Robots are Invading! Every day, robots are launching premeditated attacks inside millions of homes across the country, with countless more invasions to come. Before you dismiss this as fake news, let me clarify that the “robots” are actually robotic vacuum cleaners and what they are “attacking” is the dust and dirt in your homes; however, their mounting invasion is real. According to Future Market Insights, the US robotic vacuum cleaner market is estimated for a CAGR (compound annual growth rate) of 12%, surpassing a value of $2.4 billion by the end of 2021, up from $1.49 billion in 2016. Given that this astounding growth is occurring in a mature market such as the vacuum cleaner industry, it begs me to ask the question: “Are robotic vacuum cleaners a disruptive innovation?”
What is a Disruptive Innovation?
The term disruptive innovation, which was first coined by American scholar and Harvard Business Professor Clayton M. Christensen, is an evolving term to describe the “process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.” This anomaly is spurred when the incumbents are solely focused on enhancing their current product portfolio to meet their base customers' demands, in turn ignoring other, often smaller, segments and needs of other customers. Disruptive companies aim to target those unappreciated segments and work to gradually move upmarket, effectively meeting the needs of a larger customer base as their product or service advances. Notably, the disruptive entrants tend to enter the market with a lower price offering.
A common example of a disruptive innovation is online streaming video and its impact on the video rental business. Customers were given the opportunity to effortlessly stream movies online through popular services like Netflix, prompting video rental chains like Blockbuster to become less and less desirable.
Disruptive innovations are labeled as disruptive for a reason, often causing significant havoc and displacement in an industry with venerable incumbents losing market share, customers, and often times their entire businesses. Blockbuster chose not to adapt and dismissed online streaming as a non-threat, which led to their demise.
Ground Zero of the Robot Invasion
Now that we have a deeper understanding of the requirements to be labeled a disruptive innovation, we can begin to examine if the robot vacuum segment meets them. To do this, let’s first observe the emergence of robot vacuums and the market’s reaction to them.
If we assume for a moment that robot vacuums are disruptive, the “Netflix” of the emerging segment would be iRobot, who launched its first robot vacuum into the market in 2002. Since then, the company has gone public (2005), sold more than “10 million units worldwide” (2013), and earlier this year reported a 45% year-over-year increase in its US consumer revenue (2017). iRobot’s success, particularly in the past five years, has created a fissure in the once entrenched vacuum industry for smaller firms to enter. Numerous new companies are now flooding the market by leveraging robot vacuum cleaners as their gateway, including Neato, bObsweep, iLife, Ecovacs, Eufy, and more. Additionally, to avoid becoming the “Blockbuster” of the vacuum cleaner industry, top vacuum brands including Dyson, Hoover, Bissell, Black & Decker, and most recently SharkNinja, have all released robotic vacuum products of their own. Even prominent home appliance companies such as Samsung, LG, and Miele couldn’t resist the burgeoning market, debuting their own robot vacuum products.
Damage from the Invasion (So Far)
Significant changes are already evident within the vacuum industry due to the impacts and success of the emerging robotic vacuum segment both in retail and online. Robot vacuums have gained shelf space in 9 out of 10 retailers within gap intelligence’s retail panel, with ailing Sears acting as the only retailer to not offer them. More interestingly, within the five months since launching gap intelligence’s vacuum service (May 2017 – to date), robot vacuum’s total shelf share has increased by more than 30%, representing a 10% share of shelf space across all vacuum types. This figure is only expected to rise as vacuum industry giant, SharkNinja, recently debuted its first robot vacuum, marking its entrance into the segment. Similarly, with 21 different players, robot vacuums make up more than 15% of Amazon.com’s residential vacuum cleaner assortment.
Why Robot Vacuums?
The majority of purchase decisions that consumers make are driven less so by a product’s functionality but more by its benefits. Our propensity to spend money on products and services based on their perceived value is the robotic vacuum segment’s vehicle for unabated growth. One of the most cherished values we all share is time. We are inherently drawn to the option that saves us time and are willing to pay a premium for it. Many successful products and services (especially disruptive ones) share a common theme of saving the customer time, which can be priceless. Robot vacuums are no exception.
With a few rare exclusions (including myself), people despise vacuuming. A significant reason for the hatred of vacuuming is because the time spent vacuuming our floors could be better utilized for something with a higher perceived value. Popular robot vacuums entering the market carry WiFi integration, allowing users to vacuum their floors from wherever they are and whenever they want, all by a simple tap of their finger on their smartphone.
This is Just the Beginning…
Two common concerns arise when the market is presented with a new (possibly disruptive) technology that invades: cost and quality. In other terms, to reap the benefits of a new robot vacuum, how much will it cost me and how much quality will I sacrifice, if any? The robot vacuum segment’s ability to address these two concerns will be the indicator of long-term success and its classification as a disruptive innovation. Although the segment is still rather new, competition is rampant, as seen with the abundance of aforementioned companies inundating the market. This heated competition is directly causing a rise in the quality of the products and the decrease in the cost, which will allow the segment to evolve from a niche market to the mass. In the last three months, average net retail pricing (within the gap intelligence panel) has decreased by 10%.
The robotic vacuum segment’s unrivaled growth in the mature vacuum cleaner industry paired with a coinciding increase in quality and decrease in cost, as well its viable value-add leaves me to believe that it is a disruptive innovation and the invasion has only just begun…
If you are still unsure of the robot takeover, need more evidence, or would like to start a dialogue, please sign up for the upcoming webinar where I will dive deeper into the robot segment’s growth and its effects on the vacuum market as seen through our data at gap intelligence.