Author / Zhang Yongzhi, Vice President of Youju, President of Youju Research Institute, senior media person, planner, observer of corporate strategy and brand marketing. Editor / Liu Yang
Reprinted from Youju Research Institute
A few days ago, Gujia Home Furnishing and People's Daily New Media launched the "Huimin Rejuvenation Project" activity nationwide. The extremely strong price and rich product package combination not only made Gujia explode a wave of heat in the dull market in the first quarter, but also caused a shock in the industry.
It is understood that the event launched a series of championship product packages, including 698 yuan/㎡ ENF level environmental protection wardrobe and 698 yuan/m cabinet products, as well as 13,999 yuan of double living room and one bedroom, 12,999 yuan of double bedroom package, etc., enough sincere price, one-stop product portfolio program, to meet the current consumer demand for high-quality, cost-effective home furnishings.
In the first quarter of 2024, the heat of the decoration and home furnishing market is not as expected, in order to seize the market cake, the head enterprises in the home furnishing industry continue to make marketing moves, but the ones that have attracted attention before are mainly customized companies, such as Oppai, Sophia, etc. The addition of Gujia Home Furnishing this time also shows that the software giants have begun to join the battle and show a trend of resistance.
Although on the surface, Gujia Home's "Huimin Rejuvenation Project" activity is a big promotion to seize market share across the country, but under the current industry cycle and market environment, we can't simply think that this is a promotional activity launched by software giants.
After three years of the epidemic, the home furnishing industry has entered a new cycle of great integration and reshuffle. The market has changed from incremental to stock competition, and the entire industry has encountered growth difficulties, with diversified channels and scattered traffic, the expansion of leading enterprise categories has been accelerating, and new models of large home furnishings such as the whole family and the whole decoration have continuously provoked the nerves of the industry.
Therefore, we can not only see the marketing activities of leading enterprises such as Gujia Home, but also place them in the context of the general cycle of industry development, so that we can find that behind these marketing activities, we can also reflect deeper changes in the industry.
So, this article will start with Gujia Home Floising and talk about the changes in the industry.
01
The trend is irreversible, and the whole family may become the mainstream model of the home furnishing industry in the future
Since its birth in 2021, "whole home customization" has been "occupying" the top of the hot word list in the pan-home furnishing industry. Behind the popularity is the change in the demand of the consumer market.
With the rise of new consumerism, the whole home customization model perfectly fits the new generation of consumers' demand for home improvement and home furnishing products and services. For a long time, the home improvement consumer market has many links, long processes, and different single products cannot match each other.
On the market side, consumers are no longer satisfied with the purchase of a single category, but instead pursue the coordination of the overall aesthetics and practicality of the home space, and the whole home customization of one-stop shopping is more in line with the preferences of intergenerational changes in consumption, and has become the standard for the pursuit of high-quality life.
On the industry side, the home furnishing industry has bid farewell to the extensive development stage, the industry competition has intensified, the channel structure has changed, and the proportion of hardcover houses has continued to increase, and the whole family model has become the mainstream model of the industry in the future. According to the data report of Youju Research Institute, the market size of the whole track of customized + finished products is as high as one trillion volumes, becoming one of the most imaginative tracks in the field of large home furnishings.
Under the stock competition, the growth space of the single-category business model is inhibited. Due to the core advantages of brand unity, complete product categories, unified style, quality and price certainty, and high quality-price ratio, the whole customization well meets the urgent needs of home furnishing enterprises to expand categories + increase customer unit price in the stock market, and also helps factories and dealers to better improve performance and master the entrance flow.
In the field of pan-home furnishing, first the head enterprise of the whole house customization, and then the giants of the finished software products have rushed to the whole track, and the head enterprises of the two tracks of customization and software have become the main players of the whole track, and the integration of customization and finished products is also a topic that the two categories can not avoid the whole track.
From the perspective of the timeline, at the beginning of 2023, Gujia released the strategy of "one body, two wings and dual-core development", that is, with "one Gujia brand" as the main body, and integrated business breakthrough and software category operation innovation as the "two wings", so as to win sustainable growth with ability and form the real core competitiveness of the enterprise.
Since then, Gujia Home Furnishing has officially joined the whole family track, and in 2023, it will continue to move, and the integrated whole family model will continue to accelerate. Whether it is in the horizontal connection of multi-category products, or in the display and presentation of terminal stores, or in the sales model, Gujia has carried out iterative upgrades.
From the perspective of this Huimin rejuvenation project activity, the content launched by Gujia is fully in line with its strategy of "one body, two wings, and dual-core development", which can be said to be the landing of this strategy on the product supply side and retail terminals.
02
Breaking the "monopoly" of customization giants, software giants snatch the right to speak in the whole house
Looking at the whole custom track, it was led by custom home furnishing giants such as Oppai, Sophia, and Zhibang at the beginning, and custom companies once mastered and led the industry's right to speak.
However, in the past two years, the leading companies of software finished products have also entered the whole track, including Gujia Home, Mousse V6, Quanyou, Lin's, etc.
The advantage of custom enterprises to do the whole home is that custom furniture is the entrance to traffic and the key to improving the value of the whole family, and the finished product is an indispensable category for the whole family in the real sense, and it is also an important item to increase profitability. Therefore, whether it is a customized enterprise or a software finished product enterprise, the whole company needs to make up for the shortcomings of their respective categories.
It is understood that after years of precipitation, Gujia's customization business has made a major breakthrough in 2023. It is revealed that in 2023, the annual performance of Gujia whole family customization (whole house customization + finished product integration sales model) will exceed the 1 billion mark, and in the next three years, Gujia whole family customization will aim at the key goal of 5 billion.
In the eyes of the outside world, with the strong entry of the software finished product giants represented by Gujia, it means that the situation of the whole track being "monopolized by the head of the customization enterprise" has been gradually broken. Software finished product companies have become an important new force in the whole track, and even began to lead new market trends and pricing rules in some aspects.
Let's take Gujia Home Furnishing as an example to analyze its advantages from the perspective of a software finished product company.
First, it has brand consistency. After years of layout, Gujia has created a complete range of software home furnishings, and at the same time made up for the shortcomings of customized furniture, which is presented in a unified Gujia brand at the retail terminal, which is easier for consumers to identify and accept. However, it should be noted that the self-closing loop of all categories is a heavy model, and it is more difficult to operate.
It should be noted that the integration of the finished product supply chain by customized enterprises to do the whole family, and the multi-brand collection model cannot be said to be without advantages. The integration of excellent brands in various categories into the whole system will also enhance its appeal, and the operation mode is light and can be flexibly adjusted, the key is to test the integration efficiency of the supply chain.
Second, the sales mix is more flexible. It can be a "big whole house" with custom furniture or a "small whole house" without customization, that is, a local space solution is provided with a finished package. For example, the Huimin project of Gujia Home Fnishing has ENF-level environmentally friendly wardrobe and cabinet products of 698 yuan/㎡, and a finished product package of 13,999 yuan for two bedrooms and one bedroom for 12,999 yuan. For end dealers, the flexibility of the sales mix will indeed be much higher, and it can also cover the needs of more different types of customers.
In the author's opinion, whether it is a customized enterprise or a software finished product company, it has its own advantages and challenges. On the whole track, the two types of companies will gradually make up for their respective shortcomings and keep up with their respective longboards. And in the future, there is a high probability that it will be a "teacher", and it may eventually grow into a highly similar "appearance".
03
The Matthew effect is amplified, and the head enterprises upgrade the industry to reshuffle the intensity
The home furnishing industry has the distinctive characteristics of "big industry, small enterprise", and it also presents such a phenomenon when it comes to market segments such as customized home furnishings and soft home furnishings.
"Big industry, small enterprises" means that the industry has sufficient space for reshuffle, some small enterprises have low-end overcapacity, homogeneous competition is serious, and leading enterprises are expected to obtain more resources through capital support, creating a collective effect.
In the past ten years, whether it is customized or finished products, the performance scale of leading enterprises has experienced a growth of 5-10 times, and has run out of tens of billions of giant enterprises.
Judging from the market development trend in recent years, as the entire home furnishing market has entered a new stage of the stock market, the intensification of market competition has made the Matthew effect of the industry continue to highlight, and the head enterprises are accelerating the "harvesting" of the market, and the market share is further concentrated.
On the one hand, the head enterprises have more resources and more means, and they often take the initiative to launch marketing campaigns, which will accelerate the speed and intensity of the industry reshuffle; on the other hand, the uncompetitive small and medium-sized enterprises will gradually be marginalized or eliminated by the market, and the market share will also be concentrated in the head enterprises.
In the author's opinion, the more involuted the industry, the more obvious the performance differentiation. The more the intensity of the head enterprises upgrade the involution, the more resources and growth opportunities they will obtain, while the performance of uncompetitive small and medium-sized enterprises will continue to be under pressure, and the share they can eat will become less and less.
In this process, although the head enterprises will sacrifice a certain amount of profits, gross profit margin and profits will be maintained at a relatively low level, but relying on their scale advantages, it will greatly compress the living space of small and medium-sized enterprises, and the uncompetitive small and medium-sized enterprises will accelerate their exit, while the head enterprises still have certain growth space.
04
postscript
The industry is getting more and more involved, who is the beneficiary and who is the victim in this whole war?
The answer is still inconclusive. But what is certain is that consumers will inevitably benefit in this process, they get more cost-effective products and services, and the "customer is God" experience will be more profound.
Similarly, the head enterprises will intensify the intensity of competition, although in the short term will sacrifice some profit margins, but in exchange for market share, and with the increase of brand concentration, it will also improve the overall health of the industry, and the development of the industry will move from disorderly to orderly.
And the whole process is only hurt by those uncompetitive small and medium-sized enterprises, they are the product of the opportunities of the times, and withdrawing from the market is just in line with the law of economic development.
It is worth noting that in the new cycle of industry integration and reshuffle, the challenges faced by leading home furnishing companies will continue, including the growth of performance, the innovation of business models and the self-transformation of enterprises. These challenges are long-term, and companies need to be patient and wise.
From an outsider's point of view, in the treacherous new cycle of China's home furnishing industry, a good show has just begun, and it is still difficult to determine whether the winner or loser, everything is possible!