Some call the design ugly, while others find the energy savings beautiful. Most agree that sales of compact fluorescent light bulbs have taken off.
Compact fluorescents — commonly referred to as CFLs — are being pushed by a number of initiatives: Utilities offer programs either giving the bulbs away or rebating their purchase; Wal-Mart Stores has made the sale of CFLs a high priority, giving them ample shelf space and recently launching a private-label line; states are considering laws to limit sales of the old incandescent bulbs and spur CFL use; and Congress is considering two bills that would do the same thing on the national stage.
The U.S. House of Representatives in August voted for a bill that would ban 100-watt incandescent bulbs by 2012, but as part of a larger energy bill, there was some question whether it would pass the Senate. Meanwhile, Sen. Jeff Bingaman, D-N.M., and Sen. Ted Stevens, R-Alaska, have initiated a bill to phase out 40-, 60-, 75- and 100-watt incandescent bulbs by 2014.
With rising energy costs, increased consumer awareness, and demand that occasionally outstrips supply, retailers polled by SN at a recent GMDC conference indicated that sales of CFLs are rapidly approaching widespread acceptance. At higher prices and margins, retailers welcome the trend and would not object to laws that increase the sales at the expense of incandescents, which have long been sold at loss-leader prices. How these longer-life bulbs impact the replacement cycle is a question for another day, most agree.
“We are starting to see the shift away from the standard A-line bulbs to the more energy-efficient products,” said Lanny Hoffmeyer, corporate director, hardlines, photo and lobby, Supervalu, Eden Prairie, Minn. Initial distribution can be driven by partnerships with local energy companies. “Consumers are becoming more aware now of the ecological aspects of the lighting category,” he said.
“The longer-life bulb has definitely taken over. You even have talk in some states of it being required,” said Charles Yahn, vice president of sales, retail development, customer service and pharmacy, Associated Wholesalers Inc., Robesonia, Pa. “That's going to be the part of [lighting] business that grows — it's going to be the long-lasting upscale bulb. That's the future.”
Scan data appear to confirm the trend. Supermarket sales of “Lamps-Incandescent” were down 13.7% for the 52 weeks ending Aug. 11, according to the Strategic Planner of the Nielsen Co., Schaumburg, Ill. “Lamps-Remaining” — which includes CFLs — were up 54.7%.
Some Shortages
“CFLs and energy-saving products have taken off,” said Gregory Hott, director of general merchandise, Weis Markets, Sunbury, Pa. “The manufacturers are having a tough time keeping up with demand. We have seen some shortages.” Sales of incandescents are in “rapid decline, because the consumer is becoming more educated,” he added.
“The category is growing so much that we've had a few supply problems, but we're in good shape now,” said Bill Dunkle, category manager, general merchandise, Valu Merchandisers Co., Kansas City, Mo. “Our retailers are embracing it and we're just now rolling out a new planogram that has more CFL facings.”
Consumer response to a high level of promotional activity has been “excellent,” said a nonfood executive with a Midwest retailer. “Our supplier has been in to totally reset the planogram with an enormous emphasis on the compact fluorescents, and moving them up to eye level.”
Building awareness through education is a key to CFL growth, and working with utilities can help in this effort, said Anthea Jones, group vice president, center store, Bi-Lo, Mauldin, S.C. “It is an opportunity out there waiting for us, if done right,” he said.
“Customers are now starting to really understand what a compact fluorescent is because of the green movement that has regenerated itself recently,” said Cathy Kennedy, general merchandise category manager, Bashas', Chandler, Ariz. “The biggest contributor to that is energy companies participating in programs with some of the manufacturers, which creates a huge awareness among consumers.”
The market is moving toward CFLs, “but it's not moving fast enough,” said Robert Passikoff, president, Brand Keys, New York. “This is one of those categories that everybody pays a lot of lip-service to. They think it is a good idea but they don't follow through.”
Thus the government is looking to set a standard. “It is one little bill that could have an enormous impact. I think the slightly higher cost of CFLs does stop people to some extent, and a good deal of what people do is based on habit,” he said.
Some Negatives
Not everyone is confident that CFLs will entirely replace incandescents.
“Everybody has got to get used to the way that the bulb looks,” said Nick Barainca, director of nonfood, Scolari's Food & Drug Co., Sparks, Nev. “That seems to be a deterrent with women. Once they get past that, they realize how much better they are, and if the woman is environmentally conscious, she will buy them anyway.”
While CFLs have made a dramatic impact on the lighting category, “five years from now I'm not sure we are going to see the same growth in the energy-saving bulbs. I think incandescents are going to continue to maintain,” said a nonfood executive with a Northeast chain. “The reason is, compact fluorescents still do not give off the same light as an incandescent bulb, and depending on where they put it, I don't think a lot of people particularly care for it.
The efforts of utility companies, particularly in California, have reduced the sense of urgency retailers feel about merchandising and promoting the category, said Larry Ishii, general manager, GM/HBC, Unified Western Grocers, Commerce, Calif.
Price is still paramount with light bulbs for Brookshire Brothers, Lufkin, Texas, said Doug Barnett, director, GM/HBC. With soft-white four-packs retailing for 97 cents, and with private label lower than that, it is difficult to move a consumer up to a $5 or $6 light bulb, even if it will last 10 times longer, he said. “They may not want a light bulb that lasts longer. They may prefer to spend 97 cents, and then buy groceries with the rest of their money.”
When promoted at or below cost, and featured in an ad, the retailer saw CFL movement triple. “But as an everyday item on the shelf, our regular light bulbs are still No. 1,” Barnett said.
W. Lee Flowers & Co., Lake City, S.C., is still selling a “fair amount of standard bulbs,” said Sammy Snell, director, GM/HBC. “We just increased our SKU count of these new higher-efficiency light bulbs with higher rings, which of course means more profit to us as a retailer.”
Just as consumers need to become more aware of changes in the lighting category, “we as retailers need to be more aware of how we are promoting light bulbs and get away from just using it as a drawing card,” he said.
Replacement Cycle
Retailers are aware that longer-life bulbs mean a longer time between shopping occasions to replace burned out or damaged bulbs, but the relative high prices of CFLs leave most unconcerned.
“That's something that everybody thinks about,” said Dunkle of Valu Merchandisers. “You get a bigger ring at the point of sale” and consumers are not going to replace all their light bulbs at once. “You are going to have people try one and see how it does. So I don't know what the future will bring for continuing sales.”
“There are a lot of light sockets to be filled, and CFLs do break, just like any light bulb,” said the nonfood executive with a Midwest chain.
“I think we are going to be in this [current] cycle for quite a while as we transition out of the traditional bulbs into the more economical and ecological bulbs. We are going to see nice growth out of those categories. There may be a sales issue out there, but I think it is quite a ways out in the future,” Hoffmeyer of Supervalu said.
Lack of satisfaction over the quality of light from fluorescents will result in many consumers changing back to incandescents, said the nonfood executive with a Northeast retailer.
Additional reporting: Wendy Toth
Wellness and the Bulb
While compact fluorescent light bulbs are environmentally friendly and represent a net cost savings to consumers, whether they contribute to a wellness-oriented lifestyle is a matter of debate.
“I think the whole wellness trend of how people are looking at their health, eating and exercise, all rolls up into a larger green, wellness initiative. They are looking at how those products interact with their environment,” said Mike Isom, director of general merchandise, Bashas', Chandler, Ariz.
“A lot of folks are very conscientious about the cost of energy in general. Whenever they can put more into their pocket by saving on their home energy bills, they are able to invest back into their family. Plus it gives them that sense of doing something good for the entire global environment, the global community,” he said.
“Wellness isn't just the idea of a cheap remedial reaction to a wound, an illness or something like that. It also has to do with your own ongoing good feelings on a day-to-day basis,” said Larry Ishii, general manager, GM/HBC, Unified Western Grocers, Commerce, Calif.
“Fluorescent lighting isn't necessarily the most friendly form of light. On the other hand, other types of lighting, such as GE's Reveal line, I think can be a much more comfortable type of light for the consumer. So it's interesting how that might play out in the coming months or years. If I was looking for a product with my wellness in mind, I'd probably look for something like Reveal, but if I was only concerned about how much I was paying in my electric bill every month, I'd probably look at CFLs,” he said.
— D.A.