Confidence is high and there’s plenty of revenue opportunities in systems integration in the next 12 months—but to make the most of it will require a bit of a shift in strategy.
That was the takeaway from CEDIA’s Size and Scope Manufacturer presentation on Friday morning, in which Grant Farnsworth, partner and director of business development at the Farnsworth Group, shared his company’s research on the construction and home improvement space.
Farnsworth began with a look at the housing market, which is experiencing a household growth rate of 1.4 million per year, a healthy indicator of opportunity. However, the rate of new construction is down and people are choosing to remain in their homes for longer. The luxury market, as defined by homes valued at $800,000 and higher, is particularly saturated, and entry-level homes, valued at $250,000 and below, have the highest demand. “Most sales happening right now in the new housing market are entry-level homes,” Farnsworth said. “And those buying entry-level homes are millennials.”
Aside from changing markets, other challenges facing the industry include difficulty in finding qualified employees and competition from DIY solutions. “This remains a big challenge for our industry and continues to grow,” Farnsworth said. “Do-it-yourself products are coming out fast, and consumers believe they work.”
Nevertheless, confidence among builders, consumers, and integrators is high, with 76 percent of businesses believing that their revenue will increase over the next 12 months. “Peoples’ mind space right now is really, really positive,” Farnsworth said. “They feel comfortable spending.”
So where are they looking to spend? As the average size of homes in the U.S. decreases, the number of home theater and media room projects is decreasing. However, there has been substantial growth in the outdoor entertainment systems, and whole-home automation systems and lighting systems, despite showing a decrease in number of installations, have experienced a tremendous rise in revenue over the last two years.
Perhaps the greatest opportunity revealed in the presentation is in the installation of connected security and “healthy home” systems, a category that’s especially in demand among the prime entry-level market and whose revenue has also risen sharply over the past two years. “The younger they are, and especially if they have kids, the more concern they have over wellbeing, safety, and security,” Farnsworth said. “This is a really powerful thing to know when we realize that 75 percent of first-time home buyers are millennials.”
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