Letter from America: Competition: You Cant Live With It, You Cant Live Without It!

Competition. At first glance it is something to fear as it represents all the opposing forces in the marketplace that are out there just waiting to steal your clients. That’s a natural thought, but take a step back for a moment and remember that in more than a small way, competition is essential to the success of any business or product. If you had things all to yourself that would be the equivalent of a monopoly, and that is rarely good. Without fair competition, what incentive is there to push the envelope in terms of products and technology? Without competition who will be there to make sure you push business to maintain the high standards that you need to make certain that someone else isn’t out-doing your level of quality at an equal or better price. Sometimes competition is like the old cliché about your significant other: ‘You can’t live with him/her, you can’t live without them.’ Or, as Jimmy Durante, the mid-20th Century pianist, comedian, composer, and singer famous for his large nose and fractured language was once quoted as saying when his co-stars would hog his spotlight, ‘Everyone wants ta get inta the act!’ In our industry, particularly here in the U.S., it does seem that everyone wants get into ‘our act’.

Cable providers, traditional alarm companies and phone companies are all offering a variety of highly promoted equipment and service packages branded as ‘Intelligent Home’, ‘Digital Life’, ‘Pulse’, ‘Xfinity Home’, and similar. These companies already have a foothold into the home, they know how to install a system and they have great brand recognition. They not only want to get ‘into our act”, they are already in it here in the U.S. However, since they offer, for the most part, complete, unified, installed systems, these competitors are the ones we may be able to compete with. Their advertising creates a value proposition for what we do, and the knowledgeable design and installation firm should more easily be able to match their offerings by using a more bespoke approach along with a broader array of devices and services to win the day. Competition, but we can deal with it. However, also getting into the act is another channel category: big-box retailers. It wouldn’t surprise you that Best Buy is offering ‘connected home’ products, but Home Depot and Lowe’s, the leading US DIY/home Improvement stores are also getting “inta the act”. After all, if you already sell light bulbs, dimmers, thermostats, and irrigation timers along with the wiring, sensors and timers to tie them together, offering unified solutions and Wi-Fi or cloud control isn’t a big stretch. Also entering the fray is Staples, one of the two leading U.S. big-box office supply chains. Given that Staples is already sells networking products, perhaps not such a stretch. Scoff as you might about whether a DIY store can compete directly with you, remember that even the most upper-crust client will grace the aisles of these stores every so often to pick up a ream of paper or toner cartridge for the home office, or something for a “honey do” home improvement project. When they see products, if not services, that compete with what you offer, the pricing and products may not sway them to go DIY, but the damage done by devaluing your offerings could be substantial. To give you a bit of an insight into what this picture looks like we visited a few stores in our area as well as a big-box mall in Burbank, California. A short hop from the Bob Hope/Burbank Airport some of you may have flown through when visiting Los Angeles on the way to or from CES, it was built on the site of an old Lockheed Aircraft plant that built fighters during WWII and was later part of the famous “Skunk Works” responsible for the U-2 and SR-71 spy planes.

Where fighters, airliners, spy planes and perhaps some more secret craft were once built you can now buy everything from a wedding dress to art supplies to home improvement to home theatre.

As a caveat to the images in this month’s ‘Letter’, to avoid trouble with the store staff we quickly took the shots you see with our iPhone so the quality may not be to our usual standards. Apologies for that. More importantly, the shots were not staged to bias the discussion one way or another. If the display looked good, that is how it was. If you see a stack of paint buckets next to connected products that is the way the store was during our visit. Draw your own conclusions! First stop, Home Depot. Reputed sell more LED bulbs than any other chain in the U.S; this multi-billion dollar behemoth is a favourite for homeowners and contractors alike. These huge stores carry everything from nails to lumber, from toilets to stoves. And, of course, all things electrical including an array of dimmers and similar that have long been in their assortment. You’d expect to find connected bulbs and thermostats at Home Depot, and you will. However, the products are not in one place, but rather spread throughout the store. There is no unified branding to tie things together as each connected product lives in the same aisle or end-cap where its non-connected cousins are. Yes, some signage from Wink, one of their suppliers, but nothing that reaches out to tie it all together. Nothing to worry about, then? Far from it. A sale based on price, no performance or a systems approach might lead someone to think that these products are a collection of individual islands. Conversely, your task is to get across the concept of an integrated system. The big-box store’s “bits and pieces” approach might lead your prospects to ignore the benefits of systems and managed services. Leaving Home Depot we went to their major competitor: Lowe’s. To our mind a bit more up-scale, and perhaps a bit more DIY than contractor oriented, Lowe’s takes a much different approach to home automation products. Where at Home Depot Nest products were to be found in at least three different places in the same store, Lowe’s puts all connected products under a unifying “Iris” branding, centred on a unified display taking up three sides of a single end-cap. Replete with digital signage to effectively tell the story and well thought through brochures in both English and Spanish, Lowes left no question as to what was being sold and why you needed it.

Iris is a major initiative for Lowe’s and the well thought out display’s unified approach is clear evidence of that. As far as we know the only connection to “cloud technology” for the blue buckets is to catch the water when the real clouds open up.

You could choose from individual pieces of kit, guided by Iris logos to indicate what worked well in the system, or purchase a “Safe & Secure” starter kit for security or a “Comfort & Control” kit for HVAC, light control and “energy using”. Combine the two and it is only $299 rather than $179 each. Not a bad deal! The messaging was plain, but this was all still very much a DIY proposition. Indeed, “Easy DIY installation” is touted in the brochure as a benefit over “Professional Installation Required” for the “competitors”.

Hmm. THAT’S YOU! Worried? Perhaps you should be, but we suggest a strategy of observe, learn, evaluate, and compete. Building package combinations is something you’ve done for years, but do your bid documents say it as clearly as Lowe’s sell-sheets do? Do you emphasize your ability to design and install systems rather than just sell pieces of kit? Yes, you may use more sophisticated products, but in the case of things such as thermostats and locksets, you may often sell the same kit the big box does. Do you effectively communicate why they need you to integrate products, not what they do on a stand-alone basis? Next, we were curious to see how an office supply store well versed in networking, rather than heating and plumbing, markets home control. No worries, as a quick exit through the Garden Shop at Lowe’s deposited us at the entrance to Staples. Staples Connect is the umbrella branding used by this major player in the US office supply market. As expected, the display was near the area where access points and routers are sold. Using horizontal shelves rather than the vertical warehouse racks in Home Depot and Lowe’s it was certainly quieter. The messaging was clean and clear, with a pitch to use their unifying control centre along with various purpose-specific pieces of kit for locks, area monitoring and HVAC control.

Staples does a good job of what each of the products their system offers does, but the message of a complete system approach was not as strong as we had expected.

The offerings, though somewhat limited, were explained well and a detailed brochure was available. It told the story well, if a bit blandly. The missing ingredient is something you can offer that they can’t: Excitement! Just as we’ve all sold home theatre by passing our own passion for music and movies on to clients, it isn’t what the products or system do that closes the deal, but stating the use case and showing how the totality of what you do—hardware and proper design, installation and user instruction—solves a problem or fills a need. Staples does a decent job on the what, you can do a better job by telling why and how. Our last stop was Best Buy, the U.S. consumer electronics giant. Scoff though you may at competition from a big-box store, their Geek Squad folks do credible work and the Magnolia showrooms often rival some of the better custom showrooms we’ve seen. Indeed, the Magnolia in the Empire Center store has a full theatre with a Sony 4K projector, high-end audio, Control4 automation and room design and seating that are up there with the best. The work is good enough that some of the local high-end architects we know have used Magnolia rather than “those CEDIA guys” for some major six-figure jobs.

Despite that, the Control4 in the Magnolia area told only a home theatre story, not home automation. When I asked the staff at the entry door where the ‘connected stuff like Nest’ was they paused for a minute and then directed me over to the computer area. There, I found four horizontal display areas similar to those in Staples headed with cards reading ‘Connected Home’. Best Buy has only recently added mainstream, moderately priced, home control and automation integration, and based on what we saw they still have quite a way to go. All the right parts where there, but there was no truly unifying signage, brochure or staff to tell you how it could all work together rather than function as separate islands.

As was also the case at Staples, but not at Lowe’s, the display material was heavily aimed towards the individual hardware vendors. It’s fine to piggyback on something such where there is a well-known tech story such as Nest, or a traditional consumer mind-set link as Honeywell have with thermostats.  However, aren’t we in the business of selling our own branding as the companies that can make all these disparate parts work in concert as a unified system with simple apps or controls? There is no better hint as to how you can compete with these new players than that; after all, it is one of the oldest tricks in the custom business book. Don’t get caught napping, for none of the retailers visited for this story are going to rest. They’ll see the holes in their approach and improve making it more important that you stay ahead of the game.

Conclusion At the outset we played off the cliché that everyone wants to get into the act, but they are already there. No, they might not be direct competition for your business yet, but as the retailers and big box stores in your trading area inevitably take up initiatives similar to what we have in the US you will be facing perceptual competition as much as someone who is directly out for your business. Don’t treat it lightly. See what you can learn from what they do as well as what they don’t do. No need to mirror the competition, simply know that you always have to keep an eye and ear on what they do to frame the best and most profitable course and course corrections for your own business.

A Closing Personal Note As this is our letter for the month of December it is our traditional time to wish one and all a Happy Holiday season of your choosing and a Healthy, Prosperous and, above all, Peaceful New Year. To those wishes, since on this side of the big pond it was also our “Thanksgiving” holiday in late November, we’d like to close with a big note of thanks to our beloved Editor and Publisher at HiddenWires. As described elsewhere, HiddenWires will be under new management in the New Year and we look forward to the continued and expanded coverage that will bring. At the same time, we send not only a Letter From America this month, but a huge THANK YOU card to Yasmin Hashmi and Stella Plumbridge for their support over the years. We wish them the best in their future endeavours as they turn the virtual pages in the book of life. As you toast the New Year, raise your glasses with “three cheers” for the Sypha team.

Michael Heiss is a technology consultant and journalist, CEDIA Fellow, CEDIA ESC 2 Certified, and US correspondent for HiddenWires magazine. You can contact Michael via the HiddenWires LinkedIn Group, follow him on Twitter @captnvid, or comment on his article, below.

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