Lowe’s and Macy’s join rivals chasing smart home opportunity

Discussion
Source: Lowe's Companies, Inc.
Nov 13, 2017
Tom Ryan

Move over Best Buy and Amazon.com, Lowe’s and Macy’s want to also help consumers transform their homes with the Internet of Things (IoT).

Last week, Lowe’s announced it is opening 70 in-store shops dedicated to helping consumers discover and buy smart home devices.

The rollout follows the successful pilot of SmartSpot shops in three Lowe’s locations last fall operated by b8ta. The collaboration with the software retailer will continue. Described as “retail-as-a-service,” b8ta’s model relies on manufacturers paying a monthly subscription fee to be in the store.

Lowe’s smart home shops, located near the front of the store, will feature more than 60 products, from security systems to thermostats, cameras to lighting and speakers. Lowe’s is using out-of-the-box displays to encourage trial and making smart phones available so customers can interact with products and supporting apps as they would use them at home. Onsite “b8ta testers” are available for advice.

Ruth Crowley, VP of customer experience design at Lowe’s, said in a statement, “Smart home products simplify life — but the technology can sometimes be confusing or intimidating. So, we developed Smart Home powered by b8ta to emulate a ‘lab-like’ atmosphere that empowers customers to make informed decisions.”

In addition, 1,000 Lowe’s locations will have smart home displays in time for holiday selling. Tips on creating a “smarter home” are available on Lowe’s website.

At Macy’s Herald Square in Manhattan, an 800-square-foot b8ta store opened earlier this month similarly dedicated to smart phone gadgets. A Samsung in-store shop also landed on the main floor offering “an assortment of the most innovative technologies in virtual reality, tablet, smartphone, wearable, the Family Hub refrigerator, QLED television, home audio and smart home categories.” 

The two retailers making the biggest noise around connected homes are Best Buy and Amazon. Underscoring the challenges explaining how technology works, both Best Buy and Amazon are hiring consultants to travel to consumers’ homes to educate, recommend and customize IoT items for homes.

Since July 2015, Target has been operating a Target Open House location in San Francisco that’s designed to “demystify connected home products” for consumers while offering insights into selling them.

DISCUSSION QUESTIONS: Do you see an opportunity for a range of retailers such as Lowe’s and Macy’s to exploit the smart home trend? Are smart home devices primed for a break-out performance this holiday season?

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Braintrust
"Retailers have a finite period of time to convince customers that they are the destination for smart home devices."
"The retail companies that establish a beachhead here could be rewarded in the long run."
"“Alexa, which home automation products do you suggest we start with?”"

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23 Comments on "Lowe’s and Macy’s join rivals chasing smart home opportunity"


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Mark Ryski
BrainTrust

Yes, smart home devices are a new and expanding consumer category and I think that any retailer that has the product mix range to pursue it, should. Lowe’s is an especially good fit. While the category continues to expand, adoption continues to lag. That said, there’s no question about the increasing importance of the smart home device market and it will be a key category in the future.

Dick Seesel
BrainTrust

“Smart home” products are a natural for Lowe’s and it’s surprising that they haven’t moved faster into the category. As for Macy’s, their move feels more tactical (let’s jump into a hot category) than strategic. The commentary doesn’t mention the alliance between Kohl’s and Amazon (to set up Echo-driven shops in Kohl’s stores) but that’s one to keep an eye on as it rolls out from its current test stage.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
1 year 10 months ago

I’m intrigued, Dick, by the perception that Lowe’s hasn’t “moved faster into the category.” Their Iris system beat Home Depot to market with a unified central hub by about 2 years and was on the market in advance of Apple’s smarthome hub. It was supported with substantial instore display and, in the beginning, some decent advertising. They’ve had a wide array of smart home products across the store and across categories for years.

And, hence, a gap between perception (which I think you reflect reality of what people know of their work) and reality. Which should lead us to ponder “why?” Was it merely execution (always a good question)? Or is there something else going on here. Certainly in IoT it’s becoming clear that beyond FitBit (et.al.) there’s not a lot of demand for consumer facing IoT.

For me, the biggest reveal of the problems in smart homes is that Amazon leads their latest advertising is a dad laying on the floor asking Alexa to turn the lights blue — not to do something significant.

Art Suriano
BrainTrust

I think smart home devices are becoming a part of everyday life. They offer excellent conveniences and, in many cases, they are fun to use. I see not only Macy’s and Lowe’s getting into the game but eventually more stores as well. As technology continues to improve we will find more ways to use the internet through smart home devices. I think there is a market out there already that is excited to learn about what they can do now through smart home technology and I would expect this holiday season for them to take advantage of the opportunities offered. We can’t stop how quickly technology is advancing, and the retailers who are getting in the game now selling smart home equipment will get a jump on their competition.

Neil Saunders
BrainTrust

We have conducted quite a bit of research into smart home products and interest among consumers is definitely increasing. However, there are also major barriers to purchase — including a lack of knowledge about how devices work, concerns over security and confusion about compatibility.

There are also many consumers who just don’t see the point in having tasks like turning on lights or locking doors automated.

All this suggests that education and customer service are critical. These new concepts seem to embrace that, so there is no reason they should not do well.

The only caveat is that smart home demand is still far from mainstream. So there is a danger that too many retailers will crowd into this market and some won’t fare quite so well as others.

Cathy Hotka
BrainTrust

There’s going to be a huge market for smart home devices — turning on the coffee pot when the alarm goes off in the morning — but the average customer is going to need some assistance getting started. The retail companies that establish a beachhead here could be rewarded in the long run.

Bob Amster
BrainTrust

The concept of the smart home is here to stay because, in most cases, the use cases are practical solutions to real situations. (Think of something as simple as a remotely-controlled thermostat.) Consequently, as more of these of these gadgets and apps (with real applicability) come to market, retailers will add them to the inventory assortment, not just Lowe’s and Macy’s. This is an emerging technology trend and it will be incumbent on many retailers to participate in offering these products.

Max Goldberg
Guest

I see IoT pop-ups working in Lowe’s more than Macy’s, where it seems like more of a Hail Mary effort than a good fit for the brand. Many consumers, myself included, are hesitant to embrace IoT devices due to security concerns — the devices are intriguing but they are not worth getting hacked. Others may be put off by potential complications setting up and operating the devices. Still, IoT is new, and it’s important to offer the new, bright, shiny object to consumers during the holidays.

Brandon Rael
BrainTrust

The smart home trend potentially could be an explosive category, as consumers desire the latest and greatest technologies to transform their in-home experience. Retailers such as Lowe’s and Macy’s are taking the right strategic steps to take advantage of this opportunity.

However, while the PR machine is in motion, and momentum is starting to build in this category, consumers have yet to fully adopt these technologies. While we could expect this the smart home category to become increasingly more significant over the next few years, this category may not make a meaningful impact this holiday season.

A diversification strategy would be wise for Macy’s, as they and other department store and speciality retailers should seek to capitalize on this emerging trend.

Ken Lonyai
BrainTrust

Smart home is not the place for Macy’s. It’s one thing to sell an IoT connectable coffeemaker and another to try and develop a category even if it’s operated by vendors. For the moment, IoT is (still) a new space, but as more retailers sell devices, preferred destinations for shoppers will emerge and department stores are not going to be among them.

For Macy’s, this really smacks of a Band-Aid looking for traction in a “let’s see if it sticks” mentality when they truly need laser-focus on their core business. They’ve had huge vending machines in-store for iPhones and related products and I’ve never seen them used nor have I ever heard anyone mention them. For them, IoT “stores” are ultimately going to end up in the same ineffectual bucket.

Chris Petersen, PhD.
BrainTrust

The challenge with the smart home opportunity is that it is not a single product, it is IoT — literally many things. The other challenge is that many of these things do not work together. Interoperability issues across different systems make it difficult for consumers to make them work together. As a result there are high rates of returns when customers can’t make them work in their own home.

In current smart home categories, price points are low and customer difficulty is high. Yes, retailers like Macy’s can sell some light bulbs and switches. But to make money long-term requires the ability to both sell and support an ecosystem.

Who you going to call when Alexa won’t turn the lights off?

Joan Treistman
BrainTrust

Retailers have a finite period of time to convince customers that they are the destination for smart home devices. Consumers expect the newest technology to be available through particular stores and not necessarily Lowe’s and Macy’s. Making the experience comfortable, convenient and impressive will catapult the less likely of retailers to the forefront. But maintaining that advantage will be the question. This is a fast-moving category and having sales staff up to the moment on what is available and efficient is just another barrier for a retailer that is new to the technology fast lane.

Seth Nagle
BrainTrust

It’s all about the in-store associates and being able to connect the dots and answer questions for the shopper. Lowe’s and Macy’s will need to spend the time to properly train their employees around a whole host of questions (connectivity issues, compatibility options, mobile apps, hubs).

From analyzing this market the price point for many of these products is still high and it looks like there will be a few more M&As to be had. But I can see a lot of dads getting those security cameras and home sockets.

Ed Dunn
Guest
1 year 10 months ago

We are witnessing fundamental flaws in real-time between Amazon and brick-and-mortar.

Lowe’s and Best Buy appear to focus on suppliers such as Nest or Google Home or upstarts that simply will not last or be acquired later. Nice displays and signage and a clueless staff.

Amazon sells everything from $20 capacitive touch light switches to Alexa-controlled IoT from plenty of merchant sellers and has an ecosystem of how-to videos and experts in the comment section with advice.

If retailers still want to push the traditional supply chain without an ecosystem, then we are just witnessing the demise of the traditional retailer altogether with smart home/IoT as the case study to watch in action.

Cate Trotter
BrainTrust

I think the idea of the smart home is out there now, but customers are still coming round to the reality of what that means for their lives. Spaces where they can see products, interact with them and ask questions are an important part of that, which makes these seem like sensible options. Lowe’s in particular is doing a lot of interesting things in the technology space, from robots to VR, so this makes a lot of sense. I’m sure these won’t be the last names we hear of opening up these sorts of spaces.

Chuck Palmer
BrainTrust

“Alexa, which home automation products do you suggest we start with?”

While retailers scramble to figure out how to sell the widgets, Google and Amazon are establishing trust and reliability in our actual homes and phones. Alexa and Google Assistant (and maybe Siri?) are becoming the go-to interfaces with home automation. It is more likely Kohl’s and Whole Foods are the places that will really win in this category.

Staying within the context of the hardware, Lowe’s seems to hold the best brand authority given it’s place in consumers’ minds for home improvement projects. The key is the “b8ta testers” that will act as Sherpas, and the in-home services others are offering.

Making these things actually work in a simple, low friction way is the key to success in this category.

Shawn Harris
BrainTrust

Lowe’s move makes sense; I’d argue they are missing a piece by not injecting themselves in to the data play. Macy’s move feels very tactical, but these are the sorts of things firms do when frantically seeking value. Macy’s should launch a program where shoppers pay a subscription fee to walk in to any store, grab an outfit and go — call it “Macy’s My Closet.” Get bodies in the door, a reoccurring revenue stream, and it’s more in alignment. It would be a way to collect data for increased personalization of product and pricing. Gaining advantage through strategic data is key today, not just the transaction.

Carlos Arambula
BrainTrust

Smart home technology is still in its nascent stage for most consumers — the technology is way ahead of the consumer comprehension. And yes, brick-and-mortar stores have the tactile and tangible demonstration advantage to capitalize on the smart home trend.

I’m not certain if they are primed for a break-out performance this holiday season, but they will be primed for a break-out 2018. All the new entertainment and kitchen appliances coupled with new smartphones and apps will offer functions to the consumers that will compel them to consider smart home technology.

Dan Raftery
Guest
I’m with Neil Saunders on this one. And I can speak from personal experience, adding to the research observations. Since BSR came out with the X10 product line in the 1970s, I was hooked. Then Sears and Radio Shack got into the act, much like what we are seeing with Lowe’s and Macy’s. Compatible products. You could get in-store advice at Radio Shack, too. Over the years, the product line expanded enormously and I believe most of the DIY retailers picked them up. A catalog company called Smart Home has been around for a couple of decades at least and several manufacturers offer product lines that use the technology. So you could realistically bifurcate the market for the new products by this, i.e., those with and those without the prior (X10) experience. I’m pretty sure a large part of the inexperienced will be tough sells, per Neil’s conclusion. For me, the proliferation of devices in my home which are powered by transformers has crippled my X10 equipment’s ability to communicate through the house wiring. So… Read more »
Craig Sundstrom
Guest

I would think at this (still relatively early) stage, buyer assistance is still a big selling point for these items, so unless Macy’s dramatically upgrades their staffing in this area, no I don’t see much opportunity for them … or perhaps I should say I see an opportunity lost. (And 800 sf in the 2M+ sf Herald Square store doesn’t impress.) The same, of course, could be said for any store whose selling effort consists of piling devices on a table and having a minimum wage associate just stand there.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
1 year 10 months ago

SmartHome theory is tremendous. Yet it remains a market limited (mostly) to home security and thermostats with only a few other gizmos.

That makes the upside potential for big commitments of these types far lower than the market hype would lead us to believe.

This isn’t said lightly. My first do-it-yourself SmartHome project work was for Sears in 1994 followed over the intervening decades by work on internet appliances, satellite TV, connected fitness equipment, and concerted effort behind Lowe’s Iris in 2014. All along the way we’ve done consumer research searching for the problems these products would solve.

What I’ve seen is there is always investment money out there to create a new “killer” smart home device. And that has created a vast array of tech desperately in search of a solution. Retailers should proceed cautiously.

Ricardo Belmar
BrainTrust
The smart home category is here to stay and we’re seeing more and more retailers trying to capitalize on the trend. For some, like Lowe’s, it’s a natural extension of what makes their store work on many levels. One, the products themselves aren’t far off from other product categories they sell. Second, people shopping at a home improvement store are used to being able to ask for advice and how-to instruction on products. As long as most smart home products remain hard to use (or at least perceived that way) by consumers, this will be a differentiator for those stores. In the past, most store displays around complex technology products leave a lot to be desired and are partly to blame for why consumers want to research such products before going to a store. Associate training is key! Then there are stores like Macy’s and other department stores. Back in the day when the department store carried every category, this would make sense. Today, Macy’s is essentially an apparel brand and they look like they’re… Read more »
Anne Howe
BrainTrust

Lowe’s has a significant opportunity to stay ahead of its rivals in the Smart Home space, which they can enhance with trained and enthusiastic service associates. Many shoppers have interest but need help to understand the real potential beyond turning on the lights!

wpDiscuz
Braintrust
"Retailers have a finite period of time to convince customers that they are the destination for smart home devices."
"The retail companies that establish a beachhead here could be rewarded in the long run."
"“Alexa, which home automation products do you suggest we start with?”"

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