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Best Buy: Making Home Energy Management Real

by William Ablondi | Nov 17, 2011

I was pleased to see Best Buy launch its Home Energy Management department in three stores in the US recently: Chicago, IL San Carlos, CA; and Houston, TX. Those of you following the HEM market know that Best Buy has been working with partners on trials of this concept for a couple of years. In addition, they have done a lot of research to understand what can motivate consumers to buy energy management solutions beyond saving money …even though saving money will be enough for some. The company is leading with energy management, but they are also offering products for home control and security. They see smart home technology applied to energy management as an extension of their traditional CE business and one which leverages their Geek Squad.

Energy management systems are a subset of home control systems which over 10 years ago. At the time, whole-home control systems were only for the wealthy, given that a typical system cost $30,000 and UP!  There have also been basic do-it-yourself lighting and appliance controls available for decades. Some of the early DIY systems were affordable, but not reliable. These were used by a group of people who are among the first to adopt new technologies I call “Thrill Seekers.” Thrill Seekers are people willing to invest time and energy to get something to work …even if it’s not ready for prime time, and are thrilled when it actually does work. Most of us are not thrill seekers.

Thanks to numerous clever technology advancements over the years much more affordable, reliable and capable control systems were introduced into the market. Still, adoption has remained in the single digits in terms of household penetration …in the US as well as elsewhere in the world. Why?

The answer to this emerges as we consider the factors affecting the adoption of any innovation, from hybrid seed corn by farmers to smartphones. In fact, it was studying adoption of seed corn by farmers that prompted Everett Rogers and F. Floyd Shoemaker to identify key factors in their book Communication of Innovation (The Free Press, 1971). Others have followed including Geoffrey Moore in his 1991 book, Crossing the Chasm. One of the factors identified by Rogers and Shoemaker that jumps out at me when I think about Best Buy’s efforts with its Home Energy Management department is “Demonstrability” … people have to “see” what the innovation can do for them. Demonstrability is what retail is all about. Displaying products on shelves so we can see what’s available and providing an environment where we can learn if the jacket, shoes or energy management solution fits is what retailers do.

Best Buy is not alone in building awareness and educating consumers about the benefits of smart home solutions. Also in the US, Verizon recently rolled out its Home Monitoring and Control service; in Canada, Rogers Communications launched a similar offering this year, but packages it with a professionally monitored security service. Next year Deutsche Telekom will roll out its Smart Connect service in Germany. These are just a few of the activities building awareness around the world of the capabilities and benefits of smart home solutions.

So when will smart home solutions including energy management systems become commonplace? Stay tuned, that’s the forecast we’re working on. An interesting discovery by scientists who are members of the Social Cognitive Networks Academic Research Center (that’s a mouthful) at my alma mater, Rensselaer, is that when only 10% of the population firmly believes in something, their belief will be adopted by the majority.  If this finding stands, the implications are vast – from the spread of political ideas to innovation. The efforts of Best Buy and others are clearly making energy management a real business opportunity.

Bill Ablondi

Client Reading: Smart Homes: Why Now?; Home Energy Management: Is It Real?

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