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The global infrastructure is ready for connected appliances. More than half of the world population is connected to the internet and global retail volume of smartphones exceeded one billion units in 2015. With government and industry associations’ support, growing household income and improving security, connected appliances are expected to pick up their growth momentum from 2015 to 2020, projected to reach 178 million units in global retail volume terms in 2020 in the global briefing on Smart Insights into Connected Appliances that Manufacturers and Retailers Should Know.
This global briefing focuses on connected appliances and their development towards smart appliances. To clarify, not all connected appliances are smart appliances, but connected appliances include all smart appliances.
Part I further discusses market readiness, gives a global overview and highlights key markets for connected appliances, as well as connected appliances’ value to consumers and the potential impact on businesses. Out of all the countries in the world, three developed markets – the US, South Korea and Japan – and three emerging markets – China, the United Arab Emirates and Saudi Arabia – are highlighted as particular growth areas for connected appliances. Among them, China is projected to be the fastest in adopting connected appliances. In a domestic market in which volume growth of consumer appliances is slowing down, connected appliances will be a critical way for appliances manufacturers to drive value sales growth. Since connected appliances are mainly targeted at middle-class households and China is projected to have the largest absolute increase in middle-class households from 2015 to 2020 globally, appliances manufacturers have been actively seeking collaborations to develop connected appliances to target these households.
Connected appliances not only offer consumers convenience, environmentally-friendly features and cost savings, but also have significant cross-industry effects for manufacturers and retailers in home care, insurance and other industries. For example, detergent manufacturers and retailers will be able to purchase the usage data of connected washing machines to improve the product mix and supply services of detergents. Healthcare insurance companies can get connected fridge freezer users’ consumption data to adjust insurance premiums.
Part II looks at the category growth opportunities and development strategies. From the category growth opportunities perspective, we highlight the categories with major potential for connected appliances, including split air conditioners, automatic washing machines and robotic vacuum cleaners, based on cases of usage. Among them, the tangible benefits in electricity savings and convenience are expected to drive the growth of connected air conditioners, especially split air conditioners, to top the global retail volume by product category from 2015 to 2020.
Since the technological development of connected appliances into smart appliances consists of four key areas – sensing, connectivity, analytics and supporting E-commerce – the technological complexity and costs of developing and integrating these advanced technologies will increase sharply. Companies such as LG Corp and Samsung Corp are capable of developing independently, but not all manufacturers can bear the development costs for the four key areas. Collaboration is the preferred method to reduce the burden on individual firms. More importantly, collaboration with platform providers such as Google Inc and Apple Inc, internet retailers such as Amazon Inc and Alibaba Group, alliances such as AllSeen Alliance Inc, and industry associations such as International Roundtable of Household Appliance Manufacturer Associations (IRHMA) and European Committee of Domestic Equipment Manufacturers (CECED) will help to build the unified platforms and common standards to facilitate inter-connectivity among appliances for integration into the connected home.
For fast adoption of connected appliances globally, manufacturers should still note that the pricing is critical to clearly justify the benefits to consumers. In addition, market research into price sensitivity and feature preferences should be conducted in different countries across categories in different consumer segments to fine-tune the product offerings and pricing. As long as development, pricing and communication are managed well, the connected appliances industry revolution will be spread out globally, changing consumers’ home lives and impacting businesses across industries.