NEW YORK — Mass-market home automation will come into its own in the fourth quarter, driven by widespread retail rollouts, a growing product selection, growing consumer awareness and falling prices, marketers and analysts told TWICE.
If Apple launches its HomeKit home-automation initiative as expected in the quarter, awareness and sales will grow to even higher levels, thanks to the company’s massive advertising and promotion budget.
Home automation will enjoy its largest retail/e-tail presence ever in the fourth quarter, said Z-Wave Alliance chairman Mark Walters. “We’ll see a lot more advertising this fourth quarter, including from Apple.”
A strong brick-and-mortar presence, he added, is a “brand new” phenomenon. “Up until the past month or two, the products were bundled with service from telcos and other service providers, or you bought at e-tail as an early adopter.”
It took awhile to get here.
“Home control was going nowhere fast until four years ago with the national advertising of the Schlage Link Lock,” Walters noted. “Sales took off within a month.”
Tom Kerber, Parks Associates research director, concluded that big-box retailers have taken note of the market’s trajectory. “I think that all of the big-box retailers that are not currently offering products are considering adding a smart-home section to stores prior to the Christmas season.”
The smart home, he said, “represents a new product category with huge growth potential.” Retailers, he said, “will certainly make smart home part of their holiday promotional material.”
Joe Gerber, president of home-automation supplier Insteon, agreed. “We’re seeing a bump in orders for Q4,” he said. “We believe retailers are definitely loading in home-automation products in a big way. I think homeautomation products will be much more prominent in Q4 than in years past.”
“There is a lot of consumer interest in home-automation products right now,” Gerber continued. “If you want to drive traffic to your store, highlighting products from a hot sector makes sense, whether its wearables or home-automation devices.”
Like Walters, Gerber expects Apple’s planned introductions to lift the industry. “Anytime there’s news from a major technology player in the connected home space, it’s going to drive interest,” he said. “Any additional announcements from a major player between now and Q4 will cause consumers to take a closer look at home automation.”
Kerber of Parks Associates also expects an Apple effect. “ADT, AT&T and Comcast have made substantial marketing investments in the smart home and have increased overall awareness of the category, but most people are still not familiar with the many product and services offerings available today,” he said. “Apple and other big brands entering the space will help everyone by increasing awareness.”
Growing promotional activity by retailers in the category will also raise awareness. More retailers will be offering products in the fourth quarter compared with last year’s fourth quarter, and those who were already in it are expanding their selections and rolling them out to additional brick-and-mortar stores.
This year, for example:
• Microsoft rolled out home-automation products to its brick-and-mortar stores for the first time, putting Insteon-brand products in 52 of its 58 full-line stores as of June 30. Insteon also became available in Microsoft’s online store on June 3. Microsoft also operates 43 additional stores.
• Staples rolled out 4- and 8-foot home- and smallbusiness automation displays to 500 stores by the end of July, having initially launched select home-automation products in 32 stores last Thanksgiving.
• Staples dramatically expanded its online assortment to 148 Staples Connect SKUs and to about 40 to 50 in the 250 stores with 8-foot displays.
• Lowe’s earlier this year completed the rollout of in-store displays of its Iris home-automation system and compatible products to all of its more than 1,750 stores nationwide following a July 2012 launch in select stores. In July, it expanded its product assortment to 54 SKUs from 50, almost all of which are available in its online store with brick-and-mortar selection varying by store size.
• The Home Depot, which has offered home-automation products for several years, this year expanded the assortment in its near-2,000 U.S. stores, offering more than 600 connected home products online and in store.
Suppliers, meantime, are expanding their retail presence. Insteon won placement in Microsoft online and brick-and-mortar stores in June, in Build.com in July, BHPhotoVideo.com in July, and by July 11 280 Best Buy stores, up from 110.
The brand also went into 35 Home Depot stores in January, expanding to 122 stores in April. And the brand was picked up last November by 36 TigerDirect stores and the retailer’s online store.
Insteon has also been available at BestBuy.com.
For its part, start-up Wink expanded distribution of its homeautomation hub in almost 2,000 of The Home Depot’s U.S. stores and on HomeDepot.com beginning July 7. The hub also became available then through Amazon.
The influx of retailers is helping drive prices down this year, Z-Wave’s Walters said, but the price trend traces its origins to big wholesale-cost reductions driven by the large volume of products sold by such service providers such as ADT, Vivint, Honeywell and others. “Now retail is driving pricing pressure,” he said.
Multi-radio, multi-standard hubs fell to $49 in two years from $300, and Wink is offering a hub at 99 cents with the purchase of two home-automation products, Walters said. Light dimmers that retailed for $80 three to four years ago are now regularly in the mid- $20s, and doorlock prices have fallen to $200 from $350 in the past 18 months, he said. The lowestpriced thermostats three years ago were $150, and now the opening price is $50, he said. GE smart bulbs are priced at $15
Prices “are lower than they’ve ever been because of volume and retail competition,” Walters said, and “more manufacturers are getting in every day.”
One of them will be Apple,” which “will bring more marketing dollars and awareness to the marketplace,” he said.