‘If you’re a consumer electronics retailer, you can’t ignore the smart home’
Hughes Electrical has seen the massive growth potential of the connected home and has invested in a division dedicated to it. It is warning dealers not to miss out. Sean Hannam finds out why
Hughes is the UK’s fourth largest specialist electrical retailer, with more than 40 stores.
Never one to miss out on a great new business opportunity, just over two years ago, it saw an emerging trend for connected consumer electronics devices and set up a Smart Home division to carry out AV and networking installations for its customers.
Hughes’s Smart Home branding is now present in all of the company’s stores and the business is booming.
His colleague Ashley Shorey-Mills (pictured top), who heads up Hughes Smart Home, adds: “We’re on track – we’ve set a high expectation and we’re meeting it.”
Q: Can you tell us what prompted the move to set up the Smart Home division?
Andy Pallant: Custom installation has been around for donkey’s years – we’d dabbled in it a couple of times, but it was always very difficult to find the business. We sell tellies and washing machines and to go that next step to actually installing what was then £15,000 or £20,000 systems… we couldn’t break into it.
With the advances in connected products, we thought it was time to try again. Finally, the average household can actually benefit from and enjoy different music and TV programmes in different rooms. The majority of our [smart home] business is TV and wireless audio systems – 80 per cent.
Q: So how did you make the move into the smart home market?
Ashley Shorey-Mills: Before I got involved, our senior management team were in contact with Jonathan Dugdale [owner of the Dugdales Connected Smart Home retail business in Clitheroe, Lancashire [see pgs 15, 54-55] and Stuart Tickle, MD of AWE [custom installation distributor – see Opinion, pg19].
AP: We went to see what Jonathan did and we thought that there were a lot of elements that we could take from it. We couldn’t mirror exactly what he was doing – our shops are different from his.
ASM: We took his blueprint and then applied it to how we saw the wider market – we put it into our infrastructure.
We started with just two full-time staff and me. I did it on top of my job as a store manager in Ipswich. Within a year, we added a team leader and then, a year ago, we employed three more people. We now have six full-time staff [on the sales side]. They’re visiting customers to try to find out what they need to buy – we do consultations in people’s homes. Those guys are on the road five days a week and they’re doing several calls a day. When they get a success from the sales lead, they then may be involved in the install as well – they’re all able to install products. We also have 20-plus installers and we’ve had training from Cedia [Custom Electronic Design and Installation Association] and AWE.
The majority of our leads are still coming from shop-led sales. We’ve worked with the staff to make them able to spot when there’s possibly an opportunity that they could get something more out of the customer – either because the customer isn’t sure about what they’re buying, or if they’ve said their renovating their home, or they’d love to be able to connect things up. The sales staff then book a call for one of our Smart Home reps to go and visit the customer.
Q: You give the customer a free site survey, don’t you?
AP: Yes, we think it’s important not to put a barrier up. In our experience, when you’re in someone’s house and you can see what the customer has, you can fully understand what their lifestyle is and what they want. You’ll get 50 per cent more retail out of these customers.ASM: The core is a 55in TV and a Sonos Playbar, but because we visit someone in their house, we can sell them four or five [Sonos] zones. We’re also adding incremental accessories business, as we show them how we can improve their wi-fi. With installation, there are still too many dealers that don’t charge for it, because they think it’s good customer service. Customers will happily pay for it.
AP: We’re very competitive on product, but if you want our services, then you have to pay for it.
ASM: A lot of people like to understand what’s going on in technology, but, they don’t care what’s going on behind the scenes – they’re interested in getting the results, like streaming BBC iPlayer without buffering, listening to music everywhere, or watching Sky in the bedroom. We’ll talk them through the journey and tell them that we can do all that for them.
The majority of our smart home business is TV and wireless audio systems – 80 per cent
AP: There are a lot of people out there who have no idea what’s achievable and how affordable it is.
ASM: In two years, we’ve learnt a humungous amount of stuff – we were never aware of some of the products that are out there and how effective they are. There are some very customer-friendly products out there. You’re now getting big brands putting pre-packaged products on the shopfloor that the customer can take home. If that’s not another signal for a retailer to have to get involved in the connected home, then nothing is. Everyone’s realised that it’s the way forward. Everything in-store is connected and demo-able, which makes it easier for our sales staff to sell the concept.
Q: Are you planning to move into more advanced installations, such as home automation?
ASM: We’re now starting to understand that a little bit more – it’s never going to be our core business, but the customers are out there. We do get the odd specialist cinema room, or the person who wants to control everything from one place – and we’re able to do that.
We’ve seen our monthly business from HDAnywhere [multi-room systems to deliver HDTV] increase. We’re looking at moving into lighting – we’ll be working with AWE.
Q: So would you advise other retailers to look at the connected home?
AP: Ignore it at your peril.
ASM: If you’re a consumer electronics retailer, you’re likely to have been struggling for 10 years. Let’s be honest, this [the smart home] is a CE part of the business. You can’t ignore it. You should be doing it – 100 per cent.
It’s frustrating that some [CE] retailers don’t get involved in it – these are the same people who ignored white goods and tablets, who don’t have a transactional website and who deliver and install everything free of charge.
There’s also a flipside. I was at a Cedia tech forum in London and there were a number of the high-end Cedia dealers who were moaning about the market dumbing down because of Sonos.
My message to them is – why are you not doing Sonos? When they’re in the customer’s house, they’re more likely to be able to sell them a DAC or ceiling speakers, rather than a Play 3.
Q: Some hi-fi dealers are sniffy about selling Sonos and streaming, aren’t they?
ASM: They’re still waiting for that customer to walk in and buy a £3,000 CD player. While they’re waiting for them, they could be installing eight or nine bits of Sonos in a week.
Q: Will the smart home bring with it challenges? What about connected white goods?
ASM: With home appliances, the control aspect is a challenge for the smart home industry. Not everyone is going buy a whole range of kitchen appliances from Samsung, for example – they don’t do everything.
The customer won’t be able to buy everything off the shelf – they’re going to have to get advice and get their products installed. That’s where we have an advantage.
Connected home appliances will become a much bigger thing – they’re very new at the moment. At the start, it will be less about how techie and lovely they are to use and more about their efficiency. It will be a massive market. In five years’ time, we might all have a connected washing machine or coffee machine at home.
Q: What are your future plans for the Smart Home side of the business?
ASM: We’re going to do ‘apartments’ in our Ipswich and Norwich stores – three room-sets in one, with a lounge, bedroom, kitchen and a little hallway. Everything will work together and be controlled by a tablet system. There will be films, music, home appliances and lighting. We want to open customers’ eyes and we can show them what’s possible – it will make a massive difference.