Residential Security Market Insights: Exploring the Impact of COVID-19
Smart home devices and services are benefitting from the tailwinds of consumer concern for health and safety, increased time at home, and desires for comfort, convenience and time for upgrade projects.
Editor’s Note: SSI has partnered with Parks Associates for the creation of DIY FYI, a column designed to help dealers keep track of important smart home market developments, what the competition is and whether they want to jump into something they see as a new opportunity.
With COVID-19 still affecting the way most Americans live, work, and go to school, industries are addressing their new reality and ramping up innovative and messages to consumers. Market conditions and solutions vary greatly. A profound negative impact has occurred for many in the retail market as well as to travel and out-of-home entertainment industries as a result of COVID-19.
Security and smart home devices face a mixed bag environment from COVID-19. Some householders unwilling to risk exposure to COVID-19 avoid installation and even repair technicians entering their home as possible.
This cramps growth for traditional security systems, but heightens the willingness to acquire self-install security systems. Countering this downward pressure for traditional security systems are strong new start home sales with a higher than average adoption of security.
ADT, as example, has entered a partnership with DR Horton, the nation’s largest homebuilder. The security system and adjacencies such as IP cameras can go straight on the mortgage; monitoring is often a choice for a new start rather than required.
In addition, sales of second homes in vacation areas have increased substantially as households, particularly those in large cities, seek escape to tranquility. ADT is also partnering with Google to offer smart home solutions such as cameras and NEST thermostats.
Certainly, these paths are often only open to households with financial wherewithal. Some large security providers offer some form of relief to households with lost wages or unemployment due to COVID-19. Security providers are also lobbying to be designated as ‘essential services,’ thus freeing their hands for some helpful programs.
In a survey that closed the first week of April 2020, Parks Associates found that three out of four consumers say they are “cost conscious” as a result of COVID-19. Job loss, furloughs, and paycheck reductions have challenged consumer purchasing.
On the other hand, some devices and services are benefitting from the tailwinds of consumer concern for health and safety, increased time at home and commensurate desires for comfort, convenience and time for upgrade projects.
As smart home security devices grow in familiarity, value and affordability, these alternatives will close the divide from traditional security systems. Increasing integration of robust analytics, AI and intelligence will make these devices “safe enough” for consumers to monitor and protect their homes.
Today, advances in home security and safety devices offer consumers an increasing array of solutions to help them trade in worry for peace of mind. Companies invested in Internet of Things (IoT) technologies are producing smart, connected products and services that promise to make the smart home a safer home.
The market research firm reported that 29% of U.S. broadband households report owning a smart home device of some kind; more than half of all security system households report ownership of some smart home device. Consumer concern for security is the most influential market driver for purchase of smart home devices to date.
If the most optimistic projections for flattening the virus infection curve and reopening the economy come to pass, the pent up demand for smart home products and services may well pick up where it left off by late summer, and even accelerate with new found appreciation for connected home technologies.
Whether a return to normal is farther off, or unfolds in fits and starts, the smart home industry is challenged to adapt. Direct-to-consumer sales and support for self-installation has never been more important. Addressing the needs of cost conscious consumers, whatever their income, is critical to delivering winning value propositions dressed in affordability.
To learn how security dealers themselves are faring during the pandemic, make sure to check out Parks Associates and SSI‘s 2020 Home Automation Deep Dive.
Elizabeth Parks is President of Parks Associates.
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