In the past ten years, the development of domestic home furnishing brands has mainly relied on the continuous expansion of stores, "eating the dividends of real estate and population increase". But now after the real estate downturn, small and medium-sized home furnishing brands have not only greatly reduced their customer flow, but also eroded their original positions by hardcover houses and big brands. All kinds of situations are forcing them to find a new direction.
Author|Huang Ziyi
Photography: Zhang Lei
Deserted walls
The 45-year-old will now wonder if the company is expanding when it shouldn't be.
In the second half of 2021, Lin Guorong spent more than 10 million yuan to build a luxury exhibition hall in the Famous Home Expo Park in Houjie Town, Dongguan, and built an Internet celebrity concept store. A wall of about 50 meters long and thousands of hexagonal reflective tiles are irregularly pasted on a semi-cave-like mosaic wall, shining with clear and bright light from different angles. In Lin Guorong's imagination, after the exhibition hall opened, this wall would attract many people to "check in" every day.
The mosaic wall built by Lam Kwok Wing and his team
"This wall alone cost more than 3 million. These hundreds or thousands of mosaic bricks were all pasted by us one by one. Lin Guorong is the chairman of Dongguan Chuangyu Group, which has a number of furniture brands such as Meicui and Meichen, focusing on modern, light luxury high-end furniture. In 2021, the company had just achieved its best performance in history, "During the pandemic, people stayed at home every day, and there was a lot of backlog of purchase demand in the market. Lin Guorong increased capital and expanded production, taking advantage of the situation to create such an exhibition hall. At that time, the market situation was also very positive, and everyone was vying for positions. Lin Guorong went late and only got the fifth floor.
The investment was smashed at the end of 2021, and the decoration company worked overtime to paste the mosaic, and it was finally completed in March 2022. But soon, the situation took a turn for the worse. In April of that year, the epidemic situation in Shanghai, Shenzhen and other places worsened, and "popularity fell all of a sudden." After that, the company's performance began to decline, and in 2022 it suffered its first negative revenue growth since its establishment.
The downside is industry-specific. Dongguan is an important town in China's furniture industry, bringing together 70% of the country's well-known brands, especially Houjie Town. In the 80s of the last century, Hong Kong businessmen who returned to their hometowns to invest developed a furniture industry here, and later evolved into a brand for domestic sales, gradually forming an industrial cluster. According to statistics, there are more than 500 furniture enterprises above designated size in Houjie, absorbing more than 100,000 employees, and also running out of listed companies such as Mousse shares. But since 2022, everyone's life has been difficult, and the revenue of the leading Mousse in that year decreased by 10.31% year-on-year. They said in their annual report that in the past year, the domestic macro economy has been complex and changeable, "demographic dividends, real estate dividends, and Internet dividends have gradually weakened, consumer demand has been under pressure, and the business environment for enterprises has been difficult."
Lin Guorong is also the president of the Dongguan Famous Furniture Club Youth Enterprise Association, and has an understanding of the business conditions of his peers. He said that the weakness in the market in 2023 is even stronger than in 2022, with a year-on-year decrease of two or three percent. "The biggest problem now is that the market can't find consumers. Everyone stops shopping malls and stores. ”
Source: Visual China
In the midst of the collective weakness, everyone is changing their thinking and looking for new channels to acquire customers. Every boss will almost chat a few words about live broadcasting. Many people are involved in e-commerce and short videos, with the ultimate goal of live streaming and private domain drainage. "E-commerce and live streaming are all trends, and they also realize that if they don't seize it, they may not have a chance." Mai Huiqing, secretary general of Dongguan Famous Furniture Club, said. In the past, many companies were engaged in the high-end market and resisted online channels.
But it's hard to actually do it. Just like that mosaic wall, high-end furniture brands are very particular about decoration and atmosphere, and short videos and live broadcasts should be beautiful and high-grade. However, in the live broadcast of goods, the three elements of "people, goods and yards", these furniture manufacturers in Dongguan still only have "goods". This is a real problem encountered by Lin Guorong in the transformation.
Because of the fear of affecting the source of customers in the exhibition hall, the live broadcast can only be in the company's office. Lim plans to redecorate the place as well
The first is the lack of "people". When he decided to do a live broadcast, Lin Guorong searched all over Dongguan and found it difficult to find the right person. The city is strong in foreign trade and manufacturing, and has few Internet genes, and its position between Guangzhou and Shenzhen has also become a disadvantage. Before and after, the team anchor has been changed three times. "One costume is wrong, one tone is wrong, one expression is wrong." Lin Guorong was a little frustrated, feeling that it was difficult for the outside team to understand the product in a short period of time.
Some bosses choose to play on their own. "There is no secret, one is persistence, and the other is shameless." A boss who personally participated in the live broadcast told me that as a middle-aged man, he was a little embarrassed. Once, when he heard that a friend who was over 50 years old also went live in person, he opened the software to see the effect, and found that there was no one in the live broadcast room. "How can you be so thick-skinned? There was no one, and they were still talking there. He called and asked. A friend replied to him, "The company is about to collapse, do I still have to do it as a boss?" ”
"Field" is also an issue. Despite the lavish décor, the mosaic showroom itself is not available for live streaming. Lin Guorong is worried that the live broadcast in the exhibition hall will affect the offline customer source, even if the customer flow is small. One floor of his own office was taken out and reinvested in the renovation. This is another multi-million dollar investment. As for the exhibition hall with an investment of more than 10 million yuan, he is already considering whether to give it up.
"This may be the new normal of the future." Lin Guorong sighed, "Heavy asset investment like a mosaic fluorescent wall should be cautious in the future." At the moment, we can only do some micro-innovations. ”
A change in the logic of survival
For home furnishing brands, there is soil for investing heavily in Houjie to set up exhibition halls.
An east-west avenue of furniture runs through the town, lined with low houses with furniture brand names on both sides, and the exhibition halls in the belly are all exposed. In the center of the town, the macro Guangdong Modern Exhibition Center and the towering Houjie International Hotel echo each other. Houjie has a well-developed furniture industry, exhibition economy and hotel service industry. When Dongguan cracked down on pornography, it was also a key area.
A beautiful exhibition hall in the famous furniture expo park. Participating in exhibitions was the main channel for home furnishing brands to gain customers in the past
The development of the exhibition and furniture industry is closely linked. After the Asian financial crisis at the end of the 90s of the last century, some Hong Kong businessmen who did foreign trade realized the limitations of OEM and began to transform into brands. Because of the characteristics of large furniture, high unit price, and emphasis on experience, Hong Kong companies have cooperated with the Houjie government to introduce a large-scale exhibition store in the local area, so as to leverage the brand and attract customers.
In 1999, the first International Famous Furniture Fair opened in Houjie, attracting countless people. In 2002, the Guangdong Modern International Exhibition Center, with an area of 130,000 square meters and more than 8,000 booths, was completed and opened in Houjie, and even CCTV's "The Same Song" also came to help the fun. The four-day exhibition attracted more than 300,000 visitors.
Lin Guorong is a native of Houjie. He was 24 years old, had just graduated from university with a degree in design, and was working in the family business. My father made furniture for a living in the 80s of the last century, when Houjie was in the process of transforming from foreign trade to branding, which was beyond his father's experience as a craftsman, so he slowly transferred the company to him. Lin Guorong analyzes data every day and ponders the style and positioning for the brand, "There is a lot of pressure, and the process of making a decision is the most painful." In 2005, he saw the opportunity of the Korean drama "Dae Jang Geum" to be a hit, and cooperated with a Korean brand to develop the Korean style furniture "Orik". Coinciding with the take-off of the domestic commercial housing market, the "post-80s" generation has gradually become the main force in buying houses. The effect of the Korean style design, which is loved by this generation, is immediate. The products were put on the exhibition, which immediately attracted many inquiries from customers.
Lam Kwok Wing
"At that time, we called the exhibition an order fair, and it was a direct deal." Lin Guorong met many dealers through the exhibition. There are countless dealers who want to be the agent of Korean style furniture, and they are found through the government and various personal relationships, and Lin Guorong often flies to various places and drinks a lot of entertainment wine. "At that time, there was a popular saying in this circle that the amount of alcohol determines the sales." Lam tries to maintain the relationship with these dealers, because that determines their prospects in various places.
The survival soil of dealers is the large-scale furniture stores in various places, such as Red Star Macalline and other stores have sprung up after 2000. In the era of the hot property market, these stores continue to acquire land. From 2009 to 2018, the number of Red Star Macalline stores soared from 66 to 308. "Staking was all that was popular at that time." A person in charge of a furniture company told me that due to the good market at that time, some brands would even let dealers "bet on stores", that is, they agreed on a VAM agreement with dealers, requiring the other party to open a certain number of stores in a specific area. "For example, it would have been enough to open 2 stores, but I have to ask you to open 5 stores. But later it turned out that it may not make money if you open 5 stores. ”
But for an up-cycle industry, no one thinks about that. Almost everyone involved made money. From 2008 to 2011, enterprises ushered in a golden age with the take-off of the property market, and a single brand could bring one or two billion yuan in revenue every year, especially in the East China market. "If you open a store and smash it for hundreds of thousands, you can pay back in three months." Lin Guorong was very impressed by a dealer in Nanjing. The first time he met the dealer, he drove a small Buick. Two years later, the other party changed to an Audi and bought three apartments and opened four stores in Nanjing.
A beautiful exhibition hall in the famous furniture expo park. Participating in exhibitions was the main channel for home furnishing brands to gain customers in the past
However, in recent years, with the downturn in the real estate market, it is no longer feasible to expand through home furnishing stores. The popularity of the store was deserted, and Red Star Macalline fell seventy percent after its listing in early 2018, and its market value evaporated by 65 billion. At the same time, brand owners looked back and found that their original positions were being eroded by giants.
A turning point is the restriction and price limit of real estate. In September 2016, after a round of crazy housing price increases, the state launched an unprecedented strict regulation, "purchase and loan restrictions, sales and price restrictions" has been accompanied by the stabilization of the property market, and has never been relaxed. In pursuit of profits, highly indebted developers have pushed hardcover houses. In 2016, the number of newly opened rooms in China's hardcover houses was only 115,800 units, and by 2019 it had soared to 3,259,000 units.
When developers dabble in hardcover houses, they generally choose to cooperate with big brands, such as Qumei, Jiumu, Sophia, etc. Giant brands have taken this opportunity to further expand the subdivided categories, from cabinets, bathrooms or wardrobes to the custom furniture of the whole house - everyone has begun to step out of their original subdivision track and squeeze in the same direction. This has directly led to the strengthening of the "Matthew effect" in the industry, squeezing the living space of small and medium-sized furniture enterprises.
Lin Guorong found that since the popularity of hardcover rooms, there are fewer and fewer items that can be sold. "There used to be a five-piece set in one room, a bed, two bedside tables, a dresser, a wardrobe, but now there is only a bed and a bedside table." He made a preliminary statistic, in the past, when selling 10 beds, at least 3~4 wardrobes had to be sold, but they were completely gone in the past two years, and they were done by developers and big brands when they were renovated.
Furniture manufacturing is difficult to be intelligentized, and many processes still need to be completed manually
"Let's say, for example, we can only make things that can fall off when we turn the house upside down." Lam said they only focus on the "two halls" (living room and dining room) products. The existence of hardcover rooms has also led to the diversion of customers in traditional stores, "before customers come to the store to shop for furniture, they have been harvested by developers and home improvement companies, like a sieve funnel, and fewer people come to the store." ”
The rise of e-commerce also has an impact. "When Taobao and Tmall were on the rise, everyone was reluctant to do it, for fear of affecting dealers, and even a little resistant, especially when the store was doing well. But then e-commerce began to screen out some store traffic, which is why we went from opposition and resistance, to compromise and then to embrace. Lin Guorong said.
The Future: Whole-Home Customization and Digitalization?
Under the squeeze of hardcover houses and big brands in the property market, small and medium-sized enterprises have not many options. Most people also go to the same track and start to do whole-house customization. It's not so much a transformation as a helpless move. Only customization can allow them to enter the market before decoration to seize the opportunity and make higher profits.
Model Household Products Manufacturing Co., Ltd. (hereinafter referred to as "Model Home") is a benchmark enterprise in Houjie, focusing on modern high-end furniture. Meng Jihua, the marketing director, told me that they were promoting the whole house design in 2016, and the transformation went early, but there were many difficulties. The main thing is how to do the dealership work, which is the place to connect directly with consumers. "In the hottest years of real estate, it was too easy for dealers to sell finished furniture, and it was too troublesome to customize the whole assembly." Meng Jihua said. Some dealers say when they hear about customization, "How troublesome this is!" How good it is to sell furniture, and how hard it is to make wooden doors and wardrobes. ”
A revolving dining table in a model home. They believe that smart homes will be a trend in the future
To this end, he and his colleagues kept running stores, doing work, and pulling dealers to train one by one, and the boss also shouted in the group every day: "The future must be the era of whole-house custom design!" But just shouting can't do it, and in the end, the brand gave profits to the dealers, and also funded the construction of some flagship stores, so that they could see the prospect of transformation, and finally pushed it down. From finished product to complete assembly to whole house, the entire process takes several years.
"Fortunately, we pushed it early and didn't take the real estate route, otherwise the developer would have been dragged to death after the thunderstorm." Meng Jihua said. In 2014, Huawei's terminal headquarters base was established in Songshan Lake, Dongguan, to build a "European town". The developer had thrown them an order for 1,250 units of whole house customization. The boss thought about it, but finally didn't answer - in the hardcover housing market, the developer has a strong position, and the account period will be very long, and the furniture brand is in an absolute weakness. The transformational effect was felt after the outbreak of the pandemic. In 2022, when the entire market is weak, the performance of most stores of Model Home Furnishing will more than double that of previous years. In third-tier cities such as Zhumadian, Zhaoqing, and Guilin, the unit price of customers has doubled from hundreds of thousands in the past to more than 300,000.
Lin Guorong also entered the whole case customization track. It's just that in his vision, this direction should be accompanied by a more efficient way, such as digitalization. After the outbreak of the epidemic in 2020, the company's sales fell by more than 10% in the first quarter. Lin Guorong thought of reducing expenditure at the production end and introducing a digital system to promote the automation reform of production. A cutting process, from the original manual line cutting, which took more than 30 minutes, can now be done in two minutes; Another example is delivery, which used to be manually searched, manually recorded, and then entered into the computer to make a single and handed over to the finance, and the whole process took two hours, but now it is also two minutes.
This is not enough. Under the change of industry logic, entrepreneurs have more in-depth ideas about digitalization: production is only the foundation, the link between the front end of sales and the back end of the factory, and the rapid response to the market is the future.
As one of the largest home furnishing brands in Houjie, Mousse implemented the intelligent transformation of production in 2015, and then the digitalization of the sales terminal and the production line. Its mattress production hall is now fully intelligent, with several robotic arms and several powerful IT systems. Consumers can go directly to offline stores to try sleep, and the data can be transmitted to the factory to automatically place orders for production, packaging and delivery. The whole process takes only 7~14 days. "We only achieved this effect this year." Li Xiaofeng, vice president of brand of Mousse Co., Ltd., told me, "This involves the opening of different systems, which is much more difficult than imagined. ”
On the intelligent mattress production line of Mousse, only the sewing and other processes need to be completed manually
Lin Guorong also wants this effect. He spent one or two million yuan to buy a whole-house customization system from Huawei and put it in the dealership. Consumers can simply go to the store, enter the floor plan, select the furniture, and get a rendered rendering in a matter of minutes. "It's a great system, but it's not necessarily good." Lin Guorong was a little worried, "If consumers don't go to the store, how will they know that there is such a thing?" ”
The weakness of the market has left him worried about whether some dealers will die. His digital vision also includes tapping into existing customer sources. "In the past, the model ate the dividends of real estate and population increase, and there was a drawback: if one day the dealer suddenly couldn't do it, the customer would be gone. Who did he sell the furniture to, what products did he match, and what was the unit price? I don't know. "However, when Lin Guorong asked dealers to provide some customer information, some dealers were unwilling and even filled in false information." It's a game. Lin Guorong said that dealers are afraid that after the brand gets the information, they will cut them down.
Furniture manufacturing is difficult to be intelligentized, and many processes still need to be completed manually
In order to convince dealers to carry out digital reforms, he had to dabble in short videos and live streaming. "Only if you drain them and bring incremental customers, will they hand over the existing customers." However, these new ways of playing are beyond the experience of these manufacturing bosses. Once, the association organized a lecture on cloud computing and digitalization. Some older bosses were confused after listening to it: "This cloud and that cloud, I only have dizziness after listening to it." ”
Lin Guorong also has a friend who spent hundreds of thousands of dollars to find a third-party team in 2021, but he could only sell some consumption coupons in the live broadcast room. The boss chose to go in person, and the team set up a "domineering president" character for the boss, and asked him to memorize the script and shoot videos every day to attract traffic, "I have been doing it for two years, and I have no confidence anymore".
A long time ago, someone persuaded Lin Guorong to also go live in person, but he just smiled. "The times are demanding more and more from entrepreneurs. When my dad's generation made furniture, all they had to do was make the furniture. When we do branding, we have to engage in design and be able to attract investment and find relationships to drink; Later, when you want to open a specialty store, the boss has to learn to do training. In the age of the Internet, you have to learn to act and host and sell goods. Lin Guorong said with a wry smile, "Now you have to be an all-rounder to be a boss, otherwise you may really not be able to keep up." ”