According to Statista, smart home market penetration in the U.S. in 2019 is 33.2 percent. Given how new the smart home market is, I feel that this is a pretty amazing number. However, Statista goes further and says that the average revenue per installed smart home is only $113.16. To me, this shows that people are beginning to invest in smart home devices, such as a smart thermostat or door lock, but I personally don’t believe it is high enough to demonstrate that people are benefiting from the integration of the devices they are purchasing.
The integration of smart home devices into a cohesive platform that simplifies control of a home is the bread and butter of the large, smart home manufacturers: Crestron, AMX, Savant, and Control4. But products from these companies are expensive and only sold through specialty retailers that provide installation, programming, and support services to go with the product sale.
Today, the average American can walk into Best Buy, Home Depot, Lowes, and even Wal-Mart, and be presented with an array of smart home products to buy. Unfortunately, what these big box retailers sell are products, not solutions.
According to Twice, Best Buy is the leader in consumer electronics sales, followed by Amazon and Wal-Mart. While Amazon’s sales are primarily online, those from Best Buy and Wal-Mart are mostly generated from their retail locations. Visiting a Best Buy or Wal-Mart store makes it clear why people don’t understand how their smart home devices can work together.
When I turned my home automation hobby into a career, almost 20 years ago, I took my software development skills and went to work for a prominent Crestron dealer. When you walked into that dealer’s showroom, one of the first things you saw was the mockup of a home. The mockup consisted of a kitchen, living room, bedroom, entry way, and patio. Of course nothing was to scale and the entire space was only about 20 feet long and 10 feet wide. But, it did a good job representing the interior of a home and it was packed with fully functional smart home technology. There were:
- Speakers in each “room” to demonstrate how a whole house audio system worked
- Touch panels for control of the smart home processor throughout the space. This included one on a small night stand by a 3’ x 4’ representation of a bed that acted as an alarm clock
- Security cameras that could be viewed on a smart phone or on the touch panels
- A smart thermostat
- Motorized shades
- Outdoor speakers on the representation of a patio
- Pressing the door bell at the entry way caused the video from a security camera facing the entry to be shown on the touch panels (remember this is long before smart doorbells were being sold)
- And much more…
A customer could try everything out and truly understand how the products worked together to simplify their life in their home. Compare this to a Best Buy that I recently visited.
When I walked into a Best Buy I was faced with kiosks for selling phones. There was a counter featuring Apple products, another featuring Samsung Galaxy products, and sections that combined products together under the major cellular service providers.
Moving beyond the gauntlet of smart phone sales there was a section of the store devoted to the smart home. Here were multiple counters full of smart home products, Alexa devices, Google Assistant devices, Next thermostats, Arlo security cameras, and the list goes on. Some products, like the Alexa devices and Google Assistant devices could be operated by a customer. Other devices had small video systems that played a recording demonstrating the attributes of a product and how it worked. However, most products were just sitting on shelves for sale.
While Best Buy has an army of people that will offer you assistance in their stores, there was nothing that helped a customer visualize how the products being offered for sale worked together to fulfill the dream of a smart home.
Wal-Mart is an even sadder story. The consumer electronics section of the store I visited is in the very back of the store. Smart home products are kept in locked cabinets where a consumer can’t even read about the products by examining the boxes they are packaged in. There was a single display for Google Assistant products that included an audio/video system where a customer could press a button to view a presentation on the products features. Unfortunately, the display was on top of a five foot tall, locked display case holding the smart home products. This placed it out of reach of many consumers. Further, when I tried to operate the system, it wasn’t even working.
A step in the right direction is that Best Buy and Amazon offer consultations on implementing a smart home system into a potential customer’s homes. Best Buy offers this consultation for free while Amazon charges for theirs. But, while an in-home consultation definitely offers value to homeowners, I don’t believe that talking about how smart home products could work in a person’s home is better than actually seeing them work together in a properly designed showroom. Ideally a customer could first see how products can work together in a showroom and then an in home consultation could help the homeowner with the design of a system that leveraged the products they viewed; integrated into their own home.
Best Buy is especially in a position to benefit from a consumer that is educated in the benefit of smart home products working together. First, it could increase revenues from their Geek Squad services team as consumers would likely need help installing smart locks, thermostats, and lighting products. Best Buy could even leverage their Geek Squad personnel to run seminars for customers on how to install and integrate smart home products themselves. This would lower the cost of ownership of smart home products and likely result in increased sales; with little added investment. Further, while consumer electronics is a very competitive business, becoming a trusted partner to consumers through offering seminars, I believe, would develop increased consumer loyalty. With Best Buy’s price match guarantee consumers would have little incentive to shop elsewhere.
According to Statista, smart home product sales are expected to grow 12 percent annually for the next four years. But, I believe, that consumer education could accelerate that growth. In addition, this could incentivize builders to construct smart homes further increasing demand for smart home products.