Retailers Brace for Change Ahead of Incandescent Bulb Ban

With the calendar turning to 2014, some of the most popular light bulbs used in homes around the country will soon disappear from store shelves for good.

Production of 40-watt and 60-watt incandescent light bulbs will be prohibited by law starting Jan. 1, and retailers are preparing for the changeover by informing consumers of their options and stocking what’s left of the traditional bulbs.

The ban stems from a 2007 law signed by President George W. Bush, mandating that traditional incandescent bulbs be phased out. Production and the importation of most incandescents will cease, while stores can continue to sell remaining stock.

The 100-watt incandescent bulb was phased out in 2012, followed by the 75-watt variety in 2013. Some incandescent bulbs are exempt from the law, such as colored light bulbs and incandescents used in appliances.

Demand for the outgoing 40-watt and 60-watt light bulbs, which account for about half of all standard-size bulb sales nationwide, has gone up as more shoppers become aware of the change, said Marc Maldoff, merchandising director at Lowe’s (NYSE:LOW).

Lowe’s is currently keeping its stock of incandescent bulbs at normal levels. It will be difficult for consumers to find the bulbs in the second half of 2014, Maldoff said, although the timing of their disappearance will largely depend on sales over the next two weeks.

Mark Voykovic, Home Depot’s (NYSE:HD) national light bulb merchant, said the company expects its stores to run out of the phased-out bulbs in the spring. He added that Home Depot doesn’t disclose information regarding current sales and stock of specific products.

Offering Alternatives

Replacing the banned incandescents on store shelves are LED light bulbs and compact fluorescent lamps, which are known for their coiled shape. Companies are also developing updated incandescent bulbs that meet the law’s stricter energy regulations.

Some of the alternative bulbs have clear and frosted versions and are offered in various types of light, such as soft white and bright white.

Home Depot has called the LED bulbs the best alternative for consumers, providing just as much light as incandescents while making the smallest dent on electric bills. LED bulbs have a lifespan of roughly 25,000 hours, or 23 years based on average consumer use.

CFL bulbs can last up to 10,000 hours and are slightly less energy efficient than LEDs. Many consumers are also weary of CFLs due to the mercury used to make the fluorescent bulbs.

However, at $1.74 per bulb, CFLs cost less than most LED options, according to Home Depot data. The home-improvement retailer offers a 40-watt equivalent LED bulb from Cree (NASDAQ:CREE) for about $10 and a 60-watt for $13. Home Depot also sells a proprietary brand of LEDs under the EcoSmart name at $7.50 per bulb.

Halogens and high-efficiency incandescent bulbs are the least expensive alternatives, with prices averaging at around $1.50 per bulb versus about 40 cents for traditional incandescents.

When asked if Home Depot plans to offer any initial discounts for customers switching to the newer bulbs, Voykovic said consumers should check with local utility companies for rebates.

Maldoff also said Lowe’s recommends that people seek rebates from their utility companies.

“The important thing is making sure customers know that although they have to spend a little more up front, you’re going to save on your energy bill and replacement costs” since energy-efficient bulbs last longer, he explained.

Informing Customers

Selling customers on the energy-efficient but costlier light bulbs may be a challenge for retailers, but step one is informing them of the change and exactly which bulbs will soon disappear.

Maldoff said Lowe’s stores have set up end-caps with a banner that explains the timing of the mandated phase-out, and the company launched print advertisements last week with details of the transition.

Shoppers will also see displays for energy-efficient bulbs that have been up since 2011.

Maldoff noted that confusion over the law has boosted sales of other incandescents at Lowe’s, including exempted three-way bulbs.

According to Osram Sylvania’s annual Socket Survey, 59% of Americans said last month they weren’t aware that the best-selling 60-watt light bulb and its 40-watt sibling are on their way out. Twice as many respondents compared to last year, or 30%, plan to buy the bulbs where available and continue using them.

“The big thing right now is education,” Maldoff said. “We see it in the Sylvania survey and sales figures. Customers are obviously confused.”