Smart tech is now finding its way into a far broader range of products. Futuresource analyst Filipe Oliveira explains why there has never been a better time for retailers to capitalise on this potentially huge market
Connectivity, voice interface and AI have made great strides into the home, but until now the impact has been greatest in entertainment, security, climate control and lighting.
There are signs, though, that white goods will be the next frontier, as smart features start to trickle down into mid-priced laundry and refrigeration.
Futuresource Consulting estimates that sales of connected refrigerators and washing machines more than doubled in 2017 and are on course to represent over half of the category globally by 2021. Manufacturers such as Whirlpool or Bosch no longer showcase non-connected appliances at shows like CES and IFA, while Hoover Candy now only makes appliances that are connected.
Growth is admittedly from a low base – only three per cent of the appliances shipped in 2017 featured wi-fi. Other forms of connectivity, such as Bluetooth and Near Field Communication (NFC), account for a further three per cent, thanks to widespread availability in Asia and Europe, including the UK.
Bluetooth is cheaper to integrate and has enabled manufacturers, such as Hoover Candy, to roll this feature into its entire range. A Candy washing machine with NFC sells for around £300. This is close to the average unit price of £270 that Futuresource estimates for laundry in the UK market.
However, remote-control options are limited with Bluetooth and Futuresource’s forecast shows wi-fi will be the dominant form of connectivity by 2021.
This growth in connectivity of appliances goes hand-in-hand with the introduction of voice control, which is becoming a major driver of smart-home sales.
Appliance makers are now integrating their products with either Amazon Alexa (Whirlpool) or Google Assistant (GE, LG). Arçelik (Beko) will ensure its entire range works with Alexa this year, with Google Assistant compatibility also on Europe’s leading manufacturer’s road map. As a result, voice assistance will become available in mid-priced appliances.
Research conducted by Futuresource among owners of smart speakers (such as Amazon Echo and Google Home) emphasises the view that voice control is already one of the main growth drivers in sales of smart-home devices such as security and lighting. Although the primary reason for purchase is generally music listening, almost 40 per cent of smart-speaker owners in 2017 were expecting to use them to control lighting in the future (26 per cent already have).
Other areas of consumer interest include controlling heating or the use of smart speakers as a kitchen assistant. The case for automation has been further helped by the bundling of the Amazon Echo Plus with a Philips Hue light bulb. Echo Plus and Philips Hue are based on the ZigBee protocol, which obviates the need for an additional Hue hub.
While availability of voice control is unlikely to compel most consumers to rush out and upgrade their washing machine or fridge, the rollout of such devices does carry benefits for manufacturers and retailers. One of those is the opportunity to bundle services with devices. These can be lifestyle and replenishment-type services or after-sale diagnostics and support. The partnership between Whirlpool and Yummly announced at CES is a good example of the lifestyle and replenishment services that connectivity can bring.
Yummly is a recipe and shopping list app that is now being added to all Whirlpool connected kitchen appliances. Such services enable the brand to have an ongoing relationship with the owner, fuelled by a constant stream of data on consumer habits and usage.
Developments in AI go beyond connectivity and voice assistants. Consumers will appreciate the convenience and savings made possible by devices that learn and adapt to the profile of their household – adjusting their consumption to economise on energy and manage consumables.
Retailers will have an important role to play in educating consumers about the possibilities opened up by connectivity, voice and AI. They will also need to pilot customers through the maze of communication protocols and voice assistants that make shopping for smart-home devices a complicated process. No one wants to buy devices that are incompatible.
Being well-versed in what devices work with one another also makes it possible to successfully promote product bundling and up-selling. Last year, almost 10 per cent of owners of a smart speaker purchased their device bundled with a smart-home product. As Futuresource prepares the 2018 edition of the Smart Home and Appliances consumer survey, we expect to see this number grow.
Those who are as smart as the products they sell will be well placed to capitalise on this trend.