2016 has been another solid year of business for security dealers, according to a recent report conducted by Parks Associates and CE Pro's sister publication Security Sales & Integration.
Within the Residential Market Report, a survey of electronic security dealers and installing security contractors, nearly 60 percent of security dealers report revenues of 10 percent or higher in 2016 than in 2015. That follows the same level of increase reported in 2015 over 2014. Less than 10 percent report lower revenues than in previous years.
As the year comes to a close, Parks Associates forecasts 2016 net sales to be around 1.9 million systems. After several years of recovery, Parks predicts that the remainder of the decade will bring a fight for targets and increasing needs for competitive differentiators.
Other interesting findings:
- Small firms dominate the security dealer landscape. About 50% report revenues less than $1 million while one-quarter report revenues exceeding $5 million.
- More than 60% of dealers now offer some level of interactivity for their traditional systems.
- 70% of respondents offer smart home additions to their installations of traditional security systems.
- Network security cameras category has risen from being offered by 62% of responding dealers in 2013 to 81% today.
- Other options, such as smart lighting devices and smart thermostats, are not as pervasive but also commonly offered.
- Approximately 25% of responding firms provide monitoring while 62% offer monitoring through a third party. Only 10% claim to offer no monitoring at all.
See more data from the report.
The top six types of systems sold by security dealers between 2013 and 2016 are reflected in the chart above. Smart home devices, which saw an 8 percent hike, is one of the only two categories that saw an increase in 2016, alongside networked security cameras coming in at 1 percent.
As for why dealers change their offerings, there are many possibilities. According to the Parks and SSI study, competitive forces are key. It could also be driven by the consumer, as more homeowners are becoming aware of smart home options … and asking for them.
Solid margins, customer demand, competitive parity and new products all combine to increase product adoption in some areas, with opposite factors such as low margins and sated consumer demand causing the easing out of other categories.
See a slideshow of the report or read the full summary on Security Sales & Integration.
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