Retail Strategies and Smart Home Merchandising

by Dina Abdelrazik | May. 20, 2019

Retail is the leading channel for smart home purchases; however, the expansion of the smart home market as a whole opens new paths for insurance, home builders, and other channels.

Retailers benefit from the growing awareness of smart home devices that is driving more consumers towards exploring products in the smart home ecosystem. National and local retailers specifically benefit from having a physical presence where consumers can explore smart home products at their own convenience, as well as having an opportunity to tackle purchase challenges head-on at the point of sale.

The consumer’s decision to purchase a product typically involves gaining awareness of the product, identifying a personal need, assessing whether the price of the product is worth its perceived benefits, and determining the channel through which to purchase the device. Purchases are made only after successful navigation of these steps.

Retailers and other channels to market face a number of key purchase challenges, including:

  • Insufficient Information – Many smart home purchase challenges stem from consumers’ insufficient knowledge or understanding of product technologies and capabilities. This leads to problems like purchase avoidance, incorrect purchases, and incompatible product purchases.
  • Lack of Concise Value Propositions –Each household (and individual) is unique, and some connected living products have struggled to pinpoint the value of connectivity or new form factors. In the smart home space, consumers consistently rank security and safety as top value propositions, followed by energy management. Solutions that are outside of safety, security, and energy not only lack clear value propositions to entice consumers, but offer a long-tail of capabilities not easily marketed to the consumer. Consumers must understand a large group of value propositions and use cases, making the sales process more complex. 
  • High Upfront Costs – Smart products struggle with high upfront costs. Given the low familiarity with many emerging devices, many consumers cannot justify the disparity in prices between connected and unconnected models. Parks Associates data reveals that more than half of consumers view smart door locks and smart video door bells as “unaffordable.”  This is a significant challenge for the smart home market.  While innovators and early adopters recognize the value of smart home products, the early majority sees only marginal value which is insufficient to justify the price premium for smart products.
  • Low awareness – Smart thermostats and smart cameras are among the smart products with the highest adoption rates. However, only 39% and 32% of US broadband households report familiarity with smart thermostats and smart cameras, respectively. At such low levels of awareness, the pool of consumers available for market growth is small.


Given these challenges, manufacturers, service providers, and retailers can work to improve the smart home device purchase process by driving consumer awareness and improving consumer access to comprehensive product information. Common approaches include cross marketing, consultative selling, in-store experience centers, “works with” programs, and merchandizing compatible products together. These tasks often involve significant time and capital investments.

This year at CONNECTIONS, my panel discussion will evaluate a key channel to market – retail. The session, “Retail Strategies and Smart Home Merchandising”, tracks the rise of the retailer in marketing and selling smart home products and solutions, drivers for online vs. in-store sales, and the potential to expand sales with a service brand offering installation, troubleshooting, and more benefits.


Tags: smart home

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