Thinking of Buying a Lighting Store in Australia? Here Are 3 Vital Questions to Ask

Australia’s lighting retail sector is valued at $2.5 billion, supported by over 4,300 businesses supplying residential, commercial, and trade customers across the country.

Despite an annualised decline of 0.5% from 2018 to 2023, demand for LED upgrades, sustainable lighting, and home renovation has driven a positive outlook for 2024–25 and beyond.

For buyers, lighting stores offer a balance of design-focused retail and trade service potential — especially where installation, project consultation, and digital tools are integrated into the offering.

1. Is the Business Financially Viable?

Why It Matters:

Lighting stores operate on relatively lean margins and can tie up capital in high-value inventory.

Sellers Discretionary Earnings (SDE) for suburban stores typically range from $120,000 to $180,000, while mid-tier and multi-location businesses can exceed $500,000 depending on trade volume and stock efficiency.

Understanding profit sources — from showroom sales to installation upsells — is key to evaluating sustainability.

What to Check:

• SDE performance: Is the store generating earnings in line with its turnover and size category?
  
  

• Stock management: Are stock levels well-controlled, or is capital tied up in slow-moving items?
  
  

• Margin mix: Are higher-margin products like smart lighting, design consulting, or installation contributing to profits?
  
  

• Expense ratios: How do rent, wages, and warehousing compare to similar-sized operators?

2. Does the Location and Trade Network Support Consistent Sales?

Why It Matters:

Lighting demand is highly influenced by renovation cycles, new builds, and relationships with trade professionals such as electricians, architects, and designers.

Location in high-foot-traffic homemaker precincts or proximity to construction hubs can support steady showroom traffic.

Trade accounts and B2B repeat business offer more predictable revenue than walk-in retail alone.

What to Check:

• Site placement: Is the store situated near relevant trade centres, homemaker hubs, or growing suburbs?
  
  

• Client base: Are there established builder or designer relationships driving recurring sales?
  
  

• B2B channels: What percentage of revenue comes from commercial or project-based lighting orders?
  
  

• Reputation and reviews: Does the business enjoy positive local recognition and online ratings?

3. Is the Business Operationally Aligned with Market Trends?

Why It Matters:

Energy efficiency, smart home integration, and design personalisation are shaping the future of lighting retail.

Stores that offer AR visualisation tools, eCommerce integration, and licensed installation options are more likely to win both trade and consumer jobs.

Compliance with Australian standards and supplier reliability are equally important to ensure long-term viability.

What to Check:

• Tech integration: Is the store using online catalogues, visualisers, or click-and-collect platforms?
  
  

• Product trends: Does the range include sustainable and smart lighting options?
  
  

• Installation services: Are licensed electricians or subcontractors engaged compliantly for installs?
  
  

• Supplier stability: Are exclusivity agreements or long-term terms in place with manufacturers or importers?

Ready to Invest in a Thriving Lighting Business?

With home improvement demand, energy-efficient retrofits, and smart lighting technology on the rise, Australia’s lighting sector presents a strong investment opportunity.

Independent stores with curated ranges, strong trade links, and digital infrastructure can successfully compete and grow in this evolving market.

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