Wagreens is experimenting with a new store format, which made its debut earlier this year. A few folks from our team recently visited the newly redesigned Walgreens in the South Loop area of Chicago. The experimental new format is a move in the direction of hybrid retail, but we suspect it’ll take several more iterations of this new concept before Walgreens gets it right.
Several months ago, we published a retrospective on the history and evolution of the category display at retail. We received some great feedback on that write-up, so we decided to take a similar tact and share some of our reflections on the evolution of smart home products at retail.
We’ve been building retail displays for nearly two decades, so we saw close-up how the smart home category matured from rather humble beginnings.
Some of you may not be old enough to remember this, but there was a time when the home computer needed a wired dial-up connection to connect to the internet. In most cases, this would mean the computer would pirate the connection normally occupied by the home phone (remember those?) – which meant when the computer was “online,” the phone line would be busy and calls couldn’t come through. Clearly, this scenario wasn’t sustainable. Thank goodness wireless connectivity was on the way…
In 1997, the IEEE 802.11 standard was published, paving the way for wireless capabilities as we know them today. Right around the year 2000, wireless routers were being snatched up by early adopters, and then by the early 2000’s, they were selling like hotcakes as home users ditched their wired connections in favor of wireless.
Entering the Living Room
YouTube and Amazon both launched media streaming services in 2005, and Netflix expanded into streaming in 2007. Suddenly home internet was about much more than just checking email and browsing the web. The streaming media revolution was on, and consumers were willing to spend top dollar for the latest, fastest wireless routers. This presented a massive opportunity for consumer electronics retailers. Although we didn’t know it at the time, this was the unofficial beginning of the smart home category at retail.
In the several years that followed, most smart home innovation centered on speeds and feeds. The media people consumed became richer and more data-dense. Households that used to have only one computer connected to the internet soon had multiple computers, not to mention various smart phones and tablets. This need for speed drove wireless hardware innovation and provided reliable revenue streams for the hardware manufacturers and the retailers they sold through.
Before long, wireless connectivity in the home became the norm and innovation began to sprout up not just in the routers that create wireless networks, but in the devices that thrive on them. Not coincidentally, this is when the terms “connected home” and “Internet of Things” came into usage. Household devices were getting “smart.” Kitchen appliances, speakers, picture frames, light bulbs, doorbells, home security systems and thermostats, just to name a few. Anything and everything could connect to the internet. Some were more novel than useful, but that’s beside the point. The key here is that people were slowly but surely becoming used to the idea of internet-connected devices throughout the home, not just their dens and home offices.
Connected Lifestyle Comes of Age
Fast-forward to the present day, the smart home category is thriving, and this presents massive opportunities at retail. Let’s face it, if we’ve normalized the act of conversing with smart speakers, the smart home’s time has come.
Today, merchandising smart home products is not about selling gadgets, it’s about selling a lifestyle. Retailers need to demonstrate how the products they’re selling are going to fit into their customers’ daily lives. This isn’t easy to do, which is why retailers are turning to creative approaches to merchandise products in new ways. Lifestyle vignettes that bring together products across categories is an effective way to do this – as is creating a shop-in-shop environment that showcases a single brand’s entire offering in a more intimate, lifelike setting. There’s an aspirational quality to smart home merchandising, and we’re beginning to see some very clever ways brands and retailers are collaborating to create immersive, lifestyle settings in-store.
Lastly, the smart home category has matured in such a way that it’s moving far beyond the consumer electronics department. Hardware stores sell smart home products in the home hardware area, while big-box retailers sell smart home products not just in the home electronics department, but also in the pet aisle, the home goods section, and other places throughout the store.
For retailers, the opportunity is huge, but only if it’s approached in the right way. Simply putting smart home products on a shelf and expecting them to sell themselves won’t work. Those customers have already purchased online. The customers who make the effort to come into the store expect more – they are in need of an experience that educates them, and convinces them how a certain product will fit into and enrich their lives. The retailers that do this the best are the ones who will win.
Are you thinking about a fresh approach to merchandising smart home products in your store? We can help! Contact us and we’d be happy to offer a free consultation.