Retail Observer

RETAILOBSERVER.COM DECEMBER 2015 50 A t this year's CEDIA Expo—the annual tradeshow for custom electronics professionals—a slew of Do-It-Yourself home automation products reared their heads, including wares from traditionally custom home automation manufacturers like Savant, who introduced a new $499 Savant Remote. Savant's remote is the company's first product to be sold direct-to-consumer through big box outlets like Best Buy, instead of solely through authorized Savant integrators. However, this new remote also opens up new possibilities for Savant dealers who want to get into the broader DIY home automation market. Home automation companies like Savant and new ones that have appeared on the scene are all endeavoring to capitalize on the smart home market, which is poised to be $71bn by 2018, according to Juniper Research. DIY Home Automation is epitomized by products like the Nest thermostat and Dropcam security cameras, with Apple, also interested in staking its claim in the home automation market, also recently announcing compatible devices to its own home automation platform, HomeKit. To service this growing home automation market, we anticipate that traditionally high-end custom automation companies will follow Savant's lead and go a bit more downmarket, while services providers and entry-level manufacturers, exemplified by companies like Alarm. com, will go upmarket to find the home-automation sweetspot. Opportunities abound for the independent retailer in the new home automation landscape, who is uniquely poised to not only sell DIY home automation products, but also to install and service them. Why does a DIY system need to be serviced and installed? The answer is that just because these products are marketed as DIY, it doesn't mean that average consumers have either the time, skill, or inclination to install a thermostat, surveillance system, or connected door locks on their own. Just think about the average homeowner who buys a bathtub or water heater from Loews or Home Depot, then has a professional install them. It's essentially the same deal. In a study by Argus Insights that finds a slight wane in DIY Home Automation interest at the beginning of 2015, John Feland, CEO and founder of the company, says, "Even though Google and Samsung made big purchases in this space by buying Nest thermostats, Dropcam and the suite of SmartThings products, demand is stagnating. It is obvious that the early adopters have bought what they want and other consumers are expressing frustration that these products are complicated and difficult to set up and use." In other words, DIY isn't necessarily so DIY after all, and the promise of the intuitive installation and setup of any smart home product is often under–or undelivered. Independent retailers can differentiate themselves over a big-box manufacturer by at the very least offering robust product knowledge and guiding the consumer to the right smart home products for their particular needs. Additional opportunities are presented by the ability to offer installation, which in turns opens up the avenue for add-on sales by improving the client's network or upgrading home entertainment gear. Finally, if an independent retailer has a robust service department, they can create monthly or annual client service plans, which provide a source of recurring monthly revenue and boost profitability. Feland adds, "There is a lot of confusion about standards with Google introducing Brillo and Apple's new HomeKit. Add in WiFi, Bluetooth, Zigbee and Z-Wave and there is a lot for any consumer to grapple with during installation. Until things become easier and consumers don't have to cobble together a total solution, I believe we will continue to see this stagnation continuing for the rest of 2015 unless a new offering addresses these issues and revitalizes the market." Could your retail operation be the solution that gets the billion- dollar home automation market moving once again? With the right mix of sales, installation, service, and consumer education, you're poised to do just that, while building your business. Dave Workman Consumer Electronics Trends DIY HOM E AUTOMATION: IS IT RIGHT FOR YOU? How to straddle the worlds of DIY and custom-install, and capitalize using the right approach to home automation at retail Dave Workman is CEO/President of the ProSource Buying Group. RO

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