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Comment: Why won’t consumers switch on to the connected home?

There has been much media hype around connected devices and the creation of the Internet of Things (‘oT) in the consumer and commercial worlds, but the technology is still in its infancy.

The retail industry has been bracing itself for an IoT revolution, as the technology has the potential to shake up the industry itself by changing the customer experience and improving supply chain efficiency through automated stock replenishment, for instance.

However, if sales figures are the best measure of consumer interest, then retailers’ approach to connected devices has so far failed to catch the consumer’s imagination. Whilst smart TVs, wireless speakers and wearable fitness devices have performed relatively well, there is a general feeling that we are still a long way from embracing IoT technology throughout our home.

To an extent, consumers are engaging with IoT, albeit slowly. More than half of UK consumers own some form of connected device, and one in three plan to buy a connected device in the next 12 months.

Intriguingly, consumers are also aware of the benefits of IoT: 66% of people agree that connected devices have the potential to make their lives easier – and this rises to 91% for 18 to 24 year-olds. Our research indicates that a majority of consumers (57%) would like their heating to turn off automatically when they leave the house.

So why is it that we don’t all have smart fridges that automatically order a resupply of milk when our supplies are running low? Do consumers and, most importantly, retailers, fully understand the benefits of connected devices, or is there something specifically putting them off from buying?

IoT hurdles

Evidently, there are some fundamental barriers that are deterring customers from buying connected devices, namely a perception of high prices and scepticism about the technology.

These barriers mean we will see a gradual uptake in IoT devices for the home – not overnight adoption. As such, the replacement cycle of household products will play a significant role in the development of IoT in the consumer market. Demand for connected devices will increase slowly as consumers replace old and worn out appliances with new devices that are likely to include IoT technology as standard in the future, as we are already seeing in the television market. Retailers can help speed up the replacement cycle process through targeted promotions, marketing and in-store demonstrations. Education on the technology’s utility and reliability will also help tackle misconceptions about IoT devices, encouraging consumers to buy such devices sooner.

The slow growth in demand for IoT devices presents a challenge for retailers, who will need to balance supply chains. Given the media hype around IoT, retailers are at risk of over-estimating consumer’s desire for connected devices in the short term and underestimating it in the longer term, when the connected home may introduce more opportunities to engage with and sell to the consumer direct, within their own home.

Evidently, brands hoping to gain a share of the consumer IoT market should watch the technology’s development.  When it comes to the connected home, the question is very much when, not if, it will happen.

So what should consumer businesses developing their IoT strategy be thinking about now?

1. Invest in some early marketing around the IoT – lay the groundwork now and reinforce a brand’s name in consumers’ minds for when demand starts to increase.

2. Product brands and technology manufacturers need to think beyond product specifications, to how a consumer’s day-to-day life can be improved.

3.The lack of universal standards for the manufacture of IoT devices is an important hurdle to clear but if brands were to work with technology firms, the pace of development could speed up.

4. Privacy and security of consumer data need to be addressed. Manufacturers and software companies need to ensure app updates and operating system updates are secure.

5. Communication needs to improve – businesses need to ensure consumers understand the full benefits and detail of connected devices.

To find out more, take a look at the latest Deloitte Consumer Review: Switch on to the connected home