In 2010, many observers marked it as a turning point in the home furnishings market, shifting from a period of intense growth to a more subdued phase. By year-end, the industry was embroiled in a fierce competition that lasted for an entire year. Numerous small workshops closed their doors, global chain building material stores pulled out of China, and surviving companies focused on self-preservation. It wasn't until 2012 that the pace of expansion slowed down, with a stronger emphasis on improving service quality.
Unseen by many, this industry—once considered to have the lowest entry barriers—began to evolve in terms of quality. As one industry insider put it, the home market is characterized by large industries but small businesses. While sales in 2013 did not show significant improvement compared to 2012, many concepts introduced in 2012 started to take shape this year.
[Image: Romantic Korean Solid Wood Suite]
Smooth
Event: The Guangzhou Pazhou Furniture Fair saw the lowest number of visiting companies in a decade; decoration activity entered a stable phase.
According to statistics, in 2012, the total transaction volume of new and second-hand houses in Beijing reached 266,607 units, a 25.5% increase from 2011. By November 13 this year, the total had reached 248,840 units, up 14.2% compared to the same period last year. With the delivery of new housing sold last year mostly occurring between this year and next, the transaction volume for this year is expected to be delivered in the coming years. Despite a modest increase in sales compared to last year, some specific brands still showed notable growth. For example, according to the Beijing School Furniture Alliance, sales of its member companies this year increased by 10% to 20% compared to the same period last year.
Interestingly, when it comes to furniture exhibitions, the lively scenes seen in previous years were nowhere to be found this year. The number of companies attending these events dropped sharply. Take the Guangzhou Pazhou Furniture Fair, one of the most anticipated events in the industry, as an example. Compared to previous years, the number of visiting companies decreased by at least 40%, marking the lowest attendance in the past ten years.
Comment: Yin Chao, Secretary-General of the Beijing Furniture Brand Alliance, stated that the drop in exhibition visitors reflects broader changes in the industry this year. Furniture exhibitions are typically used by distributors to discover new brands and trends, but now the pace of brand updates has reached a rational stage. Additionally, today's home buyers are mainly first-time or just-needs buyers, which contributes to a more stable consumption level in the home market compared to investors.
Liu Chen, Deputy Chairman and Secretary-General of the Beijing Home Furnishing Industry Association, believes that based on the renovation cycle, homes should be renovated every 8 to 10 years. Now, demand for home improvements due to better housing, second and third renovations, and replacements has formed a long-term mechanism, releasing annual volume. This part of the demand is expected to soon extend into the home industry.
Encircle
Events: Ju’s Home opened in Daxing; Ju’s Home and Red Star Macalline expanded to third- and fourth-tier cities nationwide; Jimei Home entered Yanjiao and Tangshan; IKEA Daxing store opened, among others.
In 2011, the Jimei Shuitun store in Changping City's southwest opened. In 2012, the Shunyi Home followed. If the first two years were more cautious about expansion, then this year was almost explosive.
In addition to planning comprehensive stores in Daxing and Changping, Jimei has also stationed itself in Yanjiao. The expansion of the IKEA Daxing store and other Beijing area developments reflect the trend. Home furnishing companies have also launched plans for rapid national expansion. Aligning with the shift of major housing companies to third- and fourth-tier cities, this year, they have opened stores in 11 regions including Jining, Cangzhou, Huainan, Zaozhuang, Yuncheng, Bijie, Hengyang, and Xinyang. They are also preparing to open comprehensive stores in 41 regions, such as Xingtai, Kaifeng, Chengde, Zibo, and Sanya. Red Star Macalline is also expanding into smaller cities.
Comment: Yin Chao believes that the number of stores in many regions clearly exceeds the capacity, so it is better to open new territories than to compete within the same radiation area. Suburban counties like Xiangshun and Pinggu, which lack standard hypermarkets, are ideal locations. Third-tier cities are being saturated, and even smaller economically strong counties are becoming the only choice for home furnishing companies to seek new growth points. This downward movement in distribution will inevitably drive the national expansion of furniture and building materials brands. However, it should be noted that all enterprises must maintain "perfect and unified" service and management.
Electric Shock
Event: Home distribution companies collectively boycotted Tmall; actually went online; Yihua Wood and WeChat teamed up to develop CRM systems, etc.
On the eve of "Double 11," news that 19 domestic large-scale home furnishing stores, such as Red Star Macalline and Actual Home, jointly boycotted Tmall made home e-commerce a hot topic. In fact, as early as the start of "Double Eleven" in 2011, home furnishing companies had already eagerly tried to join e-commerce platforms, but it was hindered by the particularity of home furnishing products.
Now, after two years of trial and error, home furnishing companies have officially launched an offensive against e-commerce. Starting with official online operations, furniture and building materials brands have finally begun O2O attempts.
Comment: Industry insiders generally believe that home e-commerce is the inevitable trend. Unlike FMCG, home furnishing companies must not only see e-commerce platforms as pure sales channels, but also effectively respond to both online and offline interactions.
This year can be considered the beginning of e-commerce development in the home industry. There will always be problems in the future, but the consumer-oriented business philosophy must remain intact.
Import
Event: Hundreds of Home Furnishings established Eurohui International Home Pavilion; Chengwai Cheng joined hands with Huari to create Chengwai Cheng International Pavilion; Poltrona frau and other top home furnishing brands settled in their homes, etc.
In recent years, signs with the words "international home furnishing" have gradually increased, and the China International Home Furnishing Congregation Area centered around Beijing has begun to take shape.
Even in 2012, when the home market was at its toughest, imported home goods remained strong. For example, the sales of Respect Home reached 400 million yuan in 2012, an increase of nearly 30% compared to 2011, and a 60% increase in the first half of this year compared to the same period last year.
Such a development has prompted international big names, who previously never sought partnerships, to reach out. For instance, Hästens, known for the Swedish royal mattress, Arclinea, Italy's top cabinet brand, Ca ssi na, Poltrona frau, the originator of modern furniture, and Germany's top sofa brand ROLF-BENZ, have all set up shop in the home.
Comment: Meng Xiangmin, vice president of the home analysis, said that in addition to the European economic crisis in 2010, foreign brands have targeted the Chinese market, affirming the business philosophy and service level of Chinese agents and home distribution companies. The improvement in consumers' living standards and their rational requirements for home life are also important driving forces.
Design
Event: Actually, the top floor design center was built; the home furnishing company played a leading role in each design week, etc.
Those who have visited home stores may have felt the same: after visiting a few stores, they often find similar furniture. Consumers are frustrated, unable to find personalized furniture that makes them shine, and are forced to settle for "homogenization."
In August last year, the first original home living museum created by Red Star Macalline—"Yiyi Space"—opened. This year, the top design center of Actual Home was officially constructed. During the Beijing Fashion International Design Week and China Interior Design Week, home furnishing companies such as Red Star Macalline and Actual Home actively participated.
Comment: Liu Chen stated that from the perspective of market mechanisms and consumer trends, the market must retain companies with higher brand added value, service added value, product added value, perceived added value, and environmental protection added value. These added values have become rigid requirements for consumers when purchasing household products. Moreover, the demand for product freshness is increasing.
Yin Chao also believes that with the continuous improvement of people's living standards, consumers' requirements for furniture are no longer limited to practicality, but have gradually become an inseparable part of their pursuit of quality of life and lifestyle advocacy. As a result, multiple indicators such as personalization and artistry naturally become the main conditions for consumers when purchasing home products.
The secret to the healthy and sustainable development of the home furnishings industry lies in giving it a unique design style and cultural connotation, and approaching consumers with sincerity and respect.
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