Consumer confidence that smart devices are truly useful is what will drive the leap forward for smart homes. “Smart home products – explains Nevin Francis, Senior Director, Global Strategic Insights, Consumer Tech & Durables, GfK (an NIQ Company) – must go beyond being a novelty and be genuinely useful within the specific lifestyle and household of the user to break through the current barriers to adoption. Smart home products must also adapt to the consumer and not vice versa. Manufacturers and retailers that offer proactive support around product setup, operation, security, and the responsible management of user data will gain the advantage of consumers’ trust”.
Encouraging signs from the market
According to GfK, in the major EU7 markets, revenue from sales of smart home products in the first half of 2024 stood at $13.9 billion. That’s 6.5% higher compared to the same period of the previous year. “Compare that to the 0.6% drop in revenue for consumer T&D sales globally in that period, and it becomes clear that connectivity or smart features are among the best triggers of consumer spending in today’s consumer landscape – Nevin Francis says – and for driving product premiumization”.
The barriers to overcome
“Overall – Nevin Francis states – cost remains the top barrier to smart home product adoption among the list of 10 potential barriers that we measure, even for high-income consumers”. Privacy concerns are another obstacle, standing at 2 place for smart appliances and smart security and rising to 1 place when it comes to voice assistant speakers.
“For some products (like televisions, robot vacuum cleaners, and dishwashers) – Nevin Francis adds – the benefits of smart functionality are quite clear to consumers in increasing performance and convenience, or reducing energy use. In certain other smart home products, the benefits still aren’t compelling enough to overcome those barriers. This is especially so in developed markets, where consumers overall are less enthusiastic and more skeptical about tech, compared to many emerging markets, where the population tends to be younger and more excited about what tech can offer”.
Smart Major Domestic Appliances
Considering GfK data about Major Domestic Appliances (MDA), 38% of consumers are willing to pay a bit more for smart variants of these products. According to NIQ GFK Market Intelligence Sales Tracking, in the first half of 2024 the smart variants accounted for around 40% of the sales value of all tumble dryers, washing machines, and dishwashers sold globally, with people paying around $300 more than for a non-smart version.
MDA: SHARE OF SALES REVENUE OF SMART VERSIONS
Smart Small Domestic Appliances
For Small Domestic Appliances (SDA), 32% say they are willing to pay a bit more for smart variants. “The picture across actual sales is more varied, however, and links back to the need for a really compelling and relevant use case in order to persuade consumers of the value of investing in the higher purchase price – Nevin Francis explains –. Robot vacuum cleaners are the leading example of getting this right, with 95% of all items sold being smart versions that allow users the convenience of controlling them remotely and setting automatic timers, among other features. Smart variants of personal scales are also reaching mass-market status, accounting for 39% of all items sold. This is partly due to the relatively small jump in price between non-smart and smart varieties”.
In other product categories, such as dental care and blood pressure monitors, the situation is different. Here, the price jump from non-smart to smart is notably higher and this may not convince consumers that the benefits offered by the smart variants justify the higher price.
SDA: SHARE OF SALES REVENUE OF SMART VERSIONS
