Retailers Play a Key Role in the Success of Smart Homes

Connected home products are grabbing floor space and early tech adopters’ attention. Sales are growing, and big brands are investing more and more. But moving from early tech adopters to the mainstream will not just be about lower prices. A better shopping experience is a must when consumers are still confused about what works with what and the overall benefits of a connected home.

Tech savvy consumers know what they want. They have researched the product category, they read tech reviews, they asked friends, and they are happy to purchase online. Tech-savvy buyers are also glad to go through any pain the set-up of a device might bring. They see the pain as part of the process of being early tech users. It’s their duty to pave the way for the masses.

Mainstream consumers, on the other hand, want a pain-free setup and most of all a worry-free purchase experience. In our research into early connected home adoption, mainstream consumers expressed the need to have someone to go to in a store and the peace of mind that if something went wrong, they can bring the device back to the store and talk to a human. In our focus groups, consumers seemed to prefer home-improvement stores to electronic stores mainly because that is how they see these connected devices. A connected bulb is still a bulb!

Sadly though, if you go to a Home Depot or Lowes you are left facing a bunch of connected products lump together on a shelf with very little information on what they do let alone of the experience they can deliver.

It’s about the Experience, not the Specs

Whenever I play mystery shopper, I am faced with a high degree of ignorance on the topic of smart accessories. Most sales assistants know about specs and what is spelled out on the box, but unless you have someone who went through their own set up at home, it is rare to talk about an experience. Yet, I find that when you can envision what a particular device can do for you the sale is much easier.

Last week I moderated a panel on ambient computing at the Target Open House in San Francisco, and I was pleased to see how it had evolved since I first visited it after its grand opening over a year ago. The space gives the ability to potential buyers to see products in a large room called the Playground as well as walk through a living room, a bedroom and a garage to experience some of these in a home context. Target has 500 stores across the country that have smart products displayed in context.

While, as you can expect, the experience is still quite show-roomie, it does attempt to deliver an experience. What I liked is how Target focused on guests’ personality and preferences rather than the products. So, for instance, if you are a sports enthusiast or a music lover they show how your living room can be optimized for your ultimate viewing or listening experience. I think this is interesting as it attempts to put the consumer first rather than the product. In other words, it is about helping you find the products that deliver what you want instead of telling you about products and let you discover how they fit into your life once you get them home.

A few months ago, I spent some time in a model home that was installed with HomeKit compatible products. Needless to say, the experience was pretty compelling as there is nothing more convincing than sitting on what could be your own sofa and open the door to a guest, lower the blinds to have the perfect light to watch TV and set the temperature in the room. Over time this will become the norm for buyers of new homes. I expect you will be able to pick a Siri, Google Assistant, Cortana and Alexa home. For now, however, not every vendor in the market can have a real life home to welcome potential buyers, so store experiences are important. Your average consumer is also not necessarily going to attend a home show where many of these solutions have been showcased this far.

Interestingly, setting up experience rooms is how large TV and projectors are displayed in electronic stores. If you walk into a BestBuy you will quickly find the room with the cinema chairs and the projector or the large screen TV that disappear behind a portrait above the fireplace in front of the couch or the speakers that are disguised as rocks for your patio. Showcasing video and audio solutions in a real-life setting has been done for years, yet showcasing a connected home is not something that retailers are rushing into and I think it is because the opportunity is more limited for them at least for now. It might all boil down to how many connected devices will I need to sell to equal the sale of a $7000 video projector?

Smart Experience Showcases Can Help Retailers and Brands

In this early stage of the connected home, it is not just consumers who need help in buying. Brands too need help in selling. Information on what message resonates with consumers, what features close the deal, what is the job to be done…Retailers can help with that information when they set up a smart environment. Target Open House, for instance, has sensors that connect information on foot traffic, product views and likes, touches on digital screens. Information is collected about sales and direct feedback shared with the team of experts who work in the house, and the information is used to decide what products should be displayed in the Playground area as well as what may make sense to sell at Target stores nationwide. Some of the insights are also shared with companies on the shelf to help them understand how guests are experiencing their products.

Big data is such a trend in tech right now that retailers should start talking more about what kind of data they are prepared to share with brands. This can be a competitive advantage in securing product exclusives, and co-marketing spend.

A Platform for Smaller Brands

The connected home space is benefitting from Amazon, Google and Microsoft, opening up Alexa, Google Assistant and Cortana respectively to be integrated into different ways into apps and devices. While Apps have an easy go to market through apps stores, most device manufacturers still need a distribution channel that is online or in store. Kickstarter and Indigogo can help startups to get to market but once there getting noticed might be harder than they thought.

Target Open House offers startups a stage through their Garage space where a dozen of products at the time are showcased before they get to market. Some of the products that guests are particularly excited about and offer a somewhat unique proposition are then moved to the Playground area and on Target’s shelves.

Other stores should follow in the steps of Target and offer a stage for startups especially if local. A community-feel always speaks to consumers, look at how popular farmers market and farm to table restaurants are!

A Connected Home is not built on One Device Alone

Connected homes in their true sense of home automation are complicated concepts that will take years to develop fully. They are also going to be quite different from one home to another. Some consumers might like to be in a single brand home; others will like to pick best of breed brands in the many areas they will decide to connect. Experiencing that home will matter to all but especially to the ones who will pick and mix. This is why experiencing the best way one can, what how technology changes your home is important. While consumers today think about it regarding home improvement I believe that home design will also play a key role in shaping the connected home. Maybe over time Pottery Barn rather than Home Depot is where consumers will turn.

Published by

Carolina Milanesi

Carolina is a Principal Analyst at Creative Strategies, Inc, a market intelligence and strategy consulting firm based in Silicon Valley and recognized as one of the premier sources of quantitative and qualitative research and insights in tech. At Creative Strategies, Carolina focuses on consumer tech across the board. From hardware to services, she analyzes today to help predict and shape tomorrow. In her prior role as Chief of Research at Kantar Worldpanel ComTech, she drove thought leadership research by marrying her deep understanding of global market dynamics with the wealth of data coming from ComTech’s longitudinal studies on smartphones and tablets. Prior to her ComTech role, Carolina spent 14 years at Gartner, most recently as their Consumer Devices Research VP and Agenda Manager. In this role, she led the forecast and market share teams on smartphones, tablets, and PCs. She spent most of her time advising clients from VC firms, to technology providers, to traditional enterprise clients. Carolina is often quoted as an industry expert and commentator in publications such as The Financial Times, Bloomberg, The New York Times and The Wall Street Journal. She regularly appears on BBC, Bloomberg TV, Fox, NBC News and other networks. Her Twitter account was recently listed in the “101 accounts to follow to make Twitter more interesting” by Wired Italy.

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