As mobile phones become more capable of interfacing with home networks—along with new connected speakers such as Amazon’s Echo—and the Internet of Things gains momentum, the “smart home” is rapidly coming of age. And experts say now is the time for contractors to develop a strategy to capitalize on this burgeoning market.
“If you’re not at the forefront of technology, you’re probably going to be left behind,” said Jeffrey Sears, founder and CEO of The Modernist Group, a technology consultancy. Sears is the keynote speaker for NARI’s 2017 Spring Business Meeting.
The risk of getting left behind is apparent in the growth of the smart home market. Pegged at about $14.6 million today, the segment is expected to shoot to $32.2 million by 2021—a 21.8% increase. Meanwhile, household penetration is projected to jump from its current 32.5% to 60.7% during the same time frame, according to Statista, an online statistics company.
As professionals who homeowners look to for guidance, contractors are in an ideal place to capitalize on this growing market, which nicely dovetails with the trend toward people staying in their homes longer, experts say.
Contractors “have a unique advantage to complement this choice to stay put by incorporating technology that will accommodate the client’s needs,” said Dave Chic, senior director of CEDIA, a leading trade association for the home technology industry. “There are a variety of technology applications that can extend the amount of time a homeowner can stay in one location, from aging-in-place to simple smart home control features.”
Such technologies include a growing list of smart thermostats, locks, and lighting that all connect to a home’s Wi-Fi network and can be controlled through a mobile device. Increasingly gadgets can also “talk” to each other through Bluetooth or other wireless connections, which is generally known as the Internet of Things, or IoT.
Currently, the smart home is a loosely defined arena. But most experts agree that smart homes include:
- Any stand-alone object found in the home that is connected to the internet.
- Any gadget or appliance that can be monitored or controlled from a remote location.
- Any device that has a non-computing primary function.
Multiple smart home devices within a single home form the basis of an integrated smart home ecosystem, which Statista defines as:
- Digitally connected and controlled devices within a house that can be remote controlled.
- Sensors, actors, and cloud services that support automation.
- Control hubs to connect sensors and actors with remote controls and to each other.
But catering to the smart home market is more than just about increasing business. “Homeowners renovating their homes are more likely to report high levels of satisfaction with their new smart security, entertainment,
climate-control, and/or lighting systems and devices compared to those installing devices without mobile connectivity,” according to a 2016 Houzz Smart Homes Trend Study.
Additionally, that study found:
- Renovated homes are more than twice as likely to include a smart system or device after the renovation. Homeowners report greater levels of satisfaction with their upgraded smart features than their non-smart features.
- New smart systems or devices are most likely to be added as part of home security or safety upgrades, followed by entertainment, climate, and lighting upgrades. Smart thermostats are the single most popular smart device in a renovated home.
- Renovating homeowners point to educating themselves about available product options and finding the right products/technology as the top challenges they face when incorporating smart features into their homes.
It’s on that last point contractors really need to develop a strategy if they want to cater to the smart home market, Sears said. In its current form, the smart home market is largely undefined, which gives contractors an opportunity to make it their own.
But because the market is still undefined, contractors could also give customers unrealistic expectations that lead to unhappiness or frustration. “If you’re reacting to things people think they want, you run the risk of creating a finished product that’s nothing more than digital confusion,” Sears said.
The best approach? Develop a team of subcontractors who can address smart home demands, agreed Sears and Chic. Though specialized, this team consists of subs that contractors often already work with: HVAC, electricians, security and home entertainment. Once the team is assembled, the real key is to define the offering, Sears added.
“The smart, progressive remodeling and contracting community will start to approach this market as an integrated offering, and they’ll go and build teams in their area that will produce a great result that’s repeatable,” he said.
Producing that kind of reliable product in the smart home market has yet to be achieved. But the ultimate goal is clear, Sears added. “Everyone knows they have to be in it. But no one’s really defined what ‘smart’ is yet,” he said. “The fundamental underlying question is, ‘Is it functional, repeatable, and simple?’ And the real test is, ‘Does it make my life better?’”
