Lighting rebate trends
Rebates are a win-win solution for retailers looking to offset the initial upfront costs involved in utilizing more energy-efficient lighting solutions in existing stores as well as new ones.
Every year, rebate programs get updated. The good news is that rebates for lighting controls such as daylight dimming are still going strong, according to BriteSwitch. (The Princeton, N.J.-based company helps businesses find and take advantage of the thousands of rebates and incentive programs that exist across the United States and Canada.) On the other hand, the company noted, rebates for certain LED lamps have declined significantly.
Here is an update on the top rebate trends for 2018 from BriteSwitch:
LED lighting has decreased about 10-20% in recent years as the price of these technologies has come down. But the rebate amounts have started to level out this year, with the average prescriptive LED product rebate only down 1% across all product lines.
However, some specific products saw big changes, including LED linear tube replacements and screw-in HID replacement lamps, which dropped by 19% and 35%, respectively. The decreases likely reflect the changing price in the marketplace as the costs of those solutions have also decreased significantly in the past year.
In contrast, rebates for LED downlights and linear panels (2x4s) went up 5% and 10%, respectively.
Rebates for DLC standard versus premium
A rating by Design Lights Consortium has always been important for LED rebates, with about 80% of programs requiring it. In 2017, DLC introduced a new “DLC Premium” category, which are products that must meet higher qualifications and testing requirements in order to be considered for the premium classification.
Looking at the current rebate landscape, the new DLC premium has not had a significant impact. Only a handful of programs require the DLC Premium qualification in order to get rebates.
What’s more common is for programs to offer an additional rebate or bonus if using a DLC premium product instead of a standard one. The amount is usually an additional $10 or $20, which doesn’t always cover the additional cost of using a premium product. Currently, these extra incentives are offered in less than 10% of LED rebates.
Rebates for lighting controls such as occupancy sensors and daylight dimming are still very strong — evidenced by the fact that in the eight years BriteLight has been tracking rebate changes, rebates for controls are the only category that has not decreased at all.
For products like fixture-mounted and remote-mounted occupancy sensors, the average rebate is still high ($20 to $30) compared to the cost. Also, and in many cases, the rebates make sensors an attractive and cost-effective addition to most lighting upgrades.
With the addition of a new DLC category of networked lighting controls, BriteLight has seen some programs start to offer more rebates for these systems. Because many networked lighting controls are more complex than stand-alone sensors, many other rebate programs are still trying to figure out how to best implement them.
Biax/PL-L lamps and 8-inch tubes
Later this year, DLC will be finalizing its criteria for several popular types of lighting, such as 3- and 8-inch tubes and Biax/PL-L lamps, along with up-and-coming technologies such as color tuning fixtures. These categories represent some much-needed additions where rebates have fallen behind due to lack of a DLC category.
Because of the mid-year launch of these new DLC categories, BriteLight does not expect widespread adoption of prescriptive rebates until 2019. In the interim, once these products start appearing on the DLC list, there will be potential for custom rebates for these solutions. Custom rebates are generally more complicated to pursue than prescriptive rebates and basically need to be reviewed on a case-by-case basis.
Peloton in retail—and product—expansion
A high-tech startup brand that sells indoor cycling bikes tied to a live-streamed workout experience led by elite instructors is revving up for international expansion. It’s also expanding its product lineup.
Starting in the fall, Peloton will ship its bikes outside of the United States for the first time, to the U.K. and Canada. Similar to the company’s U.S. strategy of selling direct through its website as well as through its own brick-and-mortar locations, Peloton is planning to open multiple stores throughout London and Toronto. It currently operates some 32 U.S. locations.
The brand will also begin introducing British indoor cycling instructors to its instructor roster and will launch a London-based studio in 2019. The company plans to expand to additional European markets in 2019.
Kevin Cornils, who recently joined Peloton as managing director, international, will lead the company’s global expansion efforts. Most recently, he served as CEO of Glasses Direct, which he grew into the leading online optical retailer across Europe, before overseeing its sale to Essilor International in 2016.
“Over 60% of the $100+ billion dollar global fitness market is outside of the United States, and the U.K. is the world’s second largest market,” said Cornils. “We were increasingly hearing from potential members from the U.K. and Canada who were asking for the bike, so we listened and decided to launch the full offering, including retail showrooms, to bring them the same best-in-class experience as we’ve been building out in the U.S.”
Founded in 2012, Peloton allows home users to have, essentially, the same type of experience that they would have at a spinning class. It does so by selling a subscription service that gives the user (member) access to live and on-demand fitness group classes (along with archived ones) led by elite cycling instructors. It also provides performance tracking metrics and a real-time leaderboard designed to motivate users.
Also this fall, Peloton will start selling its second major product, a treadmill called Tred. It allow members to participate in live and on-demand bootcamp and circuit classes from their own home, both on and off the treadmill.
Brands That Excel in Customer Experience Are Winning Big in Brick-and-Mortar Retail
When Toys “R” Us announced last month that it would be closing all of its U.S. stores, some observers immediately jumped to the conclusion that online retail had claimed another legendary brick and mortar brand. Commenting on the story, one bankruptcy lawyer told Business Insider that “Brick-and-mortar stores are just getting bludgeoned to death by e-commerce.” That’s certainly an attention-grabbing quote, but the facts say something different.
In total, 4,850 more stores were opened last year than were closed, according to IHL Group. That includes major chains and retailers; when you factor in small retailers, the net gain was around 10,000.
That’s not to say stores aren’t closing. But, that same IHL report revealed that nearly 28% of store closings last year were tied to five major chains (RadioShack, Payless, Rue21, Sears and Ascena, which operates brands like Ann Taylor and Loft).
And, of course, there’s the matter of Toys “R” Us, but it doesn’t take much digging to discover the root of that retailer’s problem. The company was deep in debt, to the point that it couldn’t afford to invest in improving its stores, which meant it couldn’t offer its customers a unique, modern and engaging in-store experience or drive enough sales to pay off its massive debts.
Customer experience is ultimately at the heart of the Toys “R” Us story, and it’s emblematic of an issue many other large retailers are facing. Overexpansion in the 90s and early 2000s led to a glut of poorly performing retailers with in-store experiences that aren’t fun, educational or engaging for shoppers. At a time when better convenience and price can be found online, there just isn’t a great reason for shoppers to visit these types of stores in the first place. Other companies are getting in front of this problem before it gets worse. Sam’s Club, for example, is closing underperforming stores and refocusing investment on the stores with potential.
Elsewhere, other brands have progressed even further, to the point where they’ve created in-store experiences that are so engaging and unique, that they’re succeeding in the physical environment far beyond what the dire headlines would lead you to believe. These are the brands that are charting the future of physical retail, showing the industry that brick-and-mortar is still a venue where retail business can thrive. Here are a few examples.
Nike Keeps Shoppers Active
Nike is frequently experimenting with its in-store experience. Last month, the company said that it would soon test in-store mobile shopping in two stores, as a path to engaging younger shoppers. It also ran an in-store virtual reality video game, which allowed shoppers to test out sneakers on an in-store treadmill, in several of its Chinese stores earlier this year.
But, its success isn’t just about gadgets. Nike also succeeds on the basics of retail execution and customer engagement. One reporter recently covered her experience walking through a Nike store and an Under Armour store, saying that she found Under Armour’s shop to be “empty,” “repetitive,” “confusing” and “underwhelming.” The Nike store, on the other hand, felt brighter, more contemporary and offered a more upbeat atmosphere, in part because it was simply busier – there were way more shoppers trying out different styles and engaging with in-store activities, like a treadmill and a basketball court to test out shoes. In this case, Nike gave its customers more to do in their stores, and therefore more reason to stay a while and buy something.
Ulta Thrives in a Growing Market
Beauty is a major bright spot in physical retail, and Ulta might be the vertical’s most shining example: the company’s sales grew 22% in the past five years, surging on the back of strong product sales, a popular in-store salon offering, and a growing group of 28 million loyalty club members.
Ulta is not alone. The beauty category is a $130 billion industry in terms of services and sales, and other brands, like Sephora, are also enjoying great success. But, Ulta’s perspective on in-store retail speaks directly to the biggest opportunities across every retail category.
In comments at ShopTalk last month, Ulta CEO, Mary Dillon said her business wants to provide inspiration to its consumers. They have 1,074 stores in the U.S. and they’re focused on convenience, creative brand experiences and customer personalization. Dillon believes that technology is most powerful when it serves people, so she’s looking to find technologies that free store associates’ time to spend with consumers. That’s how the company will continue to stand out in a growing market.
Build-A-Bear Makes Toy Shopping Fun
If Toys “R” Us closed because shoppers would rather buy their toys online, then why is it that another toy store, Build-A-Bear, has seen four straight years of profitability and a 12% growth in its physical store footprint over the past five years?
It’s because Build-A-Bear stores are fun – shoppers come to literally build their own teddy bear, with all the accessories and stuffing you could ever ask for. It’s an engaging, interactive experience for kids and adults alike, and the process of creating your own stuffed animal fosters a strong emotional connection that builds brand affinity and loyalty.
But, the best part of the Build-A-Bear story is that the company hasn’t rested on its laurels. In response to sliding sales a few years ago, new CEO, Sharon Price John oversaw several changes to improve existing store designs and explore new locations in places like movie theaters, cruise ships and vacation resorts.
Every brick-and-mortar store is facing the same external pressures, but they also enjoy one key advantage over e-commerce: today’s consumer is searching for great real-life experiences. These companies demonstrate that with the right ideas and focus, retailers can step up to deliver brand-centric customer experiences.
Gina Ashe is CEO of ThirdChannel.