Targeting the Residential Market

From time to time, I’ve talked about the way the security industry is “bleeding” at the edges. There is no longer a single channel of security distribution since the home automation, IT and electrical industries are all taking bites out of the growing apple.

In the residential market, there’s little impact from the IT and electrical industries, but home-automation integrators are developing their home-security businesses nicely. This is not so much through terrific marketing as much as it is homeowner convenience, i.e. “While you’re here, why don’t you install this … ” etc.

This could mean traditional home-security dealers slowly losing their influence in the affluent home segment, where high-priced alarm, networked and video systems are sold.

Integrators Eye 1-Family Homes
A recent survey shows just how important the custom-built, single-family home market is to integrators. This doesn’t mean that most home-automation sales are generated in that market segment, but it does show how much a prime target it is to integrators of all sizes. It’s different from the retrofit market where it’s not always possible for an integrator to know that a family is considering an electronic system. Instead, integrators can check for new construction plans by inquiring at local building departments, which are an accurate information source.

In Newtown, Conn., near the offices of J.P. Freeman Co., is high-end builder Toll Brothers. The company has a freestanding office where the goal is to buy up as much property as it can to develop mini-villages with security systems of all types. Is the builder simply going to stop operating because interest rates have risen to 6 percent? That’s not likely as long as there’s an old farm field it can talk someone into selling.

Remodeled Homes Not Easy to Find
Right after custom-built, single-family homes, integrators are mostly involved with remodeled homes.

As gigantic as this market sector is in terms of sheer numbers, it comes down to a question of who finds out about these retrofit projects first.

If they’re significant, the building department is again a good source of information. Bearing in mind that the average home-integrator sale in 2005 was $20,000, the availability of this information can be critical to a growing business. As the home-integrator channel increasingly includes security electronics in its offerings, the more the future of traditional alarm dealers will be impacted.

System Pricing Going Down
Another trend to consider is what has been happening to system pricing by home integrators. For the past few years, the price has been declining as more integrators go after more system projects at lower prices.

We’re now witnessing a steady closing of the economic gap in home automation/security pricing vs. traditional security. It is possible that the concept of home security as just an alarm system will continue to weaken as a business model in the same way commercial security weakened and morphed into the rapidly growing integrated systems field. It looks like it’s time for some business remodeling work, possibly taking a page out of the work we did in the 1980s when the mass market was developed.

 

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