,” as it’s come to be called, streamlines the end-user experience to maximize ease and efficiency.
Speaking of efficiency, there’s the continued rise of the light-emitting diode. In the past decade or so LED lighting has seen a meteoric rise, with cautious initial investments starting in 2008 and expanding tremendously in 2013.
That trend is only expected to continue. In its LED Lighting Forecast, the U.S. Department of Energy predicted that LED lighting would take over the market, representing 84% of sales in the general-illumination market by 2030. That’s a 40% reduction in lighting energy consumption, and a reduction of greenhouse gas emissions by around 180 million metric tons of carbon dioxide.
Differentiators are the name of the game in a crowded market, especially one that has to contend with eCommerce giants like Amazon. (So, basically all markets nowadays.) Given the newly-saturated marketplace, Industry experts are encouraging companies to focus on what differentiates them.
As with HVAC, a prime differentiator for the electrical supply industry is service. Electrical distributors are increasingly seeing service revenue as an opportunity for business growth, and contractors are valuing distributors that can provide service more and more. One electrical contractor told tED that “service is the only thing that will separate us from paying a 1% or 2% difference across all of the bids that we’re getting.”
If you’re familiar with electrical, or with some of the other industries we’ve covered, you probably know what that first shark in the water is: labor. With a growing industry that requires increasingly complex training to bring in service revenue, you’d better hope you have the labor force to make it all happen.
The past year has seen rising concerns about skilled labor shortage across a range of trades, including electrical distributors and contractors. We’ve been over this too with HVAC: more people are leaving the skilled trade workforce than entering it, and distributors are now working on finding ways to attract new hires.
The electrical supply industry is in a strong place and will likely see a good year, though not a record-breaking one. Recovery takes time, even in the most resilient of industries.
Still, in a crowded market with a somewhat uncertain year ahead of them, many electrical distributors will have to consider how best to meet the challenges they face.
If you’re an electrical distributor, we’ve got your back. HMI’s incentive solutions are designed to help companies like yours combat these challenges with programs that increase market share, build customer loyalty, enable your channel, generate brand awareness, and more.
Want to hear more about how an incentive program can help your business? Book a meeting with us today!