Brand rejuvenation, marketing alone is not enough.
Author/Barbara
Produced/Newly Excerpted Business Review
Founded for 43 years and listed for 12 years, Boss Appliances can be regarded as a veteran of the kitchen appliance industry.
Recently, Boss Electrical Appliances released the 2021 performance express, with a total revenue of 10.148 billion yuan, an increase of 24.84% year-on-year, breaking through the 10 billion mark for the first time, and the net profit attributable to the shareholders of listed companies was 1.334 billion yuan, down 19.66% year-on-year, which is also the first negative growth in net profit since listing.
Boss Appliances, which is aware of the lack of growth, has been trying to move closer to young people in recent years and find new growth space. At the new product launch conference in 2022, Boss Electric released 10 products including integrated stoves, dishwashers, steaming and frying machines, washing and eliminating machines, ultra-thin range hoods, etc., most of the new products are new kitchen appliances customized for young people.
Ye Danpeng, CMO of boss electrical appliances, said publicly: "Young consumers will emerge in every era, and brands must be active in front of the youngest consumers." At the same time, he also admitted that in the product function experience, it is in line with the personality of emerging consumer groups, which will be a major opportunity point for kitchen appliances.
Can boss appliances, which started with traditional kitchen appliances and developed so far, win back a round with these new products and successfully circle young people?
First, the transformation is hesitant and misses the outlet
The rapid growth and rise of Generation Z has made them the hottest consumer force in the current market, and it has also become the "new head" of kitchen appliance brands. According to AppAnnie statistics, China's Gen Z population is close to 300 million, leveraging more than 5 trillion yuan of consumption space in 2021.
A set of data from Ai Media Consulting pointed out that 40.7% of China's "Generation Z" group will cook at home every week in 2021, which shows the consumption power of Generation Z on home appliances, and Guojin Securities Research also pointed out that in the next 10-15 years, Generation Z will be the mainstream customer group of home appliance consumption.
Different from the concept of the post-70s and post-80s generations, the Z generation has put forward higher requirements for home appliances in terms of product appearance, intelligence, and scenario-based products, which has also made a new increase in the traditional home appliance market that has declined.
In the first half of 2021, the revenue of the first category group business such as range hoods and gas stoves of Boss Electrical Appliances accounted for 78.04%, which was highly dependent on traditional kitchen appliances. Moreover, the main business of boss electrical appliances almost all belong to the category of traditional kitchen appliances.
Image source financial report
The latest monitoring data of Aowei Cloud Network shows that the sales scale of emerging home appliances such as integrated stoves, dishwashers, and vacuum cleaners will achieve double-digit growth in 2021, of which the sales scale of dishwashers loved by young people will exceed 10 billion for the first time.
Boss Appliances, who has insight into this trend, also launched a dishwasher in line with the trend, and during last year's National Day, he launched the "Dishwasher Song" Vibrato creation contest to preview his new products. This marketing did bring a wave of heat to the boss electrical appliances, the number of plays of this song on the national day exceeded 5 million, the number of likes reached 6W, and the related topic #Do not wash the pot # read more than 30 million on the whole network.
But boss electrical appliances do not really want to conquer young people with dishwashers, the main purpose is to let consumers know that it has this product through marketing, so as to expand the brand influence.
A Beijing Yuquanying home electrical appliance salesman mentioned in an interview with the "Finance and Economics" weekly that domestic kitchen appliance brands such as boss electrical appliances are "for the sake of having and having", because consumers like to place orders in sets, if the product variety is incomplete, it is likely to appear to run a single situation. The boss electrical appliances launched a dishwasher, the root cause is still to sell their own "smoke stove" products.
The product line is broadened, but the product quality is not passed, to the boss electrical price of 7280 yuan embedded dishwasher WB735 as an example, although the price is quite high, but the slot point is full, the failure rate is high and the drying effect is not good is the general evaluation of consumers.
From the boss electrical appliances to the integrated stove attitude can also be seen that its transformation of the move, last year boss electrical vice president He Yadong publicly said: "The integrated stove each product is not perfect, the function is not enough, will not become a large-scale." "But in just one year, the boss electrical appliances have changed the caliber, and at this year's new product launch, a high-profile announcement has entered the integrated stove."
In addition to promoting the emerging kitchen appliance category such as dishwashers and integrated stoves, boss electrical appliances are also attacking brand marketing, not only inviting Xu Kai and Song Weilong as brand spokespersons, but also launching the micro-movie "Pot Dish of Family Feast" at the beginning of the year, and also convening 8 head vibrato masters to increase their heat, but this wave of marketing does not seem to stir up too much splash among young people.
In order to win over young people, Boss Electrical Appliances has invested a lot of real money in marketing, but from the performance of emerging kitchen appliances such as dishwashers that have been launched so far, the results do not seem to be satisfactory.
Second, the intelligence is insufficient, and it is difficult to attack the young mind
For young people, the appearance and intelligence of kitchen appliances are the points they attach great importance to, not to mention the appearance of products that are strongly related to personal subjectivity, and the degree of intelligence may be more able to see the appeal to young people.
Boss Electrical Appliances has launched a range hood that can be waved and can be talked to man and machine, compared to the traditional range hood, its degree of intelligence has indeed been greatly improved, but this is only the industry average, Fangtai, Vantage and other brands of range hood also have the same function.
In addition, Boss Appliances has also launched a ROKI kitchen appliance intelligent cooking system, but this system is based on the ROKI smart cooking APP, that is, through this APP to connect with a part of the boss appliances kitchen appliances, and then carry out a series of operations.
In addition to the cumbersome connection steps, the intelligent cooking of the boss electrical appliances is more concentrated in the stove and electric oven, and only in the firepower and cooking time to control, the preparation of ingredients and spices and stir-fry and other more troublesome links also need to be operated by the user himself.
In addition, in order to use the automatic cooking function, it is also necessary to strictly follow the ingredients displayed in the recipe, because the ROKI kitchen appliance intelligent cooking system does not adjust the cooking time and heat according to the actual situation of the ingredients.
From this point of view, the ROKI smart cooking APP is more like a recipe, but the variety of recipes it provides is very limited, and the user wants to make related dishes, which is far less efficient than directly searching online.
The ROKI kitchen appliance intelligent cooking system does not solve the actual problem, and it is really difficult to capture young people through such a more "chicken rib" function.
Boss appliance ROKI smart cooking APP interface
The lack of intelligence may be related to lower research and development costs, in recent years, the average research and development costs of boss electrical appliances are only about 300 million, if according to the 10 billion revenue in 2021, only 3% of the total revenue, the investment in research and development is not heavy.
The reason for this situation is obvious, on the one hand, the boss electrical appliances rely too much on marketing, and the sales expenses in the first three quarters of 2021 reached 2.041 billion yuan, compared with only 232 million yuan in research and development expenses.
On the other hand, it is subject to real estate, and the boss electrical appliances are not optimistic about the operation, even if they want to win over young people, there is no more money.
In 2020, the operating income of Boss Electrical Appliance Company was 8.129 billion yuan, of which the engineering channel revenue was 1.836 billion yuan, accounting for about 23% of the total revenue. According to the official website, boss electrical appliances has established cooperation with more than 85% of the top 100 real estate customers.
The boss electrical appliances to force the real estate fine decoration channel is not unreasonable, on the one hand, in order to increase their own revenue, on the other hand, the policy points out this direction.
In 2017, the relevant policies of the construction industry pointed out that by 2020, all new civil buildings in cities and towns will meet the requirements of energy-saving standards, of which the newly started fully renovated finished residential area will reach 30%.
This is a great opportunity for Boss Appliances, because Boss Appliances established certain contacts with real estate companies as early as 2009 when it undertook engineering business, and Evergrande was one of them.
According to the 2018 financial report, Guangzhou Evergrande Material Equipment Co., Ltd. contributed about 160 million yuan in sales, accounting for 2.11%. By 2019, Country Garden became the fourth largest customer of Boss Electrical Appliances, contributing about 340 million yuan in sales, accounting for 4.43%.
Establishing close contact with real estate enterprises is not a good thing, because affected by the "destocking" policy of the real estate industry in 2016, the property market across the country began to carry out multiple rounds of regulation, and the regulation was further intensified in 2017, and the comprehensive upgrade of the purchase restriction and sale restriction policy caused a big impact on the performance of the boss electrical appliances, and the revenue growth rate declined while its bills receivable and account amounts continued to rise.
From 2018 to 2020, the revenue growth rate of Boss Appliances was only about 5%, which is not a small gap compared with the growth rate of 25% between 2010 and 2016.
In 2017, the bills receivable and accounts of Boss Electrical Appliances exceeded one billion yuan for the first time, at 1.379 billion yuan, and there is a continuous upward trend. According to the financial report data for the first half of 2021, the revenue accounts and bills of boss electrical appliances reached 2.931 billion, of which 1.943 billion were bills receivable, accounting for 66%.
The source of the picture is flushed
It is worth mentioning that among the 1.943 billion bills receivable, 1.427 billion are commercial papers, and before that, boss electrical appliances had said that they only accepted commercial acceptance drafts from real estate enterprises such as Evergrande and Country Garden, which shows how much the boss electrical appliances rely on real estate enterprises, which actually poses a great risk to the operation of the boss electrical appliances.
In the second half of last year, Evergrande exploded, and Evergrande has a business intersection of the boss electrical appliances have also been affected to a certain extent, according to the recent boss electrical disclosure of the 21-year performance express, because some of the fine decoration business customers have expired commercial acceptance bill default, based on the principle of prudence, the company on the customer single bad debt provision of about 710 million yuan, of which Evergrande Group and its member enterprises alone about 630 million.
Boss electrical appliances in 2010 after the listing, relying on offline retail channels and e-commerce channels rapid development, with the intensification of e-commerce channel competition, boss electrical appliances in 2017 into the real estate fine decoration channel, but did not expect that this accelerated the "fall" of the enterprise.
Third, the boss electrical appliances are old
In 1979, Ren Jianhua founded Bolu Hongxing Hardware Factory in Yuhang County, Hangzhou, an enterprise specializing in the production of household appliances and spare parts, which is also the predecessor of Boss Electrical Appliances.
A few years after its establishment, the company began to develop range hoods, and has been focusing on this business, in 1989, the company formulated and issued the mainland's first range hood standard to lay its industry position, in 1991 renamed "Boss Electrical Appliances".
Entering the 21st century, boss electrical appliances are no longer limited to the single category of hoods, but also set foot in the kitchen appliance industry outside the health care products, audio, VCD and other businesses, for unrelated diversification layout, but this step is too big, the boss electrical appliances in the field outside the kitchen appliances do not have much experience, which led to the boss electrical appliances main hood business affected, not only sales fell sharply, the market share also fell out of the top ten in the industry.
The collapse of the diversified layout has also made Ren Jianhua no longer one-sidedly pursue bigger, but based on the entire kitchen appliance market, gas stoves, disinfection cabinets and small kitchen appliances are the development direction of the boss's electrical appliances.
Up to now, the boss electrical appliances have formed three major category group development strategies, the first category based on hoods, gas stoves, disinfection cabinets, the second category represented by the steaming and grilling machine, and the third category represented by the embedded dishwasher.
In addition, Boss Electrical Appliances has launched specific brands for different markets, the "Boss LOBAM" brand is mainly high-end, and occupies the minds of consumers with the keyword of large suction hoods, and this brand is also the most well-known among the many sub-brands of Boss Electrical Appliances.
The boss electrical sub-brand "Fame MQ" focuses on the sinking market, the positioning of the introducing brand "Dize DeDietrich" is the top kitchen appliances, the "Golden Emperor KINDE" brand focuses on the integrated stove market, and the "Chef DACHOO" focuses on the desktop kitchen appliance market.
The highlight of Boss Electrical Appliances was the years after the listing, during which Boss Electric Appliances not only completed the goal of reaching 3 billion yuan in main business income and net profit of 300 million yuan in 2013.
After that, Ren Jianhua and his son Ren Fujia took office and put forward the performance plan for 2014-2016: on the basis of 2013, the return on net assets in each year was not less than 20%, and the net profit growth rate in 2016 was more than 110%, and this challenging target boss electrical appliances was still completed, but unfortunately, it was later trapped in real estate.
Founded 43 years ago, boss electrical appliances have long become a "long-established brand", but the establishment time is not the moat of boss electrical appliances, since the deep binding with real estate, its highlight moment has been gone. In the new era, if you really want to rely on young people to turn over, only relying on marketing is not feasible, and making products that are really close to the needs of young people is the key.