The mood was decidedly upbeat, particularly for the custom integration crowd, at last week’s Insights Conference in Chicago, hosted by the Home Improvement Research Institute (HIRI).
Strength in housing, particularly remodeling, was shown to be lifting the business of system integrators and A/V installers associated with CEDIA. Dave Pedigo, CEDIA’s emerging technologies VP, presented further evidence of strong growth with the number of projects by his membership increasing by 5.4 percent, and average prices per project growing even faster at 7.7 percent.
Pedigo cited strength in distributed audio, lighting controls and outdoor entertainment as sources of growth among his members. As gains in home theater and media rooms soften slightly, member dealers are seeing 30 percent increases in projects relating to home automation, and he expects 31.4 million homes will have some home automation or smart-home system installed by the end of 2017.
But what about the consumer who is driving all this growth? Nielsen’s Jordan Rost posited that it’s the connected spenders that are making the housing market thrive, and that the number of these connected homes will increase as 8.3 million new millennial households form by 2018.
Look for the housing and retail environments to continue to evolve as these connected spenders shop differently and use social media to find inspiration for their homes, he said.
Expanding on the connected consumer were Kantar Retail’s Sarah Catlett and Laura Kennedy, who showed that IoT shoppers are overwhelmed with the amount of information they absorb every day. Over 75 percent say they are looking to simplify their lives, which is influencing how they shop, what they purchase, and how they design their home spaces.
Indeed, according to a Kantar Retail study, over two-thirds of respondents said the experience of buying something is just as important as the product itself. Further supporting this was Christina Cooley from J.D. Power, who showed that the satisfaction consumers have with an appliance and other home products is inextricably linked with the retailer from whom they purchased it from. Cooley showed that consumers do not separate their satisfaction by retailer and product; to them it is all one and the same.
Setting the backdrop for the connected-spending boom was Joshua Rosenbaum of RBC Capital Markets, who presented an upbeat outlook for the housing market, particularly for the remainder of 2017 and into 2018. Housing attainability remains strong, he said, supported by data showing that mortgage payments remain affordable relative to rents. That is causing potential homeowners to take notice, and younger households are disproportionately buying homes in affordable U.S. markets.
With the housing stock aging and more of the population staying put, Rosenbaum predicted a 4 percent increase in remodel and replacement spending through 2018.
Building upon this optimistic outlook was Kermit Baker from the Joint Center for Housing Studies of Harvard University, who pegged the growth of home improvement and repair spending at an average of just under 6 percent for 2017 and 2018. With the Home Improvement Index — a composite of several publicly traded companies within the segment — showing twice the performance of the S&P 500, the attendees at the conference were left feeling cheery about the near-term for their categories, which include appliances, electronics, faucets, sinks, paints and windows.
The bottom line: As shopping and purchasing behaviors continue to evolve, it was made clear how important it is for manufacturers and retailers of consumer electronics and appliances to be connected with their customers, both literally and figuratively.
Bob Tancula is the founder and principal of Senex, which provides research for product development, trend mapping and market simulation. A frequent TWICE contributor, he is a 21-year veteran of TWICE market research partner The Stevenson Company, and is the principal analyst behind TWICE’s annual Top Retailer rankings.
