Set to become possibly the biggest sector in CE in the next five years, the smart home is a golden opportunity for independent retailers who are ideally placed to sell consumers on the ways it can change their lives, says techUK director of markets and membership Paul Hide
There has been a lot of talk about the smart home, the benefits for homeowners, the sales opportunities created for devices and services and the value drivers and benefits. However, it would be fair to say that, so far, it is more talk than action and that this new market sector has yet to live up to the hype.
But what are the potential opportunities, why is it more hype than reality so far, and how can the industry come together to realise the benefits for everyone?
GfK commissioned a study to investigate some of the background to this market. It shows that consumers are aware of, and are attracted to, the smart-home concept. About half of people surveyed expected the smart home to have an impact on their lives in the near future, citing interest in smart-home technology above connected cars, wearable technology, smart cities and cloud computing. Only mobile payments was viewed as having a bigger impact.
The perception of smart-home benefits is broad. Home security, home environment, health, appliances and entertainment are all seen as key benefits. The barriers to adoption were rated at a lower level than the benefits. The major concerns listed were cost, fears over personal privacy, a lack of knowledge about what products and services are available and concerns about interoperability between different devices and systems. Two-thirds of respondents expected devices supplied by different manufacturers to be able to communicate with each other.
The research also looked at what payment models could be attractive to consumers. Two-thirds (67 per cent) liked the idea of a single, upfront payment with no recurring fee, but 45 per cent were receptive to a subscription model, in which the hardware is provided as part of the deal. Just under a third (30 per cent) showed interest in a mix between an upfront payment and a recurring fee.
The final element of the survey asked consumers from whom they might expect to buy these services. The good news for the readership of ERT is that electronics manufacturers, high-street and online electrical retailers were the most commonly mentioned sources, followed by utility, telecoms and financial services providers.
These responses suggest that, as consumers, we are less inclined to consider only the ‘traditional’ channels of distribution for technology products and services. You could view this as both a threat and an opportunity. If you are slow to react to the opportunities, you’ll have new entrants as well as your existing competitors to fight against. If you are open-minded and creative in your approach, however, you can create opportunities to sell service propositions and ongoing revenue-based services that you may not have focused on in the past.
This research by GfK and similar research by others tends to confirm that consumers have both an interest in, and an awareness of, smart-home technology, the benefits it can deliver and how they may go about procuring it.
However, it also uncovers the lack of clarity over just what is available and how consumers can be sure that a purchase made today will still be relevant and compatible tomorrow. From my perspective, this looks like a clear opportunity for those able to manage a complex offer with a personalisation element – “hello, independent retailers!”
The things holding the market back so far are a lack of clarity over the value proposition for the user. The language we use needs to focus on user benefits – for example, it’s not about security services, it’s providing piece of mind. It’s not about the devices, it’s about the services that can be accessed with them.
And, most importantly, there needs to be consumer trust. Trust that platforms will be fit for future development, providing interoperability. Trust that our personal data will be held securely with retained privacy and trust that the seller of the service and devices understands the user requirements and provides a solution that is fit for purpose and can grow as a platform.
Now is the time for a more collaborative approach that demonstrates a ‘one industry’ position behind common platforms and shared trust principles upon which a business model can be built.
TechUK has developed a set of trust principles that device and service providers can sign up to reflect in their respective offerings. This market sector is still small, but it has the potential to become both one of, if not the, largest consumer electronics sectors in the next three to five years.
We see many of our members investing heavily in the backing of smart-home technologies on the expectation of strong paybacks. Make time to fully understand the sector in terms of the product and service providers, the most popular sales packages and take heed of the views of the key players as to how this market will develop.
We are all looking for the turning point that can reinvigorate the electrical retail sector. I am sure that the opportunities for independent retailers are significant providing you make the upfront effort to understand the sector and plan carefully your offer and approach.