The Road Less Traveled: Part 2

Read Part 1 of this article series.

In a lighting market dominated by LEDs, what’s become of ‘legacy’ technologies like fluorescent and HID?

With LEDs now supporting most every application in the lighting market, LED technology is all the rage, but what’s become of the many legacy technologies – e.g., fluorescent, HID, incandescent, halogen, etc. – that previously dominated the market for decades?  In Part 2 of lightED’s two-part coverage, three experts nationwide – Rhandi Kuchenmeister, purchaser at K/E Electric Supply Corp. in Mount Clemens, Michigan (www.keelectricsupplycorp.com), Sean Retting, manager of project quotations at Blazer Electric Supply in Colorado Springs, Colorado (www.blazer20.com ), and Ryan Micheletto, district operations manager at Crescent Electric Supply in Joliet, Illinois (www.cesco.com) – discuss their approach to stocking legacy technologies and what will become of the market for these older light sources.

lightED:  Is it disruptive to your operations to have to stock legacy lighting technologies for certain customers or is it no big deal?  Would you prefer to upgrade those customers/applications to LEDs?

Kuchenmeister: I wouldn’t necessarily call it disruptive; as far as what we stock, I look at it as a product line extension. As sales of incandescent and other legacy lamps go down, they’re replaced by LED lamps or fixtures, so we’re more or less just trading warehouse space from one product to another. We changed most of our troffers from T8 fluorescent to LED in nearly the same quantity along with floods and wallpacks too; it ballooned our inventory volume but increased our sales volume as well, so you had to understand where the changes were coming from. At one time we saw a spike in inventory of nearly $500,000, which was concerning until we realized that it was the major swap-over from legacy to LED fixtures. We’ve since learned that we can’t have a hard cap on inventory volume in the warehouse and that you have to go with the flow of change rather than get left behind. Sure, we try to convert those customers who come in for an HID wallpack to LED, which is in fact a bigger dollar sale right now, but we also have to accept that not everyone is ‘there’ yet and many people just want to stick with what they know/have. We still have a healthy inventory of legacy HID, incandescent, and fluorescent lamps, but I see them being re-ordered far less as time goes on and we’re only stocking 20-50 percent of what we were just a few years ago.

Retting: We stock a box or two of all kinds of lamps for miscellaneous requests, so I don’t believe it’s that disruptive. If we were able to only stock LEDs I’m sure that’s the direction we would go, but until all buildings have been retrofitted or installed exclusively with LED, I don’t see that happening anytime soon.

Micheletto: Legacy products haven’t caused any disruption to our operation in Northern Illinois. We stock fluorescent, HID, halogen, and incandescent lamps for our customer base to support their maintenance needs.  However, we also stock LED equivalents across all of these product categories so that we can offer our customers a quick and up-to-date alternative; combined with local utility rebates, we can be very aggressive with our pricing, often offering LED technology at the same or even lower price levels. As far as fixtures are concerned, we made the decision nearly two years ago to stop stocking legacy technology — any fixture we currently stock in our nine locations is LED technology. Based on our current price levels and cost of ownership comparisons, it really doesn’t make sense financially for us or for our customer base to continue to support these technologies on new or even replacement installations.

lightED:  Is there a point where you feel you’ll only be stocking LEDs or do you think that there will always be a small market for legacy technologies?

Kuchenmeister: I don’t think the legacy market will completely go away 100 percent, at least for a long time. There are still many residual areas of the legacy market that LEDs can’t exactly replace; sure, the lumen output or color temperature are close enough and beam spreads on PAR/MR/BR lamps are about the same, but LED manufacturers haven’t filled every niche yet. We have a long-standing saying/joke within K/E that we’ll sell anything our customer wants to buy, including a toilet seat (which has happened!), so as long as a customer says ‘sell me that HID or fluorescent lamp,’ we’ll get it for them.

Retting: This can be a sticky situation as even LEDs rapidly become obsolete as newer and less expensive versions are developed. Ideally, we’d have the bare minimum of legacy items as they’re slow movers, but being able to provide what the customer needs is the ultimate goal.

Micheletto: For our stock of fixtures we’ve already gone the path of carrying only LED technology, because at this point it just doesn’t make financial sense for us or our customers to keep two sets of overlapping product technologies. For example, if someone wants a 400-Watt metal halide fixture, we can provide them an LED equivalent for nearly the same price right now. If not, any sort of price premium on the LED alternative will be minute compared to the energy and maintenance savings it will deliver. As for lamps, ballasts, and otherwise, there’s still a large portion of business out there that we receive from repair and re-lamp projects. It’s funny, LED is the latest and greatest, but if you were to take a drive around your town you’d still notice plenty of older lighting technology in the area. As long as that’s in existence, there’s a market for us to service our customers and ultimately, that’s our goal — if our customers have a need, we’re going to make sure we have the inventory to fulfill it. Eventually, I’m sure everything will move to LED, lamps included. However, with the number of current installations of older lighting technology we have in our market, it’ll be some time before we make the full conversion to LED on the lamp side. I imagine that timetable will rest more on lighting manufacturers’ depreciating support of older technologies, which will ultimately drive distributors away from stocking and supporting those products.