‘It was the best of times, it was the worst of times.’ Electricians in Australia could be forgiven for quoting the opening line of Charles Dickens’ Tale of Two Cities when they look at the market. Whilst the industry has grown significantly and new house starts have increased, there are continuing pressures on costs and a shortage of skilled labour. In the face of these challenges, an electrician or contracting firm may be tempted to grow staff numbers or cut costs. A better path is to do what a number of leading players are already doing and move into smart home automation.
Over the past twenty years, industry employment has grown from 100,000 to 150,000. Half of the industry’s employment is in construction where growth has been fuelled by people needing to work from home, and therefore investing in electrical systems and appliances to stay productive and connect to their workplace.
Dilemma and solution
Faced with the desire to grow, an electrical contractor can do more of the same – win more tenders and employ more people; reduce costs – maybe focusing on using less qualified labour; or take the third path of smart home automation.
More high-margin income
The market is already substantial in Australia, over $3.5b in total growing at a rate of 12% pa. It is split into three broad segments. At one end, custom automation providers charge $50-$100,000 per home and at the other, retail devices can be as little at $30 for a smart bulb. The sweet spot for the electrician is the broad middle: devices that require little or no training but offer a significant quality and reliability edge over retail products.
Electricians interested in this space should look for wireless products that have the seal of approval of the main electrical wholesalers or retailers like Beacon Lighting. They should look for a strong ecosystem to package up a variety of experiences. Bluetooth is important because it can be installed without the need to access the home’s Wi-Fi system. The training required should be minimal but there must be support, which is much easier if the company has an Australian base. Finally, electricians should focus on products that work in homes with two and three wires.
Lighting automation is a good place to start. Although it does not consume a great deal of energy, it creates simple, personalised experiences that consumers love and can improve safety in the home with scheduling and timing. Packages should be less than $5,000 for the homeowner which is small enough to be affordable, yet large enough to make a real difference to the electrician’s margin on the job.
More satisfied customers
Whilst there are significant number of retail smart home devices on the market, most consumers are too lazy to install and commission them, and Australia law means only an electrician can install a switch.
Phones and cars have been smart for many years, and the home is only now catching up. Smart home automation provides a more personalised experience, improves safety, reduces energy consumption and adds value to the home. It therefore creates a virtuous circle where electricians make more money, homeowners are happier, and developers are happy, too because the investment differentiates their property.
Most sustainable growth
It is no exaggeration to say that smart home automation is the single biggest opportunity for the electrical industry of the past fifty years. There are 10 million existing dwellings in Australia and somewhere between 150-200,000 new homes built every year. Houses have anywhere between 20 and 40 connections for electrical sockets, switches, dimmers etc. Even if only 10% get connected that is more than 25 million devices in the coming years.
Today, smart home automation differentiates property. In the future, like the car or phone, it will be unimaginable to think of buying one with out it. For electricians who want to invest a little time and effort, this is the most sustainable pathway to growth.
– Brett Savill
Brett is the CEO of Zimi, an Australian company listed on the ASX that specialises in connecting electrical products to create smarter living and working spaces.