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The Spoon

Daily news and analysis about the food tech revolution

Sears

Don’t Brick My Fridge!

Product manufacturers face many new challenges when they introduce smart, connected appliances and devices into the market. New business models, extended support windows, rapid technology changes, supply chain adjustments, post-support deprecation planning, and information security are all factors that companies developing connected products now need to consider and address.

The former CEO of Ford is famously quoted as saying that Ford now sees itself as a technology company. The shift that appliance manufacturers must make in their businesses to produce and support connected products is no less significant. In the old world, you could build and distribute your big metal box and move on to the next thing. Consumer feedback contributed to the next model, if there was one. But connected appliances are a whole different business. Now you’re creating and maintaining back-end software services, and you’re possibly maintaining and updating device firmware and customer-facing apps. And, in addition to investing in regular updates to the software and back-end services to keep them running on the devices and platforms you support, you’ll also find that your customers expect that app to improve and add functionality over time.

Then there’s the data. What are you going to do with all the telemetry data these connected devices are collecting? How can you use this data to guide future product decisions, optimize your support and failure prediction models, and enhance your customers’ experience?

One of the panel discussions at this year’s Smart Kitchen Summit, “Don’t Brick My Fridge,” focused on exploring these very issues. With a diverse panel of speakers, we looked at these challenges from multiple perspectives. Joe Britt, CEO of Afero, and Jonathan Cobb, COO at Ayla Networks, addressed key factors about the requisite data and infrastructure platforms; Cristian Ionescu, Head of Smart Home at Renesas, discussed some of the supply chain and distribution channel challenges; and Chris McGugan, GM of Innovation at Sears & Kenmore, gave some perspective from an appliance manufacturer’s point of view.

Don’t Brick My Fridge from The Spoon on Vimeo.

Based on how technology evolves and ages, your refrigerator is likely to outlive the Android screen built into its door…or even the communication chip integrated onto its circuit board. So manufacturers need to consider new support models. Just like some parts may be warranted longer than others, perhaps connected features or components get supported for a specified, limited period.

These realities could potentially support new business models. Refrigerator as a service? Would consumers consider leasing connected appliances, like they do now for phones, cars, and some other products, ensuring that they can readily upgrade to the latest model every few years? Some companies are exploring this as an option.

And what happens if your company doesn’t survive, like the recent announcement from Teforia? Or say you decide to deprecate a product from your company’s portfolio. Once your app or back-end services are no longer supported, can your customers still use the appliance they likely paid a premium for? If your oven, for example, needs an app to set temperatures or cooking modes, what happens when—when, not if—that app is no longer available? You should ensure that the core features of your product still function. Have you provided customers with a local, analog control option? Deprecation issues can (and likely should) even impact a product’s industrial design.

There’s far more to consider than can be discussed in half an hour, but the panel did touch on some of the key challenges and concern for most companies. If you’re in that space—if your company is introducing connected kitchen products—be sure you’re ready for the new, longer support commitment you’re making, the new factors you need to consider (like data and security), and the long-term viability of your product as a stand-alone device. Without proper planning, budgeting, and even restructuring, you risk leaving your customers with useless metal boxes instead of the smart, connected appliances you designed.

About the Author: Richard Gunther is the Director of Client Experience at Universal Mind, a digital agency in Denver, CO. He’s also the Editor of the Digital Media Zone and hosts Home: On, a podcast about DIY home automation products and technology.

Sears Cuts Ties With Whirlpool In Another Effort To Survive

For almost a century, Sears carried staple appliance brands from Whirlpool including Maytag, JennAir and KitchenAid. But amidst the retailer’s struggles to remain profitable in a tough environment, Sears has announced it is cutting ties to Whirlpool and will no longer carry the brand’s appliances.

It appears that the retailer’s decision stemmed from Whirlpool’s attempt to raise margins in an increasingly competitive appliance market environment. In a statement, Sears commented, “Whirlpool has sought to use its dominant position in the marketplace to make demands that would have prohibited us from offering Whirlpool products to our members at a reasonable price.”

The decision is effective immediately and Sears reported that it would sell off the rest of its Whirlpool inventory while immediately pulling subsidiary brands including Maytag and KitchenAid from store floors. Sears will continue to sell its Kenmore brand and other popular appliance brands including GE, Bosch, Samsung and Electrolux.

These recent changes may not be enough to keep Sears from going under and the announcement comes in the last quarter of a rocky year for Sears; the company has been in the process of closing less profitable stores, including all those in Canada and has attempted to reinvigorate its e-commerce efforts through a partnership with Amazon. In a “if you can’t beat ’em, join ’em” mentality, Sears signed a deal with the Seattle based e-commerce giant to sell Kenmore appliances on Amazon.

Sears business dealings with Whirlpool aren’t entirely over though, the company still manufactures the Sears Kenmore line of appliances and will continue to do so according to Sears. Kenmore is attempting to remain competitive in the connected appliance space, launching a new suite of smart kitchen appliances with Amazon Alexa compatibility at the 2017 Smart Kitchen Summit.

Whirlpool, on the other hand, has spent the past several years dipping their toes into the smart kitchen space, first partnering with food platform startup Innit, then announcing voice connectivity inside their devices and after dissolving the Innit partnership, buying Yummly, one of the internet’s biggest food & recipe sites.

The Kenmore-Amazon Deal Examined

Last week, Sears and Amazon announced a partnership that will bring the Kenmore brand of appliances to Amazon.com. The deal, which also brings Amazon’s smart home voice assistant Alexa to the Kenmore lineup of smart appliances, marks the first time in Kenmore’s hundred plus years the iconic appliance brand will sold through a non-Sears channel.

The reaction to this deal was mixed. Wall Street loved the idea of Kenmore tapping into Amazon’s retail savvy and Alexa platform, while others saw the deal as something of a white flag for Sears.

The reality is this deal has many net positives – and a few downsides – for both. Let’s break it down for each side:

Sears/Kenmore

Sears’ struggles over the past few years are no secret, and with more stores closing every year, it’s no surprise that Kenmore’s market share has also been shrinking. By virtue of its up-to-now exclusivity with Sears, the appliance brand has simply been in less storefronts every year, which has meant less opportunity to capture the consumer dollar..

Sears stores 2010-2016. Source: Business Insider

The Kenmore brand has also lost some luster over the past decade, as Gen-Xers and Millennials have looked at new entrants into the appliance market such as Samsung and LG. The brand is, in many ways,  mom and dad’s (or grandma and grandpa’s) appliance brand, so the addition of Alexa smarts could give the brand a well-needed upgrade.

The deal also allows Sears to keep its most popular remaining brand. Last year, the company sold the Craftsman brand to Black & Decker, which gave the company a liquidity lifeline, but also meant it was beginning to cut into bone as it struggled to turn itself around.

Long term, however, the deal still doesn’t seem to change the long-term trajectory for Sears. The company’s existing retail format is expensive and outdated and this does nothing to change that. If anything, it could mean less sales of Kenmore appliances in Sears storefronts as more are sold online through Amazon, which could accelerate store closures long term.

Amazon

The deal for Amazon is almost (but not entirely) net-positive. Not only do they get a semi-exclusive distribution deal as the Kenmore brand’s only non-Sears sales channel, but it also likely locks the Alexa platform in as Kenmore’s primary voice interface.

Long term, it also makes Amazon a bigger player in white goods and appliances. While it’s unclear if Amazon would launch their own brand of appliances – my gut tells me they probably wouldn’t – you can never rule anything out with Amazon.

The biggest downside for Amazon? How this deal could benefit other voice assistant and smart home platforms.

Think about it: For other Amazon appliance partners, the deal probably is a bit of an annoyance. After making much of their CES this year about Alexa integration, Whirlpool probably can’t help but be a little annoyed with this deal. This deal will reinforce the reality that while an Amazon Alexa integration is necessary, it would be wise to not put all your eggs in the Alexa basket.

The deal could also have an upside for Google and Apple. While many appliance companies have already done Nest integrations and have been working on Google Assistant integration, this deal will likely push them to push down on the gas pedal. For Apple, who has been moving fairly slowly with HomeKit and Siri integration, this could serve as an opportunity to evangelize their platforms in the face of growing dominance of Alexa’s voice assistant in the smart home.

If you want to hear the head of Kenmore innovation, Chris McGugan, talk about this deal, make sure to not to miss the Smart Kitchen Summit. Just use the discount code SPOON to get 25% off of tickets. 

Sears Gets Serious About The Smart Home (But Will It Enter The Smart Kitchen?)

Sears debuted a line of private labeled smart home products last week, including a water heater retrofit module and a connected riding mower.

Our Take: Like many brick and mortar retailers, Sears is struggling in the age of Amazon and Costco. Also like many others, the iconic retailer is beginning to turn to connected devices as one way to possibly reinvent itself.

Sears has always derived a significant amount of its business from its own private label brands such as Kenmore and Craftsman, and given the retailer’s historically strong market share in its core markets (like tools) it’s worth noting the move. While the company has yet to announce any connected kitchen appliances, we think doing so would be an interesting move since Kenmore appliances appeal to middle and modest income households and could help mainstream the connected white goods category.

Bottom line, Sears may also want to rethink attention to its traditional sales floor plans and formats in its effort to sell connected devices. Its customers are generally middle to late stage adopters, so it would benefit them to show product benefits through in-store experiential retail formats. I’ve written a lot about how it often takes a new approach to selling products in the era of IoT, one that focuses on experiential retail and possibly even entirely new models like that from B8ta.  While Sears may have a hard time remaking themselves overnight, they could at the very least begin to experiment with lab-style offshoots like B8ta or Target’s Open House in San Francisco.