Will 2017 be the year of the Smart Home?

Smart Home Technology

Smart Home technology has reached a pivotal point in its development, where the surrounding hype is teetering on the edge of convincing the sceptical consumer. 

Perceived high prices and doubts about the reliability of the technology has led to sluggish sales in the UK, but recent research by Deloitte indicates that this is set to change.

What is a Smart Home?

Ask this question twenty years ago and having your lights on a plug-in timer would have been considered smart home technology.  With more ‘smart’ devices coming onto the market at an increasing fast pace, the term ‘smart home device’ today covers anything in the home that can be controlled remotely by a smartphone, tablet or computer; from a thermostat that ‘learns’ your desired temperature throughout the day to a washing machine that orders your washing powder before you run out.

However, this is an industry more concerned about competition than collaboration and there are very few worldwide accepted industry standards for smart home devices.

Market Drivers

In 2016 80 million smart home devices were delivered world-wide (Source IHS Markit).  This is up 64% on 2015 with predictions being made suggesting that 130 million devices will be delivered in 2017 and by 2020 13.5 billion consumer items are expected to be connected to the web (Source Gartner)

The home entertainment sector has led the way in the Smart Home and consumers are already accepting of and appear to understand the benefits of a smart TV, a games console or wireless speakers

Energy management systems such as Nest are expected to be the next major drivers of the Smart Home market growth, closely followed by smart security devices and smart lighting; all areas where there is a definable financial or comfort benefit to the home owner.   Deloitte suggest that two fifths of people plan to replace lighting, thermostats and security devices with connected devices once they need to.

And as consumers start to become more aware of how smart technology has the potential to make life in the home easier, smart devices that will enable the ill or elderly to stay in their own homes or in assisted living situations longer are also expected to push market growth.

The majority of new home appliances are now ‘smart-ready’ with connected features as standard. As consumers replace their old kettles, ovens, fridges and lighting in the coming years, there will be a gradual escalation of Smart Home adoption.  By speeding up the replacement cycle through promotions, in-store demonstration and targeted marketing campaigns, retailers can potentially drive faster market growth.

Barriers to Sales of Smart Home Technology

Although the technology is improving and the pricing is stabilizing – coming down even, the main barrier remains the indifference to ‘smart’ devices and appliances; consumers simply don’t ask for them or understand the relevant to their own homes.

Smart Home technology is not yet considered a selling point for properties, according to estate agents, especially in older properties, although there is a growing expectation that it will be included in a high-end new build property.

Trend-Monitor’s recent research into kitchen purchase behaviour found that although the inclusion of a smart kitchen appliance when purchasing a complete new kitchen had increased significantly over the 3 year research time-frame, this was from a very low base.  And 35% of those homeowners who didn’t have any smart kitchen appliances didn’t think the technology was relevant for their own kitchen, with a further 23% being unaware that the technology was available.

Convincing the consumer that the technology actually works has proved a stumbling block to sales.    There is evidence that stores have benefited from increased sales where they have allowed consumers to try out the technology for themselves with advice from store assistants.  John Lewis, for example, has dedicated space in its Oxford Street store in London to the smart home, and is actively demonstrating what it is and how it can make homeowners’ lives easier

At this stage in the development of Smart Home technology, creating a fully automated home is hard work for the consumer.  A confusing lack of interconnection between devices and an incohesive consumer offer means that research is required to understand the different platforms and which devices are compatible with each other before each device is manually connected once in the home.

Suspicions surrounding personal privacy and the potential danger of a cyber-attack via your fridge have not yet been fully addressed.  The Deloitte research shows that 13 per cent of people are holding back from buying connected devices because they are concerned about their device getting hacked, while 11 per cent do not want their usage data accessed by companies.

A Question of When not If

Despite a slow start to sales of connected devices, Deloitte reports that two-thirds of consumers (66 per cent) agree that connected devices have the potential to make their lives easier, rising to 91 per cent for 18-to-24-year olds.   And whilst low ownership of these devices is unlikely to change dramatically in the next 12 months, interest in the automated home is growing, albeit not expected to follow a smooth trajectory over the next few years.

Instead growth is likely to come in stages as different categories take off.  The fast replacement cycle of TV’s and sound systems means that this category is already ahead of the rest of the smart home market.  The next stage of growth is looking to be home monitoring and security as consumers can easily see the benefits of automating these areas.

Following behind is the connected kitchen – the longer replacement cycle of ovens and fridges means that this market could take some time to catch up.

The connected bathroom is an area that few consumers are considering at this stage and the statement in KBBreview from Roca’s corporate marketing director, Carlos Velázquez, claiming that the mid-market was not ready for smart home bathroom solutions, will come as no surprise to the bathroom industry.   Like many home improvement brands, Roca are choosing to bide their time until there is stronger evidence of consumer demand before launching a smart product.

The Smart Home market is still in its infancy and for it to reach its full potential it is becoming increasing clear that there is a need for a secure, standardised operating system for the home which brands can build on. Until this happens, the different categories will remain fragmented and consumers will continue to be sceptical about the benefits and security of a fully-automated home.


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