As the home furnishing industry enters a mature stage and market competition intensifies, leading companies have gradually built a high-barrier moat around channels, product brands, and operations, and made efforts to build all channels to seize the sinking market in cities, coun

As the home furnishing industry enters a mature stage, market competition has intensified. Leading companies have gradually built a high-barrier moat around channels, product brands, and operations, and made efforts to build omni-channels to seize the sinking markets in cities, counties, towns and rural areas below third-tier cities. Under the mid- to long-term impact of the epidemic, the industry structure will be further optimized in the process of survival of the fittest. Leading companies with deep accumulation may further increase their market share by relying on their advantages such as channels, diversified product systems, and scale.

The home furnishing market is ushering in many new opportunities

In the process of urban advancement (smart city construction), accelerated urbanization and the rapid popularization of smart technology, people’s understanding of beautiful living forms is becoming increasingly clear, and a large number of products have been derived from this. The demand for supporting products will become a new outlet for market development in the home furnishing industry.

On the one hand, the construction of smart urban micro-units represented by "future communities" is advancing from the region to the country. Whether it is residential supporting projects or the construction and renovation of new and old public buildings, home products, especially intelligent products, will be promoted. demand has increased significantly.

On the other hand, the development and construction of county towns has been pushed to the national strategic highland. At the beginning of this year, our country proposed "appropriately carry out infrastructure investment in advance". Recently, a new policy was introduced - by the General Office of the CPC Central Committee and the General Office of the State Council. The "Opinions on Promoting Urbanization Construction with County Towns as Important Carriers" issued by points out that medical and health facilities, cultural and sports facilities, industrial supporting facilities, and municipal construction are all important directions for urbanization construction.

The county-level market has a huge demographic dividend. According to official statistics, in 2021, my country's urban permanent population will be 910 million. Among them, the permanent population of county towns is about 160 million people, and the permanent population of urban areas of county-level cities is about 90 million people. The population of county towns and urban areas of county-level cities accounts for nearly 30% of the national urban permanent population. The favorable policies will drive the engineering market to sink, and the county home furnishing market will usher in major benefits.

With the further expansion of market demand generated during the construction of new infrastructure in future communities and counties and towns, the home furnishing market has the opportunity to enter a dividend period. At the same time, the epidemic and supply chain problems are testing the operating efficiency of enterprises and may accelerate the clearing of market from . According to reports, many corporate executives believe that the epidemic has intensified the reshuffle of the home furnishing industry, and companies whose development is not stable enough may not survive the "severe winter." Relatively speaking, companies with certain strengths still have considerable room for improvement in market share.

New Home Furnishing Paradigm found that in recent years, leading companies have made efforts in omni-channel layout, actively penetrated into the sinking market, and further increased product competition barriers by launching diversified categories and packaged sales, and increased market share through a two-pronged approach.

Deeply explore the sinking market, driving share increase

The "2020 Smart Home Consumption Insights in the Sinking Market" released by Tmall pointed out that due to the late popularization and low penetration rate of and in markets below the third tier, the growth rate of consumers in smart homes has been Much higher than the first- and second-tier markets, especially the sixth-tier and township markets, the growth rate is close to 100%, while the growth rate in first- and second-tier cities is around 50%.

At present, the market in first- and second-tier cities is saturated, and homogeneity and low-price competition are severe. At the same time, the consumer awareness of users in the third-tier and lower-tier markets is rising, and the demand for comfortable and high-end home products is getting higher and higher. In addition, under the background of favorable policies and new infrastructure construction in counties and towns, leading home furnishing brands have increased their penetration into lower-tier markets in order to seek higher profit growth points.

In the field of software home furnishings, Xilinmen has outstanding channel advantages. It will have a net increase of 852 stores in 2021 and will continue to promote plans to open more than 1,000 new stores this year. In addition, Xilinmen has accelerated its expansion into the lower market by building Ximian distribution stores that focus on youth and cost-effectiveness, and has become the largest segment in terms of new stores in the first nine months of 2021.

Easyhome’s exploration results in the sinking market are also remarkable.As of the end of 2020, its terminal store network has been distributed in 270 cities across the country, of which non-first- and second-tier cities account for 71.35%. The company expects to realize its thousand-store plan by 2025, and will target the lower market as an important direction for store expansion.

It is undeniable that leading companies are more adequate in channel resource allocation. Their terminal store network construction and refined operation and management capabilities have advantages over their peers, which may form channel barriers to help increase their market share.

Diversified and integrated product strategy , broadening the growth track

Home furnishing has the characteristics of a small enterprise in a large industry. In recent years, the comprehensive competition trend of channels, products, brands and prices has been obvious. In the product link, the industry is moving from single product competition to a diversified and integrated competition trend. A survey by Aowei Cloud shows that among people who have newly renovated or purchased home appliances in the past two years, the proportion of people who choose to package home appliances reaches 12%. Leading companies with keen business acumen have successively launched packages including customization, software, home appliances and other diversified categories to carry out packaged sales and open up new growth space.

Judging from sales performance, packaged purchases of multiple categories are indeed very attractive to consumers. In 2021, the revenue growth rate of Gujia Home integrated products and customized furniture will exceed 40%; the synergy effect of Xilinmen guest bedroom products is evident, and the revenue of soft beds and sofas will increase by 70% and 47% respectively year-on-year; Oppein Home Wardrobe and Accessories Revenue was 10.172 billion yuan, a year-on-year increase of 49.53%, and orders for large home furnishings increased by more than 90% year-on-year.

The new paradigm of home furnishing believes that the strategy of diversified products and packaged sales has simultaneously increased product richness and cost-effectiveness, which not only meets the needs of consumers for personalized purchases and one-stop purchase of quality home furnishings under the trend of consumption upgrading, but also the need for unified home styles. , the demand for products to be better interconnected and interactive, and at the same time, it also allows companies to enter more branded products into market segments. For leading companies that already have the advantages of large-scale centralized procurement and strong supply chain integration capabilities, this will become another major barrier to their construction. In the process of accelerating the survival of the fittest in the home furnishing industry, they can use this resource integration advantage to enhance their competitiveness. core competitiveness and further gain market share.

Based on the above, under multiple new opportunities, leading companies with deep industry accumulation will benefit from deep cultivation of channels and product links, further deepening the moat, and it is expected that their market penetration rate will gradually increase, driving industry concentration to increase.