i3 | February 07, 2018

Smart Homes Provide Retail Opportunities

Steve Smith

Smart home technology is one of the hottest technology categories at retail with consumers, according to Berg Insight, in a recent report that found the number of smart homes in the U.S. is expected to reach 73 million in 2021, representing 55 percent of homes. CTA’s 24th Annual Consumer Technology Holiday Purchase Patterns Study said 33 percent of Americans planned to buy a smart home device, up nine percent from the prior year. Digital assistant devices, home cameras and smart thermostats led the way.

In CTA’s U.S. Consumer Technology Sales and Forecast, the same smart home products mentioned above, plus carbon monoxide detectors, smart locks and doorbells, smart switches, dimmers and outlets, and IP/Wi-Fi cameras, were predicted to hit $3.3 billion last year — a whopping 48 percent increase.

While great news for retailers, the challenge is that smart home technology is unlike any other CT category ever introduced. It isn’t one product like CD, DVD, HDTV or 4K UHD TV. Smart home technology includes a swath of products, formats, smart TVs and smart appliances, which opens the market to an array of retailers and suppliers.

There also are competing and incompatible formats, systems and hardware in smart home technology. Some are do-it-yourself products with limited features compared with full-fledged custom installed systems and everything in between. This can be a stumbling block but also an opportunity for astute retailers and custom installers to explain, sell and service.

Embracing the Connected Home

The Nationwide Marketing Group, the $18.5 billion marketing and merchandising retail group representing more than 5,300 independent appliance, electronics and furniture dealers operating some 14,000 storefronts, partnered with Nest and Google in 2017 in an exclusive program.

Doug Wrede, consumer electronics director of Nationwide, said “The connected home is already growing in double-digits, year-over-year, in revenue.”

During its PrimeTime convention last summer, Nationwide built a “connected home room” explaining to its retail members how to demonstrate Nest-compatible outdoor cameras, lighting systems, Wi-Fi hub, thermostats and security systems to homeowners.

Because most of Nationwide’s retail sales are in major appliances, these suppliers are “embracing connected home in its early stages,” Wrede said. That should give electronics/appliance dealers a step-up since smart home technology “will be integrated in more and more of these appliances.”

ProSource is the national buying group of more than 500 specialty electronics retailers and custom integrators with sales of more than $4.5 billion. Dave Workman, CEO and president of ProSource says the group’s traditional expertise with installing and explaining new technologies to consumers — whether they are specialty retailers or custom integrators (CI) — makes smart home an area that it can capitalize on.

“For the average consumer it is one thing to change a thermostat with a do-it-yourself [product].” But with all of the products that encompass smart home technology, their customers want more than one smart home device. “We cater to the CI market and want to provide solutions. Fellow members in its affiliated BrandSource group, which consists of traditional electronics/appliance dealers can “partner with us.”

Richard Glikes, who heads Azione Unlimited, a group of CI businesses, said that while many traditional retailers will capitalize on smart home technology, he believes installers and retailers should not become complacent since, “Amazon, Google and Apple will flex their muscles and that will be the next thing we have to adapt to.”

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