Internet of Things

Here's Why Retailers Are Betting Big On Internet Of Things

If you sit in the board room of a retailer of home electronics, home improvement products or pretty much anything that uses batteries, chances are one of the topics of discussion over the past few months has been the Internet of Things.

Just look around if you don’t believe me. Home improvement stores like Lowe’s and Home Depot HD +0.23%, office retailers like Staples SPLS 0%, big box retailers like Best Buy BBY +1.1% and even old-school retailers like Sears are all ramping up their efforts to play in this space.

So, why all the sudden interest in making our homes and everything around us smarter?

New Categories, New Business Model

With increased competition from the Amazon.com's AMZN +0.76% of the world, the decade-long shift towards a new world order in which every home and personal system talks to each other and is controllable by a smartphone represents an opportunity to enter new categories or reinvent old ones.

In the old model, a sale in a given category such as watches, lighting, TVs or sprinklers was an isolated event, unrelated to the other. In an Internet of Things world, this changes. Someday your watch will talk to your TV, which may talk to your lights and even possibly control the watering of your lawn.  As a consumer, this means that one purchase decision has implications for another purchase decision, and at some point you find yourself not simply buying a random hodge podge of stuff but instead investing in a system of interconnected products that work in concert to organize, simplify and better your life.

Hold The Utopia, Please

Granted, it’s a utopian vision we’re talking about here, one some say may never materialize. A problem looking for a solution, some might suggest.

Maybe, but the big investments being made by large technology players such as Intel, Google and Apple, not to mention those big consumer product manufacturers such as Philips and GE, tell a different story. All are working very hard towards a day where the ‘solution’ of an interconnected, smart world is good enough to convince consumers maybe they did indeed have a problem.

But why retailers? After all, technology and product companies are the innovators when it comes to technology, and retailers just move product.

Not so fast. As suggested above, in an IoT world device purchases are not made in a vacuum, but instead could become an interdependent chain of decisions where consumers start looking at boxes to see if their device is part of a broader system.  Maybe that’s HomeKit, Android, Wink or WeMo, but at this point in the game retailers are asking why shouldn’t it also be them?

Lowe’s is a good example. Early on, they started selling their smart home hub and would group all those devices that work with the device in one place near the front of the store. They were educating the market, but the broader vision is to someday have every aisle filled with products that say “works with Iris”, essentially creating themselves a consumer purchase pipeline for years into the future as consumers look to grow their collection of smart “things”.

And let’s be honest, not for a minute does any sane retailer think they’ll replace Apple or Google in lives of the consumer, but when devices like Staples’ new Connect Hub has the ability to connect to multiple types of smart home networks AND likely work with technologies like Apple’s HomeKit someday, it’s a sign that maybe the future Internet of Things land grab may have enough waterfront property for more than just Big Tech to participate.