The personalisation opportunities offered by the smart home could open up a world of possibilities to retailers, argues Deutsche Telekom.
Europe’s largest telecoms firm believes retailers are at risk of being “disintermediated” from the potentially lucrative connected home market by their suppliers and tech giants if they do not act fast.
The ‘smart home’ – a household full of interconnected devices that can be controlled by a mobile or computer – is just around the corner if some forecasts are to be believed.
Research firm Gartner predicts that by 2022 around 500 devices in the home will be connected and Samsung announced at the Consumer Electronics Show this year that all of its products will be connected in five years’ time.
Deutsche Telekom, which has put together a white paper on the smart home and invested “tens of millions of euros” in a white-label connected home platform, envisages that data collected in the home will offer customers compelling personalisation.
“With the customers’ approval you can really understand much more about what their needs are and make really pertinent and personalised recommendations to them”
Jon Carter, Deutsche Telekom
“This is basically Tesco Clubcard on speed because with the customers’ approval you can really understand much more about what their needs are and make really pertinent and personalised recommendations to them,” says Deutsche Telekom UK’s head of business development for the connected home Jon Carter.
Deutsche Telekom believes if retailers introduce their own smart home platforms, such as the one being developed by Dixons Carphone the data can be aggregated to create “innovative propositions tailored to the customer”.
The smart home will be able to facilitate such propositions by collecting information such as the type of products customers like, how often products are used, how much time the customer spends at home and how many children they have.
By jumping on the connected home now, retailers will be able to build propositions ranging from simplifying the reordering of household basics to providing electricals maintenance advice remotely.
Potential missed opportunity
Despite the opportunities on offer there is also a grave possibility that a retailer could miss out on the smart home proposition altogether, according to Deutsche Telekom’s white paper.
“A huge disruption is going to hit the retailer, they have been disrupted already by internet version 1.0 and 2.0 and what the internet of things is going to bring about is complete transformation of their model,” says Carter.
“It is not just a case of ‘I can get it cheaper online, it is now the manufacturer has a direct relationship with my customers and that product does not work if it is not connected to the manufacturer’s platform.”
This is already beginning to happen. Philips requires customers to register to its platform in order to operate its Hue smart lighting.
“We need to crush the image of the smart fridge because it is almost a distraction to the compelling commercial business case that exists today”
Jon Carter, Deutsche Telekom
Some retailers have already begun to make major plays in the connected home market. Alongside Dixons Carphone and its platform, Amazon has launched its Dash button, which allows customers to order products at the push of a physical button.
Carter believes the Dash button “is the first step in a journey” for Amazon as it seeks to manage “the whole supply chain for FMCG products”.
This is a development that should concern grocers, rather than the prospect of a fridge that can reorder groceries, which Deutsche Telekom dismisses as being a long way off.
“Talk about the connected fridge is absolute gibberish, as an industry we need to crush the image of the smart fridge because it is almost a distraction to the compelling commercial business case that exists today,” says Carter.
He concludes: “When retailers say ‘is this another smart fridge story’ then they have not got it.”