Home furnishing industry enters the warm-up period, accelerates the layout of third- and fourth-tier cities

With the shrinking of the domestic first-tier urban home market, the third- and fourth-tier markets are becoming hot spots for home furnishing companies. The layout of some brand enterprises in the first- and second-tier cities has been basically completed. In order to occupy a larger market share and realize the national strategy, many brands have begun to turn their attention to the more promising third- and fourth-tier cities.

When interviewed by reporters, most of the households made it clear that in the case of the recovery of the entire home market in 2013, where to find market growth points and potential markets is a problem that home enterprises must consider. Therefore, the sinking channel has become more urgent. This situation will be particularly evident and urgent in 2014. Zhengzhou Evening News reporter Tang Shanpu

The current home industry enters the warm-up period

Looking back at the development of the home furnishing industry in 2013, three major characteristics can be summarized: first, the industry is picking up, second, the industry is becoming more mature, and third, the second and third-tier cities have become hot spots.

Taking Hongxing Meikailong as an example, the total sales in the first half of 2013 was close to 30 billion yuan, of which the sales of building materials products increased by 25% and the sales of furniture products increased by 13.7%. Red Star Macalline Central Plains Regional General Manager and General Manager of Zhengzhou Shopping Mall Jiang Weigang told reporters that in 2013, the sales performance of Red Star Macalline Henan market increased by nearly 10% year-on-year.

According to the introduction of the Huazhong regional manager of the left and right sofas, the sales of sofas around 2013 were “very optimistic”. The two regional markets in Henan and Shandong, which he is responsible for, have achieved remarkable performance in 2013. The sales in Zhengzhou only increased by 40% compared with last year. Shandong is still above this percentage.

In fact, since 2011, the annual output value of China's home furnishing industry has exceeded 1 trillion yuan. At present, household products have become the fourth largest consumer goods after real estate, automobiles and food.

Although the industry insiders talked about the optimistic situation of the home market in the past few years, it is always necessary to talk about the influence of national policies on the regulation of real estate, but the rigid demand of the entire market also gave the market a shot in the arm. On the one hand, due to the lag period of one to one and a half years of home decoration, the real estate transaction in 2013 led to the growth of new home decoration in 2014, which directly generated the demand for household consumption; on the other hand, the home store actively promoted the promotion and effectively stimulated Consumer demand.

“The subdivision of the home furnishing industry is also deepening. The sub-categories of flooring, mattresses, sanitary wares, wallpapers, etc. all have industry-leading brands, and the scale and influence are also expanding.” Jiang Weigang believes that the larger the number of sub-brands, Instead, a more comprehensive store with a wide range of categories and brands is needed to provide an orderly display and marketing.

On this basis, in the process of “wintering” in the past two or three years, more and more home furnishing companies have chosen to actively adjust and find new business growth points. The rise of smart homes, the in-depth exploration of “pan-home demand”, and the adjustment of online and offline linkages are among the following. After experiencing high-speed arrogance and industry downsizing, home furnishing companies are becoming more mature and their formats are gradually improving.

Trend 2, 3rd line cities become hot spots

Similar to other manufacturing industries, channel sinking is the development trend of the home furnishing industry in recent years.

“As the home market in first- and second-tier cities is becoming more and more saturated, the demand in the third- and fourth-tier cities and even the surrounding counties and towns in the process of urbanization is increasing.” Li Chunxiao, general manager of Fulili Furniture Engineering Co., Ltd. said that In line with this trend, home stores have expanded to second- and third-tier cities.

Red Star Macalline opened three new stores in the first half of 2013, two of which are located in the second and third tier cities; the newly opened shopping malls in the second half of the year are also mainly in the second and third tier cities. In Henan, there are chain stores in Luoyang, Nanyang and Xinxiang. "In the next 2-3 years, Red Star Macalline will carry out all-round layout in 17 prefecture-level cities and all the top 100 counties in the province, and deeply root the Red Star Macalline in the hearts of every loved one. Jiang Weigang revealed that in 2014, Red Star Macalline will expand rapidly in the third and fourth-tier markets of the Central Plains.

He analyzed that the main reason for the development of the second and third-tier markets in the home industry is the continuous release of demand in the second and third-tier markets in the context of the national urbanization policy. Taking Red Star Macalline as an example, its sales volume of building materials and household products in third-tier cities showed a large increase.

In the future planning of Wu Dawei, CEO of Ou Kailong Group, the expansion of Ou Kailong to the second and third tier markets is an inevitable trend. At the same time, it will conduct cross-industry trials on business models, such as restaurants, clothing, movies, etc.

Shengxiang Floor has more than 1,000 sales outlets across the country, and launched a network-style marketing model in the third and fourth-tier markets, with a county-level penetration rate of 50%. Among them, the sales in the planned third and fourth-tier markets will account for 40% of the total sales.

The Huazhong regional manager of the left and right sofas told reporters that what they have to do in 2014 is to open the store to all the counties in Henan, complete 50~60 layouts, and guarantee 40%~50% sales increase compared with 2013.

In the heart of Li Chunxiao’s heart, the mattress will be “full coverage of the urban and rural market in Henan, and it is planned to be realized in three years”.

Li Chunxiao believes that the country's regulation of the property market, the demand for the home market attached to the property market has declined, resulting in the hardship of the home industry in the past two years, but now it has improved. However, the blind expansion of home stores and home brands has caused the first- and second-tier cities to be seriously saturated, which makes the profits dilute. At present, the property market purchase restriction has little impact on the cities of the third and fourth tiers. Only when the enterprises preemptively lay out the market, can there be more room for development in the future.

It is precisely because of the huge opportunities hidden in the second and third-tier markets that Red Star Macalline clearly put forward the strategic goal of “building 200 home stores in 2020”. It can be foreseen that the second and third tier cities will be the biggest opportunities in the home furnishing industry in the next few years, and become a hot spot for fierce competition in major home stores.

The third and fourth tier cities are the blue ocean of the home market.

At present, the home market in small and medium-sized cities is growing rapidly, and because these three- and fourth-tier cities have few strong home brands, there is an attractive market space. Who can get ahead of the game and do his homework, whoever can win the market first.

The home business Rio Tinto's third- and fourth-tier markets, the reasons: First, the rapid and sustainable development of China's economy provides enterprises with a rapidly expanding soil; Second, China's building materials market and brand advantages are not yet mature, and the space for operation is large. The industry believes that as the home industry matures, the first- and second-tier markets have reached saturation, and the intensification of competition has also led to companies falling into a situation of weak sales growth. Under the double squeeze of the financial crisis and market austerity, enterprises have to adapt to the market and make changes in marketing strategies. The sinking of channels has become a development trend. Some big brands have also begun to lay down their bodies and vigorously explore the third and fourth-tier markets in order to seek new profit growth points.

Although the positive effects of the third and fourth-tier cities are very irritating to the home furnishing industry, many furniture brands and merchants have taken the channel sinking as the next step, but some insiders also admit that they are optimistic about the third- and fourth-tier markets. Third and fourth line markets. But if you do it in the first-tier cities, there are obviously many drawbacks, and they are not necessarily successful.

For example, the new accessory products of “Charming” are different from the previous “urban” products in terms of color, variety, hardness and price, especially the products of 1000~2000 yuan, which are mainly in the rural market. Li Chunxiao said that sales are very good.

Li Chunxiao believes that compared with the first and second-tier markets, the current third- and fourth-tier markets are still in the incubation period, and the market channels and products are relatively single. In the third and fourth-tier markets, product awareness and demand are not high, and the market still needs to be further cultivated. But in the future, the third and fourth-tier markets will become the blue ocean of the home market.

“Many third- and fourth-tier cities have similar businesses. Only the strong ones have no kings.” Li Chunxiao said that if you want to compete for the king of the local market, you must expand your business scope and give yourself a chance to get bigger. Market share; Second, strengthen the marketing capabilities of prefecture-level dealers and seize more profit opportunities. For home branding companies, the prefecture-level market is a fertile ground, depending on how the brands operate.

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