How to achieve a meager profit, furniture companies realize how to turn around

Recently, there have been many media reports that some well-known home furnishing enterprises and brands located in Guangzhou, Shenzhen and other places have fallen into the dilemma of shortage of funds or even closure. In the past few years, China's economy has developed rapidly, the real estate market is booming, and the home industry is immersed in a "happiness." However, the good times are not long. Since last year, the market environment has affected the rapidly growing home industry. Recently, when I visited the market, I saw that compared with the previous years, the home stores were “cool”, sales fell, and purchasing power declined, which made many home stores and enterprises “headache”. In the face of such industry conditions, where will the future home industry go?

Increase sales and sales volume shrinks

“In the first two years, on the monthly sales list of the stores, there are often employees who create sales records.” A salesperson who did not want to be named at the Hongxing Meikailong Home Store in Zhengzhou Road, Zhengzhou City told reporters, “But from last year At the beginning of the second half of the year, such records have been reduced, and the overall market sales situation is not very optimistic."

On June 7th, coincided with the weekend, the reporter visited the Ou Kailong home store to see that many stores are doing discount promotions. In a sofa brand sales called "Youleku", a yellow cowhide sofa, the market price of 21,800 yuan, only 8500 yuan after the discount promotion, the price adjustment is relatively large; "Lian Shangjia" Solid wood bed, the market price of 2,600 yuan, now only 999 yuan. The reporter saw that many counters are currently selling discounts on the products they sell, and some products have dropped by as much as 50%.

“Since the Spring Festival, we have been making preferential adjustments to product prices.” A shop owner specializing in selling solid wood furniture told reporters that “we will hold various events every weekend, in addition to price discounts, Gifts. On the surface, the price of the product is not much different from the previous year, but the preferential activities are more, and the price is actually falling. However, our sales volume is still much lower than the first half of last year."

The reporter saw during the visit that although it was a weekend, the home store was somewhat "cold." “The discount is for promotion and sales.” The relevant person in charge of Jiahe Home Furnishings in Ouhai Road, Zhengzhou City said, “The sales volume of the store products has dropped by 30% due to the impact of the big environment.”

Who dragged the industry back?

According to the statistics of the large database of the China Business Research Institute, as of the end of March 2015, there were 5,186 furniture enterprises above designated size and 877 loss-making enterprises in China; the total assets of China's furniture industry was 429.945 billion yuan, an increase of 12.02% over the same period of last year. 218.103 billion yuan, an increase of 11.58%.

“Currently, the debt ratio of the household industry is relatively high, and many stores or enterprises have experienced losses.” The general manager of Henan Jiahe Home Co., Ltd. said that “the reasons are related to the market environment, especially the current economic growth rate in China. Slow down, the 'bottleneck' in the development of the home industry, it is expected that the economy of the home industry will be in a downward trend this year, and it will be more severe."

So, what is the impact on the development of the home industry? Hu Shuzhen, president of the Henan Province Furniture Association, said: "The downturn in the real estate market is an important reason. In the past few years, when the real estate market was hot, furniture, home improvement, building materials, etc. The industry is showing a hot blowout situation. However, since last year, the performance of the real estate market has declined, which has brought tremendous pressure on the building materials and home furnishing enterprises. The traditional advantage industry is experiencing a crisis of transformation."

"In addition, the hot stock market has a negative impact on the development of the home industry. The stock market mad cows have led to a large inflow of funds, bank deposits continue to decrease, the existing home furnishing industry still faces difficulties in bank lending, and the transfer of interest points of investors, put funds into In the market, it is difficult to stimulate consumption," said the legend.

At present, furniture companies have experienced “recession tides”. In addition to the real estate downturn and the impact of the stock market, the increase in labor and logistics costs has also brought a lot of burden to enterprises. In addition, online shopping has had a great impact on physical stores, which has led to a decline in sales of home stores.

How to achieve a turnaround?

High-priced mahogany homes, mattresses worth millions of dollars, and many other expensive furniture often appear in the terminal market. In the consumer's impression, the profit of furniture is very large, and it is not an exaggeration to use the words "high profit". So what is the truth?

In this regard, an industry insider engaged in furniture manufacturing told reporters: "The home products have gone through many procedures from the factory to the sale. After the terminal market, although the price has risen a lot, in order to increase the running volume, it will often be carried out. Large discounts. Especially now, the overall sluggish home market, home sales profits have further narrowed, home manufacturing, circulation and other costs continue to increase, the original 'high profit' era has ended, meager profit has become a home business and dealers need to face In this case, the home industry needs to accelerate its transformation to take a favorable position in the wave of competition."

Then, where is the main force in the future home industry? In this regard, the legend says: “First of all, custom furniture will achieve rapid development, limited to the development of the real estate market, high-rise and home purchase housing area is limited, and the traditional furniture size is difficult to meet. Customized furniture will grow rapidly in 2015, and e-commerce will be the next area for the home industry to engage in fierce battles."

It is understood that the current total area of ​​domestic home stores has exceeded 40 million square meters, of which 50% of the store area is surplus. In this regard, the legend said: "As China's GDP slows down, structural adjustments intensify, in the next three years, half of the home stores will be transformed or bankrupt, and the home market 'pain period' has arrived. This year, the home industry will face unprecedented development difficulties. In the meantime, the existence of difficulties means innovation or transformation. It is expected that the government will introduce a strong economic stimulus policy around 2017, and the home furnishing industry will climb the economy for three years to achieve new development."

For more information on China's furniture industry, please pay attention to the official website of Xianghe Furniture City ().