min read

Making the smart home a reality

by Eva Harms , 05.06.2015

Imagine a home managed from the owner’s smartphone or tablet, with multiple devices linked via an intelligent network or “hub”. The owners could view status reports, access information and manage functions wherever and whenever they wanted. Preheating the oven, changing the direction of a security camera, or starting the washing machine remotely would be perfectly normal.

This vision could become reality sooner than we think. Thanks to extremely high internet penetration and the public’s familiarity with connected devices the foundations are in place. Smart domestic appliances are already starting to make their way into some homes. For the manufacturers and retailers of domestic appliances this means big challenges and big opportunities.

Who wants a smart home?

So who is most attracted to the idea of the smart home and connected appliances? According to our “Smart home in the digital market” study, carried out in Germany, it is homeowners with larger households (three or more people) who own “superior” technical equipment and have a net monthly income of upwards of 3,500 euros. Of those that are interested in the smart home, 67% are men.

In a separate study in the UK, we found a high desire for smart homes amongst 18-45 year olds: 88% for 18-34s and 83% for 35-45s. This desire drops amongst those aged 55+ to 57%. The younger audience might better understand the concept of the smart home, but fewer of them own homes and they are unlikely to invest in converting a rental property into a smart home. They do however offer a substantial mid-term potential for today’s portable “plug and play” solutions and for tomorrow’s connected home.

Security and energy smart home functionalities are currently the most appealing

It’s important to understand which functionalities of the smart home are of most interest to consumers at this stage in its development cycle. For German householders, security items such as smoke detectors are most appealing, followed by door and window sensors, motion sensors and webcams. The top energy items for these householders are power meters and heating thermostat controls, followed by light and power outlet management.

Our POS Tracking in Germany plots the emerging market in more detail. Latest monthly data in Germany for March 2015 shows that smart entertainment leads the way in unit sales, followed by communication and control devices, then home automation and security items in much smaller quantities. The launch of just one new connected domestic appliance makes a significant impact in today’s smart domestic appliance market. However, we believe that the market will not stay small for long.

Currently, manufacturers and retailers are selling smart home appliances mostly as expensive one-off pieces. However, only when models become more widely available and affordable will consumers begin to appreciate the benefits of a truly connected smart home.

Five steps to making smart home appliances a success

  • Focus on the “big picture” benefit of the smart home: convert the smart home from a “nice to have” to an “essential to have”.
  • Create real consumer need: offer appliances at affordable prices.
  • Ensure appliances are easy to use and address privacy concerns.
  • Raise awareness and drive demand: use of promotional activity and clever partnerships to sell appliances as packages.
  • Train sales staff: ensure they understand, and can communicate, the features and benefits of smart appliances.

To create a joined-up smart home, the market needs joined-up concepts and smart domestic appliances. Market players, both industry and retailers, need to collaborate to make the dream of the smart home a reality. Speed is crucial. There is no time to lose, as connectivity is the hot topic of the moment. The smart home and connected appliances are a perfect way to drive consumer interest, and they provide evidence of innovation and leadership in technology in today´s durables industry.

RetailTalk and ApplianceTalk newsletter

Our regular newsletters present exclusive expertise from the heart of our business. Sign up to discover our industry insights and market data, and to understand how the latest trends will affect your business.

For more information, please contact Eva Harms, at eva.harms@gfk.com, or Markus Güntsch, at markus.guentsch@gfk.com.