What Custom Installers Need to Know vs. What Retailers Need to Know

Security systems for homes are HOT. Figures and forecasts vary, but all are bullish.

• SDM Magazine in their March 2019 issue finds that the number of US households with security systems will nearly double by 2024

• According to USNews.com, sales of security systems for homes in the US are expected to grow from about $41 billion in 2017 to nearly $75 billion by 2023

• Statista.com indicates that:
  • Household penetration is 18.3% in 2019; 32.7% by 2023
  • Revenue in the security market will amount to $6,472m in 2019
  • The market is expected to show an annual growth rate of 14.6%, for a market volume of $11,166m by 2023

• The IMARC Group reports that the North American home security system market reached $4.8 billion in 2018. It is projected to reach $14.1 billion by 2024—a CAGR (Compound Annual Growth Rate) of 19.7%

Even if the exact numbers don’t agree, the trend is clear. Whether you’re a custom integrator or a store that sells DIY products, the security systems for homes forecast is sunny, with clear skies ahead.

What custom installers need to know

Integrators are in a unique position. For years they’ve made homes “smart”—way before today’s voice- or app-controlled or smart home devices. But with consumer awareness now focused more on the benefits of a smart home, they need to be able to install both old-school and new tech devices—including security systems—and weave them into a seamless consumer experience. Understandably, most installers do not offer their own security monitoring. They leave it to the homeowner to either self-monitor or sign up with a third party, if compatible.

According to CEPro.com, Amazon Alexa and Google Assistant are driving smart home business growth:

“The smart home market is getting more complex and diverse, and for integrators that can be a good thing if they can simplify options for their clients. At the same time, the massive marketing machines behind Amazon Alexa, Google Home and Apple Siri will be the driving forces for smart home adoption, and dealers can ride those coattails for exposure.”

There’s more good news. CEPro’s interview with Brad Hintze, senior director of product marketing for Control4, revealed this:

“After experimenting with a few light bulbs, security cameras or voice assistants, homeowners are realizing they need help to set up and manage so many devices, and are connecting with integrators for expertise for their security cameras, thermostats, lighting and shading, multi-room audio, networking and more. As systems become more complex with a variety of devices, integrators need a manufacturer partner that can support them with great products as well as the tools for successful installations.”

Stats custom installers need to know

CEPro.com did a Smart Home Deep Dive in order to profile a typical smart home installation. They report that:

• The average smart home system consists of 25 separate interface devices, including keypads, light switches, mobile phones, voice modules and touch panels
• Those 25 interfaces are controlling an average of 43 total devices, including individual light fixtures, shades, printers, thermostats, loudspeakers, surveillance cameras, displays and more
• About one in five (19%) smart home projects has fewer than 10 devices controlled, while 5% of smart homes have more than 100 devices being controlled
• Changes in automation platforms are helping integrators attract customers who want to get a foot in the door of a smart home by starting with just a few items with an eye to perhaps scaling up in the future

Their findings on the most common smart home subsystems show that Security/ Surveillance is an important component.

And when it comes to a voice control preference, Amazon Alexa holds the lead by a substantial percentage.

How do custom installers feel about DIY security?

According to the SDM 2019 Industry Forecast, 38% of dealers and integrators name DIY providers as their greatest competition.

And SDM’s March 2019 issue found that the next few years will see a big shift in the percentage of traditional security monitoring systems vs. connected ones.

So, the market is headed toward smart home security products and self-monitoring. Installers should be on the lookout for wannabe DIYers who overestimated their abilities and need someone to bail them out.

As Securitysales.com states,

“The residential market might be a tricky place these days, particularly those segments that may be vulnerable to the DIY push. There will still be room for the custom design market, but more of those companies will need to offer all the bells and whistles to a more narrow and focused market that may or may not include private response. At the same time, our industry would clearly benefit to embrace certain DIY offerings utilizing new technology to find new recurring revenue streams.”

The key for integrators to survive the DIY trend? Be able to provide custom solutions that take full advantage of all the possibilities inherent in smart homes.

What retailers selling DIY security systems for homes need to know

A 2017 post by Inc.com reports that DIY home security systems are on the rise. They may well account for more than 62 percent of the market by 2035. Millennials in particular are driving the demand.

Video surveillance highly appeals to homeowners. Consumer Reports has a revealing quote from Brett Worthington, a senior vice president for Samsung SmartThings:

“Security and monitoring devices are still among the top-use cases for a smart home, and approximately 20% of the residential market has a professionally monitored security system. The majority of the remaining 80% includes consumers who are interested in smart-home and security products and services but are not looking for professionally installed options.”

The beauty of DIY security is its low cost. And, when consumers are ready, components can be added over time. The tricky part is reminding customers that if they want voice control, they need to pick one system and stick with it. This means strategically purchasing components compatible with that technology.

But if video surveillance is the primary concern, there are many options and price points that appeal to DIYers. Especially if the gear is piggybacking onto their home’s WiFi system. DIYers can choose a simple one-camera set up like a video doorbell or a battery-operated camera. Or they can go all the way up to a multi-camera system complete with NVR. Self-monitoring with push notifications is the norm. However, there are systems that both onboard record as well as upload footage to the Cloud (sometimes with a fee). Some DIY cameras even come with a subscription-based, third-party monitoring option.

Video and all-in-one security devices drive DIY sales

IHS Markit reports that the consumer video surveillance market topped $1 billion globally. The US represents about 48% of all unit shipments in 2017.

“Acceptance of video surveillance for the home has grown, in part because people now have more control over their surveillance systems,” said Blake Kozak, principal analyst, smart home and security technology, IHS Markit. “Users of network systems can log in and view footage using their smartphones, share clips via social media or speak to their families through two-way audio-enabled cameras. Cameras are becoming a gateway into the home, expanding their use beyond just security.”

Drivers behind camera adoption also include higher resolutions and battery-powered cameras with swappable battery packs.

Another advantage of DIY systems is that, for the most part, they can be dismantled and moved. This is very appealing to apartment dwellers and condo owners.

Freedoniagroup.com sees the best opportunities for devices with multiple security features:

• All-in-one smart home security systems and smart security cameras with built-in alarms lead the market
• In 2017, 65% of total demand was for all-in-one systems and kits. These will remain the leading product type through 2025
• This percentage will drop as consumers look for individual components to fill out their systems

In fact, they forecast that smart home security locks and access control will see the fastest growth. Nearly 24% a year to $2 billion in 2025! This is fueled in part by Amazon Key’s in-garage home delivery service and similar services. The growing popularity of video doorbells also plays a part.

Slicing up the security systems for homes’ market pie

DIY is poised to take a commanding lead over custom installation systems. Those with enough disposable income will still turn to custom integrators. Integrators also need to advertise themselves as the go-to source for ensuring smart home and DIY components work together seamlessly. Integrators should also explore areas such as aging-in-place components and safety monitoring. They should even consider partnering with local, third-party monitoring systems to counterbalance the services offered by national companies. And they should visit local DIY retail shops and leave business cards in the hope of future referrals. Networking can result in a win-win for everyone.

Stores that sell DIY security systems need to make sure they offer a variety of components. These can range from video doorbells and battery-operated cameras to multiple camera surveillance systems. They need to also offer all-in-one units and smart home components that can be built out over time. And if a store doesn’t have its own installation team, it should work with a pool of local installers. Or, at the very least, offer a handout with the names and phone numbers of local custom integrators.

There’s enough business for everyone—and it’s growing. You just have to be smart about it.

Don’t forget to check out our Buying Guide to Security Camera Systems. And take a look at all our home and surveillance products available for resale at petra.com!