Light Emitting Diode lights or LED lights are now mainstream and the next step for the lighting industry is going to be lighting controls. It can be called smart lighting or controlled lighting, or it can also be integrated into the Internet of Things (IoT). The use of sensors in the lighting industry has been there since the 90s but the need was to make them more sophisticated and connect them with other devices for better control. Certainly, IoT has paved the way for smart lighting but the quest for a sustainable, smart lighting solution still remains in front of the industry.
The worth of the global lighting market is approximately $133.94 billion and the credit goes to two driving factors. The first is an ever-increasing adoption of LED technology and the second is emerging smart lighting systems or connected systems. The global lighting market is growing at a rapid pace and the global LED lighting market is expected to grow at a Compound Annual Growth Rate (CAGR) of 14.4 percent till 2025 whereas the commercial LED segment alone is expected to grow at a CAGR of 6.4 percent. On the other hand, the global smart lighting market is expected to grow at a CAGR of 22 percent by 2023 with an approximate market value of $21 billion, whereas general lighting market is expected to grow at a CAGR of 5 percent. The reason for such high growth in the smart lighting sector is the increase in internet usage along with the connectivity of several devices.
However, a slight decline of 1 percent will also be there until 2020 due to the reduced number of Greenfield construction projects in the commercial sector. The current penetration of LED lights segment in North America is 40-45 percent which is likely to reach 65-75 percent in the next 4-5 years. The demand in the global residential sector is also expected to grow at a CAGR of 6.12 percent by 2022.
How to Start a Business in the Global Lighting Market
An enterprise must have a fair understanding of the global lighting market before starting a business in the field. Here is an overview of the factors that play an important role in the modern lighting business scenario.
- The industrial lighting sector is expected to witness maximum growth in the APAC region due to emerging economies. The global industrial lighting market is dominated by the APAC region with the highest market share of 40 percent due to the low cost of manufacturing. Following APAC, North America and Western Europe are at second and third position with a market share of 15 and 20 percent respectively. In addition, North America, Western Europe, and APAC are high maturity markets whereas LATAM and the Middle-East are medium maturity markets.
- Entrepreneurs must carefully consider current lighting market trends such as smart lighting and energy-efficient lighting. The current global lighting market is full of opportunities where new enterprises can emerge with innovative business ideas and gain a foothold. The global lighting market is dominated by 10 key players that are Philips Lighting, OSRAM, ERCO, CREE, Cooper Lighting, Iwasaki, Commercial, ANSORG, and ZUMTOBEL.
- Another important aspect to consider is the segment of lights that the business prefers to manufacture or supply. Here, energy efficiency is an important factor as it has become a deciding factor for the end-users in both the commercial and non-commercial market segments. The energy efficiency of different lights as follows:
- LED – 85-90 percent
- HID or High Intensity Discharge – 80-85 percent
- Fluorescent – 75 percent
- Halogen – 40 percent
- Incandescent – Low
- Once the type of technology is decided, entrepreneurs can focus on other aspects such as safety, beauty, and functionality of the lights. Website development and digital marketing are other aspects that should not be overlooked either. These can be amazingly helpful in gaining visibility and contacting potential clients, buyers, and sellers. An effective website marketing strategy will also ensure that the business is able to engage its customers without any fuss.
- After setting up the business online, entrepreneurs can focus on establishing a manufacturing plant or trading facility. However, they should not be casual about the permissions and compliances as these are of utmost importance in a business where each and every product should be tested for both performance and safety issues. In addition, hiring skilled labor is a key factor in the lighting industry. Every business hires experts who have the essential know-how of different types of processes but the employees or factory workers should also be hired with the same vigilance to ensure the sustainability of the business.
The global lighting industry is fast-paced and technological innovations at regular intervals make it even more dynamic. In such a scenario, governments across the globe have put strict regulations for users’ safety thereby controlling the market. Here, new businesses have to carefully analyze every positive avenue and check for positive signs to gain a foothold.