Daniel Todaro, Managing Director of Gekko gives his take on consumer demand for smart tech.
The pandemic has changed the way we interact with our homes. Having spent an inordinate amount of time lounging around the house with our families, we have found new and interesting ways to not only entertain ourselves but also protect ourselves. At the heart of this has been smart technology that has enabled us to stream, cast, view, listen, observe and command and it’s unlikely we’re going to see an immediate cessation of the trend.
In the UK our thirst for smart technology continues and revenue in the Smart Home market (not including smart TV’s) is set to reach £5,277m in 2021 with an expected annual growth rate (CAGR 2021-2025)* of 15.06%, resulting in a projected market volume of £9,249m by 2025. So what does this mean for brands and retailers? It’s a positive trend that nods to an opportunity for all to continue focusing on as our homes become outdated and the need to update becomes essential and note merely fanciful.
The trend is set to see the Smart Home market increase across the number of active households increasing to 18.7m users by 2025. This household penetration will increase from the forecasted 37.4% in 2021 to hit 63.0% by 2025. That’s not the only positive signal. The amount we are prepared to spend is also uplifting with the average spend per installed Smart Home currently forecasted at £481.83 and even if this does not materialise, it indicates the scale of the opportunity from every customer that enquires or starts the journey of upgrading to Smart technology.
The global comparison reveals that most revenues in the sector are naturally generated in the United States, where the size of the market is over four times that of the UK at £22,408m in 2021. So even though we may not be in the same league as our US cousins, we are performing well for a nation of our size, one that is full of early adopters looking to spend on new technology before our EU neighbours. More importantly though, just look deeper at the demographic spread. In 2020 the share of 36.5% of users adopting smart technology was in the medium income group but even more interesting is that the share of 28.8% of users/purchasers were in the 25-34 year old age range.
So as we look to develop our living environments to control our home, become better connected to streaming platforms and increase our peace of mind with total security, the need to engage with consumers at a level which increases sales is critical. Consider every factor from the usage and the ecosystem that works best for your consumer and know your stuff.
A key element of the formula for success in store is a shoppers’ engagement with retail sales advisors. Are they proactive, helpful, skilful, knowledgeable, and capable of providing a personalised experience? This is something the online experience can’t replicate and physical retailers need to exploit to their advantage. Much is down to individuals, their training and management the retailer provides, but when it comes to talking about a brand and its products it is vital they are informed, motivated and most importantly advocates. The need to keep up to date is essential in order to capitalise on sales opportunities through trends in smart technology. Many brands have adapted ranges to meet the changing habits of consumers and our increased levels of time spent at home that have seen us cook, clean and entertain ourselves in the home more than we have ever done before. The space we occupy has evolved, we are now not only bothered about how it looks but increasingly also about how it works as a space to live in. This will no doubt ease once we come out of restrictions but changes are likely to stick.
Consumer demand will remain dynamic and therefore the current situation means that interest in products is still unpredictable. As household demand shifts, it alters long standing behaviours and creates new ones e.g. home-working leads to more interest in home luxuries and smart technologies as does the inert nature to protect our possessions and loved ones.
Innovation in the category will create more demand as brands bring to market more connected devices that integrate smart technology into the inanimate objects. A great example of this is where Ikea is working with Sonos on a hidden speaker built into wall art. Previous collaborations include a revamped version of the Symfonisk table lamp selling for around the same price (£150) as the original product. The Sonos Play 1 hardware is implemented into the body of the lamp to link into your existing system or used as a stand alone Sonos streaming solution. The second product that Ikea and Sonos are rumoured to be announcing in 2021 is completely new: a piece of wall art with an integrated speaker concealing the technical bit and integrating smart technology into lifestyle products.
Beyond speakers, home security and computing, integration across many categories from white goods such as laundry and cooling are now becoming commonplace and for product line ups from some brands, are now standard features. With initiatives to integrate these seamlessly irrespective of brand and assistant underway, it will undoubtedly expedite demand. One category that naturally did well in 2020 and will continue to do so in 2021 are those smart devices that help with a home’s health and cleanliness such as intelligent air filtration systems. These can automatically detect air quality and begin operation or be pushed to purify on-demand via app or voice control, not only do they provide cleaner air within the home but offer peace of mind and tap into the zeitgeist.
So when you factor in the need for better compatibility, it’s welcome news that the initiative is underway to make it easier to create a smart eco system from many brands such as Google, Apple, Amazon, Philips who have agreed to collaborate to make all of their smart home devices compatible with one another. This has been entitled the ‘Matter’ Project which will create more choices for consumers. The goal of Matter is to increase the compatibility of your hardware to make sure you’re able to use your smart home devices with the voice assistant you prefer, whether that be Apple’s Siri, Amazon Alexa, or Google Assistant. At launch, when it is unknown yet but when available, Matter will run on Wi-Fi and Bluetooth. Some might say that this is a long overdue initiative that in reality expands the category and consumer reach for all brands whilst offering convenience for consumers.
As a retailer or reseller, put yourself in your customer’s shoes and consider what you aspire to achieve, and redouble your efforts. Use this personal approach to enhance the customer journey, engaging in the most effective manner possible with your target consumers. This begins with propositions that grab the imagination and reveal the possibilities a smart home can achieve. Explain creatively a story that envelopes the consumer, enough to become a customer through informed choices of Smart Tech purchases that work seamlessly for them and their lifestyle.
Article originally published in PCR Magazine