As the industry enters the fourth quarter of what has been a long year, many have sought insight into the industry’s Q3 performance, the outlook for Q4 and some thoughts for 2021.
This year, more than any in recent memory, has been difficult to read the “tea leaves” of the industry. COVID has roiled markets and the traditional industry trajectory, especially given the nature for regional and state specific hot spots. In addition, this summer’s wildfires impacted business on the West Coast, the Gulf Coast suffered numerous hurricanes and social unrest in major cities impacted business in those markets.
However, anecdotal feedback from channel friends regarding Q3 indicates that business, for many, was much better than expected. The industry rebounded, as expected, from Q2 with many companies coming close to recouping the losses they incurred in late Q1 and early Q2. Our definition of “recouping” is achieving if not exceeding levels comparable to Q3 2019. This may still put companies behind 2019 on a year-to-date basis. However, the year is currently not projecting to be the disaster many projected back in April and May.
To support the industry, Channel Marketing Group and DISC Corp. once again teamed up to solicit industry input to crowdsource Q3 performance, Q4 projections and identify key insights for 2021.
We got this input through our proprietary lists and received support from Electrical Wholesaling magazine, through ElectricalTrends and our LinkedIn networks, IMARK Group and NEMRA.
Overall, almost 300 individuals shared their input. Thirty-four percent of respondents were distributors, 27.6% were manufacturers and 36% were manufacturer reps/lighting agents.
In considering performance and outlook, channel participants reported a significant improvement versus Q2 with Q3 being down only a few percentage points versus 2019. Further improvement is expected for Q4, resulting in Q4 2020 being projected as essentially flat versus 2019. Nominal growth is being forecasted for 2021.
As a group, electrical manufacturer respondents saw a -1.31% decline in Q3 2020 and are anticipating increases of +0.19% in Q4 2020 and +2.56% in 2021. Distributor respondents had a -3.06% decline in Q3 2020, and are anticipating a -1.17% decline in Q4 2020 and a +2.96% increase in 2021. Independent reps combined responses were slightly less encouraging. They had a -4.23% decline in Q3 2020, are anticipating a -3.99% decline in Q4 2020 and see a +0.41% increase in 2021.
The caveat, expressed by many respondents anecdotally, is the continuing unexpected impact of COVID which is having influence on the Q4 projected project market (as evidenced in Channel Marketing Group’s Q3 Pulse of Lighting Report) and the possibility of job-site and supply chain interruptions due to personnel contracting COVID.
To get a copy of the complete report, contact David Gordon at [email protected], or Chris Sokoll at [email protected].