Market Trends May 2019
Digitalizing Construction Sites
Construction as an industry has lagged behind in productivity growth and technology until recently. Now a number of companies, including Bosch and Trimble, are focused on using smart devices and the Internet of Things (IoT) to make construction sites safer and more efficient. Fleet operators in the construction industry struggle with tracking and locating heavy equipment such as excavators and dump trucks on huge construction sites. Bosch’s TRACI, the IoT-based connectivity program that tracks assets, provides all the relevant date needed using a sensor box, cloud-based evaluation software and a wide range of digital services. TRACI speeds up materials distribution, records operating hours and sends out maintenance reminders. Trimble offers a full suite of software solutions aimed at various sectors of the construction industry that allow companies to track people and equipment in real time and manage complex construction sites from the office instead of the field.
Changing the Perception of Trade Jobs
Lowe’s has partnered with 60 of their suppliers, agencies and others to change the perception that working in the construction and production trades equals hard work for low pay. The initiative is called Generation T (Gen T), and it’s goal is to help fill three million jobs in skilled trades fields that could be open by 2028. Lowe’s says that Gen T fits in well with their Track the Trades Program launched last year. Lowe’s says they are committed to opening the path for people who relish the challenge of creating something out of raw materials and take pride and satisfaction in mastering the skills required to do it. Gen T relies heavily on social media as a way to change Gen Z’s and millennials’ perceptions about working with their hands. They have also been conducting trade sessions at Charlotte-Mecklenburg schools since last October, where they teach kids how to perform useful skills, such as tiling a floor. Other elements include apprenticeship programs at Southwire company, which also donates products to apprentice schools around the country. Toolmaker MarshallTown is donating some of their profits to a children’s book series, Marshall T. Trowel, which encourages high schoolers to pursue vocational and tech educations.
Building on Failure
Not being afraid to try something new and learning from mistakes is one of the hallmarks of innovative leaders. Few people remember Amazon’s ill-fated Fire phone, which flopped in the mobile market. But that failure inspired the Echo smart speakers and their AI voice Alexa, now found in millions of households throughout North America. Starbucks’ founder Howard Schulz told attendees at the Ace Hardware Convention that if you’re not failing, you’re not trying hard enough. The widespread adoption of voice assistants has jump-started the creation of an entire range of IoT products. To put some of this into perspective, in 2006 before the iPhone was introduced, the phone handset market in the US was about $10 billion. Today, the total market, including hardware makers and accessories, is close to $200 billion; Apple alone sells $110 billion worth of i-goods in the US. The wireless services market is close to $300 billion. Consumer income has not grown proportionately, but how consumers spend their money has. In 2006, only the elite had cell phones; today cell phones are regarded as a necessity of modern life and use starts in kindergarten. According to research, 29% of Americans talk to a voice assistant at least once a month, and six out 10 who own a voice assistant use it to connect with other smart devices. As an aside, most people refer to their voice assistant by gender; Alexa is of course “she,” not “it.” This year US consumers are expected to buy about 29.4 million smart-home products, a 23% increase over 2018.
UPS just beat out Amazon, FedEx and Uber to make America’s first revenue-generating drone delivery. UPS is part of a public-private partnership with the US Department of Transportation’s drone testing program rolled out in spring 2018. UPS collaborated with drone tech company Matternet, and made the first revenue-generating drone delivery when they delivered medical samples on WakeMed’s sprawling medical campus in Raleigh, North Carolina. Moving medical samples around the campus took up to 30 minutes in traffic, which could be a real problem when the materials being moved are life-saving specimens like blood and organ samples. The drone program is cutting delivery time to three minutes and 15 seconds. Right now the drones will be used to make about ten critical deliveries per day, but those involved say this is only the beginning, and is the first time it’s clear drones can generate more than publicity. Last year the DOT overhauled the rules for commercial use of drones, which helped to open the market.
Companies Search for Customer Relevancy
Telsey Advisory Group reported that recent executive letters from companies including Amazon and The Home Deport reveal strategies that illuminate how companies are tackling the topic of customer relevancy. One of the findings is that well-maintained and inviting stores play a key role in maintaining customer connections to retailers. This requires brands and retailers to continue to invest in stores as well as technologies that improve online shopping and fulfilment. Amazon said it is critical to ask customers what they want, listen carefully to their answers and figure out a plan to provide it thoughtfully and quickly. Home Depot said that now more than ever customers are viewing them as One Home Depot instead of a brick and mortar retailer with a website. Stores remain the hub of their business, but data shows that many in-store sales are influenced by an online visit.
What Motivates First Time Homebuyers
The American Housing Survey reports that nearly two-thirds of first-time buyers say finding a better home is the top reason for moving, followed by household formation at 61% and finding a better neighborhood at 49%. First-time home buyers made up 37% of all households buying homes in the two years before the 2017 AHS survey, which was down from 39% in the 2015 survey. The median price of all homes purchased by both first-time buyers and trade-up buyer rose 10% between 2015 and 2017. The demographics of first-time and trade-up buyers remained largely unchanged from 2015; the typical home buyer was 40 years old. First-time buyers had a median age of 32, while trade-up buyers averaged age 47. About the same percentage (27%) of recent home buyers were racial or
ethnic minorities. The Fed’s decision to delay increasing interest rates for the immediate future and historically low mortgage rates are encouraging buyers to keep looking. According to the National Association of Realtors’ 2016 study of generational housing trends, millennials (or Generation Y), born between 1980 and 2000, comprise the largest segment of the buyer market (35%), ahead of Generation X (26%), which covers those born between 1965 and 1979. However, these two generations have quite a bit in common when it comes to housing wants. According to Bankrate, they generally break down into two groups: young professionals who want a turnkey, low-maintenance home that allows them to build equity and have a place of their own while focusing on their careers and people they refer to as “creative and romantic” who are willing to put in a lot of sweat equity over time to create a home that is uniquely theirs as well as a good investment. For both groups, the condition of the kitchen and baths is important; remodeling these rooms can be very expensive, and they’d rather sink their money into other improvements.
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