About author:Dr. Zhao Longshi, Deputy Director of the Furniture Committee of the National Light Industry Vocational Education Committee, President of Guofu Zongheng, and founder of China Home Furnishing Education Platform.
In 2023, the home furnishing industry is facing a complex and volatile environment, especially in the context of the downturn in the development of the real estate industry, and the overall market is extremely uncertain. Although we often hear pessimism about the industry**, in reality, the home furnishing industry still has a broad development opportunity. Data show that from 2010 to 2025, the global home furnishing market size will show a fluctuating upward trend, especially in 2021, the global home furnishing market will reach 496.2 billion US dollars, with a year-on-year growth rate of 97%, and the global home furnishing market is expected to continue to grow at a rate of about 3% over the next four years. This trend shows that even in the current stock market environment, there are still plenty of opportunities to be tapped in the home furnishing industry.
The home furnishing industry is going through a stage of transformation from relying on external dividends (such as labor demographic dividends, real estate dividends, and urbanization dividends) to internal capabilities (including transformation capabilities, organizational change capabilities, and efficiency improvement capabilities). Therefore, we say that certainty in the midst of uncertainty is even more important. This includes not only an in-depth understanding of the environment, a grasp of the basic laws of the industry and the market, but also building a positive mindset and taking effective action.
Therefore, I have summarized a three-sentence strategy: "do the right trend, strengthen the advantages, and chain good resources", to provide market development insights and reference guides for home furnishing enterprises and industries, and to provide new ideas for the rise and breakthrough of home furnishing companies in 2024.
Take stockto grasp the trend
The home furnishing industry is entering a new cycle. This is embodied in:
First of all, with the evolution of the real estate industry cycle, the home furnishing industry has also entered a new cycle of structural change. This change is not only a migration of cycles, but also a deep reshaping of the market structure and competitive logic.
For enterprises in the industry, it is necessary to break away from the limitations of relying on a single competitive advantage and transform to build a comprehensive system capability. This transformation is the key to the sustainable development of the enterprise, involving the upgrading of the whole chain from product research and development to market layout, from first-chain management to customer service.
At the same time, the driving force of enterprise development is also undergoing fundamental changes. The growth model, which has historically centered on marketing strategy, is gradually giving way to a driving model with technological innovation and product innovation as the core. This transformation puts forward higher requirements for the company's R&D investment, product design concept, market positioning and other aspects.
In addition, the focus of market competition has also shifted from the competition for the incremental market to the deep cultivation and segmentation of the stock market. This transformation requires enterprises not only to pursue scale and speed, but also to pay attention to the cultivation of efficiency, quality and differentiated competitive advantages. In this process, the growth model of the industry as a whole has also shifted from rapid growth in the past to a slow growth model that focuses more on efficiency and sustainability.
China's home furnishing industry is going through a complex and challenging period of cyclical transformation. If enterprises want to stand out at this stage, they must strengthen the construction of system capabilities internally, and flexibly respond to changes in the market and environment externally, so as to ensure stable development in a volatile market environment.
The new cycle also brings new structural changes, opportunities, competition, products, traffic, and growth have all changed.
Opportunity Change: From Strategic Opportunity to Structural Opportunity
The home furnishing industry is undergoing a shift from a strategic opportunity to a nuanced structural opportunity. In the future, business development will rely on growth opportunities at the micro level, such as digging deeper into specific user groups, product lines, and markets. As strategic opportunities diminish, structural opportunities have become the focus of attention, requiring enterprises to accelerate their digital transformation and adopt an all-scenario marketing model. Against this backdrop, companies such as Sophia and Vantage Home are adapting to the market through category integration and differentiation strategies, while small and medium-sized enterprises are faced with the challenge of accurately grasping structural opportunities and integrating digital and new retail strategies.
Competitive change: from intra-industry competition to cross-border competition
The home furnishing industry is undergoing a transformation from traditional peer competition to cross-border competition, in which competition is no longer limited to the same category, but extends to the integration of different fields.
Cabinets, wooden doors and other enterprises began to enter new market areas, such as real estate services to participate in the home improvement business, showing the blurring of market segment boundaries. For example, Oppai passes Health +3The 0 strategy and the environmental protection upgrade of Shiyou flooring show how the company expands the market through small incision demand strategy and cross-border integration. The rise of smart homes has also promoted the digital transformation of traditional enterprises and improved production efficiency. In this new situation of competition, enterprises through cross-border cooperation and joint development, the formation of comprehensive products and joint marketing strategies, enhance market influence and resource utilization efficiency, and promote the development of the industry to a higher level.
Product changes: from a single product category to a large home case
The home furnishing industry is shifting from single-item sales to providing comprehensive large-scale home solutions. With consumer demand becoming more personalized and the pursuit of one-stop-shop, home furnishing brands are now increasingly offering integrated solutions based on space, setting, and lifestyle, rather than being limited to selling individual products. This reflects the expansion of the industry to the whole case of large home furnishings. For example, Zhuo Muwang is positioned as a "high-end mahogany expert" and "let the world see the beauty of the East" as the scene, operating all high-end circle resources that can be connected to. In the context of slowing market growth, it has brought new development opportunities for enterprises, and consumers have shifted from purchasing a single product to pursuing a holistic lifestyle experience. In addition, the support for the whole house smart home also indicates that the home furnishing industry will develop more comprehensive and intelligent solutions in the future.
Figure 1: Zhuo Muwang - a strategic partner of Guofu Zongheng brand service for ten years.
Traffic variation: from concentrated traffic to fragmented traffic
The way traffic is acquired in the home furnishing industry is shifting from centralized to fragmented. With the advent of the digital era, consumers' touchpoints are diversified, no longer limited to home stores or specialty stores, but interact with brands through multiple platforms and scenarios. This requires companies to shift from relying on a single traffic channel to building an omni-channel sales layout. In 2023, commercial stores such as Red Star Macalline, Fusenmei, and Fulma will fully empower merchants through digital transformation and new online and offline integrated operations, and achieve market expansion and marketing innovation; The successful case of the whole house further proves the importance of the industrial Internet information system and the combination of online and offline strategies.
At the same time, enterprises need to recognize the importance of customer resources, focus on the quality of products and services, and consider cooperating with professional teams to carry out new drainage to improve efficiency and professionalism.
Growth change: from performance growth to market share increase
The home furnishing industry is shifting from business growth to market share gain, especially in a slowing growth environment. This shift is driven by factors such as the first-class war and low-price strategy, which has led to the increase of market share and industry concentration of leading brands. For example, Oppai Home Furnishing has achieved performance growth through the whole strategy and the integration of the first chain, consolidating its leading position in the industry. At the same time, home furnishing enterprises improve their competitiveness and establish deeper connections with users through inter-city cooperation, resource sharing and technical exchanges. The development of high-quality after-sales service and industrial Internet has also brought new opportunities to the industry, prompting enterprises to increase their market share and brand influence.
Figure 2 Oppai's full-case design and transaction training camp - the 2023 service case of the big home education platform.
In the cold winter, it is even more importantStrengthen your advantage
The head enterprises enter the sinking market: first-class killing and channel killing
I often stress that in the current market environment, a company's strategic choices are critical to its success. Observing China's home furnishing industry, a trend that cannot be ignored is the in-depth exploration of the sinking market by leading enterprises. "2023 TOB Services for the Retail Industry in China's Sinking Market*** pointed out that the population size of China's sinking market is huge, accounting for about 71% of the total population, with a total size of 1 billion, which provides a huge market potential for the home furnishing industry.
Considering the characteristics of the sinking market, that is, consumers are highly concerned about cost performance, the head home furnishing companies to enter this market mainly rely on two strategies: first-class killing and channel killing. The core of the killing strategy is to attract the mass market by cutting prices, and at the same time take market share from small and medium-sized home furnishing companies. For example, Oppai's 699 yuan ** battle strategy is a typical case. The channel killing strategy is to adapt to the consumer needs of the sinking market by changing the sales model. The furniture supermarket chain model sent by Gujia's Tianxi has well catered to the consumption psychology of consumers in the sinking market who want "big brands and low prices", and effectively cracked the retail reform code of the sinking market.
The principle of reducing costs and increasing efficiency is crucial when implementing these strategies. We must reduce ** by optimizing operational processes and streamlining cost structures while maintaining the quality of our products and services. This is not only to win the first battle, but also to achieve sustainable market expansion. Therefore, I often emphasize that enterprises should be business-oriented, customer-oriented, and front-line, and ensure that the implementation of strategies is closely linked to market demand, so as to win in this fierce market competition.
In this process, enterprises need to carefully plan their market entry strategies, combine their own resources and capabilities, and enter and develop the sinking market in the most effective way. Through such a strategy, enterprises can not find new growth points in the era of the stock market and maintain a leading position in the competition.
Base brand: concentrate on the base market
In the stock era, enterprises need to realize that deep cultivation of regions and concentration of strength is also an effective strategy. In-depth digging and understanding of the needs and habits of the local market can help companies provide more accurate and effective products and services. Take Lai's Furniture, which has done a good job in this regard, as an example, it has in-depth operations in Jinan, Zhengzhou, Beijing and other regions, and has successfully transformed channel brands into consumer brands in the region. There is also a blue bird in Hebei, which also uses its home business cards and corporate name brands in Hebei to deeply link the brand with the regional economy.
Figure 3 Bluebird Home Furnishing - a ten-year strategic partner of Guofu Zongheng brand service.
With this strategy, companies can better focus on resources, reduce risk and grow market share rapidly. In the era of stock markets, this local branding strategy not only helps companies consolidate their market position, but also fosters new growth opportunities. By focusing on and deeply cultivating a regional market, enterprises can more effectively concentrate their brand and resource advantages, and achieve in-depth development of the regional market and the expansion of brand influence.
Online live broadcast format: Build a full-scene online ecological business field
Online live streaming has become a key component of the digital transformation of modern home furnishing enterprises, helping enterprises build a full-scene online ecological business field. Unlike traditional stores, the advantage of live streaming is that it does not depend on location, but attracts traffic by attracting user interest. Home furnishing brands can use short, live broadcast and other forms to pry consumers' heartstrings with high-quality content.
Businesses should not only be creators of content, but also explorers of scenarios. According to Matthew Schwytz in his book "Scenario Marketing", scenarios can create experiences that engage consumers. Home furnishing brands need to have an in-depth understanding of the life scenarios of their target consumers and develop marketing strategies based on this. Through accurate scene positioning and creative scene design, it can more effectively meet consumer needs and enhance brand awareness and sales performance. Home furnishing brands can create strong brand influence and market appeal through emerging digital methods such as online live streaming. In the era of traffic marketing, it not only improves brand visibility and engagement, but also provides new sales channels and market opportunities for enterprises.
Cross-border going to sea: three steps out of the sea to get gold
Overseas business is gradually becoming an important breakthrough for the home furnishing industry to open up a new blue ocean and seek new growth. Compared with the increasingly saturated competition situation of the domestic market, overseas markets such as Southeast Asia, South America and other places still have large development space and relatively low competitive barriers, which provides a broader market expansion opportunity for domestic home furnishing enterprises.
Home furnishing companies are in the strategy of going overseas step by step, and gradually deepening, which is mainly divided into three steps: the first step is to test the overseas market through cross-border e-commerce platforms and establish an online sales network. The second step is to set up overseas *** to enhance the brand image and influence. The third step is to extend to the construction and optimization of overseas ** chains, especially some strong industry leaders, who are laying out the global industrial chain with unprecedented strength and actively participating in the investment and construction of overseas production bases. For example, many leading home furnishing companies such as Lege Co., Ltd., Dream Lily, and Qumei Home Furnishing have launched fixed increases and increased overseas production bases. In November 2023, Dreamlily will complete a private placement of 800 million yuan, which will be mainly used for 3 projects such as the expansion of the production base in Arizona, USA; Qumei Home Furnishing has been approved by the China Securities Regulatory Commission for registration, and it is planned to raise 2100 million yuan was invested in the capacity upgrade and construction project of the Norwegian factory of Ekornes Company.
Figure 4 The large home education platform provides new ** escort services for many commercial chain stores.
Stock Era: Layout of the old reform track
With the downturn in the real estate market, the home furnishing industry has also entered a new stage: the era of the stock market. This is a moment of transformation, especially in the track of renovating old houses, showing great business opportunities. Let's start with a statistic: according to the Ministry of Housing and Urban-Rural Development, there are about 160,000 old neighborhoods in China, covering hundreds of millions of residents, with a total of more than 42 million households and a staggering 4 billion square meters of floor space. Most of these old residential areas are distributed in the center of the city, and because they are difficult to demolish, there is a large demand for renovation of old houses.
In this stock era, enterprises need to change their concept from pursuing the expansion of business scale to paying more attention to the quality and efficiency of business, that is, high-quality development. Such a development model emphasizes the need for enterprises to operate prudently, improve their capabilities and pursue long-termism, which coincides with the needs of old housing renovation in the era of the stock market.
How to do the old market?
I think there are three points:
First, do a good job in the operation of old customers. For example, Mousse's in-depth operation of old customers relies on professional value-added maintenance + annual holiday care + member operation system, their NPS net promoter score is about 30%, and the operation of a club can achieve a conversion rate of 30%, which is very high. And what they do is not complicated, just a calendar, a book, a card, a towel box, a set of CDs, etc. Humanistic care is also a kind of marketing.
Second, the quick installation of the small incision is fast-running. Oppai's old renovation is to start from the kitchen, and the main focus is 8 hours and 10 days of old kitchen renewal. 3Trees has been renovated and promised to be completed in 3-7 days, all emphasizing a quick renovation.
Third, the further front-loading of consumption entrances.
Win in the long run and chain up resources
In the past, we often talked about resource utilization, but it is rare for companies to truly understand and effectively use the three key elements of enterprise development: technology, people, and capital. In the process, some companies may only briefly deplete these valuable resources before discarding them. Therefore, I put forward the concept of "chain good resources", which aims to emphasize the long-term and stable connection and integration of various resources to achieve the sustainable competitive advantage of enterprises. In 2024, it's important for businesses to focus on effective links to the following types of resources:
Customer Resources
Enterprises must be deeply aware that customer resources are the primary and core strategic resources. The scale and quality of the customer base directly determine the core competitiveness of the enterprise. With the advent of the digital era, the integration of customer resources means diversifying the channel layout, not only online and offline collaborative drainage, but also not blindly following the trend. Some companies are attracted by the new power and invest a lot of energy to build their own platform, but it should be clear that although the new platform is indispensable as a powerful drainage tool, customer retention ultimately depends on high-quality products and services. Therefore, enterprises should stick to the essence of business and return the focus to the product itself. While it's important to master a new** channel, it's wise to seek out a team of professionals to operate it, rather than just figuring it out on your own.
Urban resources
As a complex systemic resource, the development status of the city directly affects the industrial pattern, and the perfection of the industrial chain determines the overall competitiveness of the city.
For home furnishing enterprises with urban resource advantages, it is very important to maintain close cooperation and joint development with the city, because such cities usually have a complete industrial chain and rich resource reserves, and often introduce a series of preferential policies to encourage industrial development.
First, under similar conditions, such companies are able to reduce operating costs with the help of urban resources, thereby increasing profitability. Secondly, through the coordinated development of home furnishing enterprises in the city, they can form a cluster effect, share resources, exchange technology and exchange information, which can not only accelerate product innovation and industrial chain upgrading, but also significantly enhance the competitiveness of the city's home furnishing industry in the entire industry. In addition, joint market development and risk resistance are also a major advantage of joint development. In the face of increasingly fierce market competition, it is often difficult for individual companies to cope with various challenges on their own. Through group heating, enterprises can collaboratively formulate market strategies and promote brands, and then achieve the synergistic effect of "1+1>2". For example, the development of Tangshan Hangu home furnishing industry has benefited from the joint efforts of government and enterprises, forming a strong momentum of joint operations. "Tangshan Hangu|The positioning of the industrial IP of "China's Healthy Home Furnishing Capital" demonstrates the strength and confidence of "serving the world based on the Bohai Rim", and sets up a banner for the joint operation of Tangshan Hangu Home Furnishing Enterprises. Another example is the practical measures of "low-carbon building materials digital home" Wen'an to build a digital platform to empower enterprises.
Figure 5 Tangshan Hangu Home Furnishing Industrial Park - a strategic partner of Guofu Zongheng brand service.
Figure 6 Wen'an Plate Furniture Industrial Park - a strategic partner of Guofu Zongheng brand service.
Ecological resources
In this day and age, user needs are undergoing a profound transformation. Users are no longer satisfied with a single product, but pursue a complete set of solutions. In order to cope with this change, enterprises need to change the traditional concept of competition, step out of the zero-sum game, and create value with users and partners. In order to provide this unbounded and continuously iterative overall value experience, enterprises need to establish a long-term win-win and symbiotic ecosystem with all parties. This ecosystem not only provides users with personalized experiences, but also creates value for partners and society as a whole.
An important means of establishing this ecosystem is to develop the industrial Internet by building a digital platform, on which many enterprises gather together to form an industrial cluster with close collaboration of the whole industry chain centered on customers. Through close collaboration across the entire value chain, companies are able to respond quickly to market changes, launch innovative products, and seize business opportunities.
In the context of rising uncertainty in the overall industry, how to seek development in the changing trend is a topic that every enterprise should think about in the new year. In terms of mentality, we must remain optimistic and prudent, see the opportunities in the home market, strategically, we find the right trend, strengthen the advantages, and chain good resources, so as to occupy a place in the new market pattern. The home furnishing industry in 2024 is worth looking forward to and investing in!