Warren Buffett once said that time is the friend of good companies and the enemy of mediocre companies.
Stretching the axis of time, it is not difficult to see that in the history of the development of world business, every wave rises and falls, and those excellent enterprises are always able to discover and even lead the next wave through internal-driven innovation, and constantly prove their own value.
In China's home furnishing industry, Red Star Macalline is an inescapable company. In the past 40 years of development, Red Star Macalline has pioneered the home furnishing chain business model, unique shopping mall façade design, full-category operation, and full-link service, leading and inspiring the entire home furnishing industry and offline business.
However, in recent years, the home furnishing industry has inevitably been hit by the weakness of the overall consumer market, and has gradually slowed down from the rapid development of the past. The dispersion of traffic and the change of customer acquisition methods...... The industry ecology is changing rapidly, and the involution competition for short-term business interests is becoming more and more intense. In the face of the "new normal" of slow growth in the industry, where will the home furnishing industry go in the long run? Will Red Star Macalline, which is also affected by the market, become the "leader" who takes the lead in exploring the way of the industry and creating a trend again?
On March 20, Red Star Macalline held the China High-end Electrical Appliance Industry Ecological Conference in Xiamen. Zhu Jiagui, Executive President of Red Star Macalline Home Furnishing Group and General Manager of the Large Operation Center, released the "3+Star Ecology" strategy on the spot, and announced the "new three-year" development plan for high-end electrical appliances, effectively reconstructing the business ecology, and helping the value of the field space and the high-quality development of high-end electrical appliances.
Together with the China Home Decoration Design Ecology Conference held in Zhengzhou in January this year, focusing on the launch of the 100 Mall of the M+ High-end Home Decoration Design Center, Red Star Macalline unveiled its long-term development context towards the "integration of home appliances, home furnishings, and home decoration" in the first three months of 2024.
Connecting categories with design to break the problem of "integration of three"
Home appliances, home furnishings, and home decoration were considered to have their own industrial boundaries in the past. However, with the change of consumer demand, especially their pursuit of one-stop and integrated consumption, it is inevitable to promote the "circle-breaking" integration of the three.
One of the three "circle-breaking" solutions proposed by Red Star Macalline is design. Data shows that 90% of high-net-worth individuals and 83% of young consumers are willing to pay for design. On the other hand, the industry is still largely stuck in the mindset that design solutions are free and materials make money. From the perspective of consumers, there is no way to understand and choose a decoration company in one stop, it is difficult to find a reliable designer who is suitable for you, and it is even more difficult to buy products and services for home furnishings and home appliances in one stop.
Red Star Macalline saw the trend and pain points at the same time, on the one hand, it has taken a key step in the integration of home decoration and home furnishing, and on the other hand, it has also continued to make efforts in the integration of home appliances and home furnishings.
From hosting the M+ High-end Design Competition in 2018, to building the first batch of 16 M+ High-end Home Improvement Design Centers in 2023, to proposing to achieve the coverage of 100 M+ High-end Home Improvement Design Centers nationwide by 2025, Red Star Macalline's thinking is very clear: it is to use the M+ High-end Home Improvement Design Center as the starting point, and through the aggregation of design proposal capabilities, to provide consumers with the delivery ability of customized personalized home decoration.
At the same time, in 2018, Red Star Macalline announced the introduction of electrical appliances and the establishment of an electrical appliance division. It has fully entered the high-end electrical appliance track, and has made phased progress in the past few years.
Red Star Macalline expects that the operating area of the M+ High-end Home Improvement Design Center will account for 15% by 2026, ranking first with high-end electrical appliances and becoming one of the core growth engines of Red Star Macalline.
It can be said that in the process of building the future business map of Red Star Macalline, the integration of home appliances, home furnishings and home decoration with design has become the biggest attraction.
Wang Dongming, secretary general of the China Interior Decoration Association, said that in the process of ecological reconstruction of the large home furnishing industry, design is the leader, the soul, the entrance, and the key to industrial transformation and pattern reorganization.
Zhu Jiagui said that the M+ High-end Home Improvement Design Center will become a super connector for categories and products, and the first entrance to high-quality home improvement traffic. This was made possible by the fact that the design was respected. There is a phenomenon in the market, that is, the design is considered free, just to drive the sales of home decoration and home furnishings, the result is that the professional value of the design is not respected, and it is difficult for the industry to retain good designers, and the final design quality can be imagined. Red Star Macalline has set up an M+ high-end home decoration design center, putting designers in the C position, and doing everything possible to attract and empower them, which will undoubtedly truly improve the design level of the home.
When the design is respected, high-quality homes can be designed, and it is a personalized home with thousands of faces, there will be mid-to-high-end users who will pay, and Red Star Macalline's home furnishings and home appliances will also be truly connected and pulled. It is worth noting that this kind of pull is not a push-type strong sale in the usual sense of the industry, but a pull-type attraction on the basis of the personalized home improvement plan that really impresses users.
One detail worth noting is that Red Star Macalline's M+ Premium Home Improvement Design Centre is usually located on the top floor of the mall and has its own elevator. It can be seen that Red Star Macalline's positioning of the design center is not simply to use the design center to attract traffic to other categories, but to aggregate other categories with the design intrinsically on the basis of truly respecting designers, so that users can recognize the solutions and products from the heart. The traffic generated by this pull attraction will cascade down the top floor of the mall like a waterfall, benefiting all other categories.
Create a "3+-star ecology"
To be a "one-stop" consumption destination for Chinese people's lives
Red Star Macalline integrates home appliances, home furnishings, and home decoration into one ecology as "3+ star ecology". On the one hand, home appliances and home furnishings are a one-stop aggregation of Red Star Macalline, and on the other hand, the M+ high-end home decoration design center Baimall has become an "aggregation field" for high-quality designers and design capabilities, connecting home decoration and home appliances through design, and jointly proposing consumer life.
In this ecology, home appliances, home furnishings, home decoration, "every home" is the entrance of consumer demand, and the three are mutually extended, mutually informed, and mutually incremental, jointly creating products, services and scene value, and meeting people's pursuit and yearning for a better life at home.
From the perspective of the supply side, Red Star Macalline has the gene of emphasizing experience and scene, which can be driven by design to open up home appliances and home furnishings and home decoration; from the demand side, this will be able to bring users a personalized experience of thousands of homes, and can bring a one-stop home appliances, home furnishings, and home decoration purchase experience. "As a high-end front-end channel, scenarios and solutions are the biggest advantages of Red Star Macalline. With its huge property volume, Red Star Macalline has gathered a complete ecology of building materials, furniture and electrical appliances to create a high-end household appliance use scenario for life. Zhu Jiagui said.
To create a new "3+star ecology", another path found by Red Star Macalline is high-end electrical appliances. As early as 2018, Red Star Macalline began to lay out high-end electrical appliances, promoted the integration of home appliances and home furnishings in the front channel, and has now realized the opening of 200 smart electrical appliances living halls across the country, becoming the first strategic category of Red Star Macalline. According to data from Aowei Cloud Network, the contribution rate of mainland home furnishing front-end channels to the retail sales of the home appliance market has increased from 2.4% in 2019 to 3.8% in 2023, and is expected to reach 4.5% in 2025.
This result was a surprise to many. Since the outbreak of the "815 war" between Jingdong and Suning in 2012, the proportion of home appliances in online channels has continued to rise. According to the China Electronic Information Industry Development Research Institute, the proportion of retail sales in China's home wire market rose to 58.2% in 2022, hitting a record high.
Red Star Macalline has achieved a breakthrough in the seemingly impossible situation of traditional wire channels, which is to find its own unique advantages and meet the unmet needs of mid-to-high-end consumers. As Zhu Jiagui said, the demand for high-end electrical appliances has changed, before the decoration and purchase, now is the pursuit of front, systematic, systematic, systematic, they no longer pursue a single device, but a more quality of life. And this is precisely the unique advantage of mid-to-high-end home furnishing stores like Red Star Macalline with offline real scenes and real experiences. Here, mid-to-high-end consumers who pursue a high-quality lifestyle can experience high-end electrical appliances in a scenario-based manner, and what you see is what you get, and you can get it all in one stop.
Under the "3+Star Ecology", the business picture conceived by Red Star Macalline has become increasingly clear by connecting categories with design, emphasizing scenes and experience, facing mid-to-high-end consumers, and realizing one-stop consumption:
This is an ecological field that connects three companies and crosses categories. M+ Home Furnishing Design Centre is not only a new office space, but also a super platform for empowering designers. Similarly, the business form constructed by Red Star Macalline is not only a simple combination of home appliances, home furnishings, and home decoration, but also an internal aggregation, so that they form a flywheel effect that promotes each other and accelerates, and all kinds of frost compete for freedom.
It's a place where demand is met and demand is created. Red Star Macalline not only sells goods or services, but also provides personalized customized homes for each user. For users with clear needs, Red Star Macalline can meet their needs, and for users who do not have clear needs, Red Star Macalline creates demand by designing ideal homes for users who pursue a better life.
It will be a one-stop consumer destination for Chinese people's living life. Here, there are proposals for a better life, and consumers can get home appliances, home furnishings, and home improvement products and services in one stop without leaving the mall, so as to realize the ideal home.
From this perspective, we can also understand the other explorations of Red Star Macalline, such as the π space released by it and C&D Automobile in Chengdu in early January this year, which is a smart car ecological complex that combines high-quality smart home life experience, trendy art space and full-field automobile marketing scenes, creating an ecology of intelligent people and cars.
From this business picture, we can also get a glimpse of the future transformation direction of offline business, not just simple people, goods, and places, but multi-dimensional reconstruction: for front-end consumers, it is the experience field of the scene, the connection field of the circle, and the emotional stimulation field, and for the back-end brands and merchants, it is a new proposal, new content, new experience, and new ecology that breaks the category boundary and reconnects and aggregates based on user needs.
Long-termism in the "integration of the three schools".
The future is bright, but the road is tortuous. The transformation of the home furnishing industry is just that.
The "three integrations" of home appliances, home furnishings and home decoration are not a new concept, but they have been proposed and promoted for the first time in the large home furnishing industry. Whether it can be truly done is not only the firmness of the strategy and the execution of the landing, but also, of course, the responsibility and "long-termism".
The introduction of design centers into home furnishing stores, as well as the improvement of quality and high-end electrical appliances, is not the only thing in the industry, but the original intention and specific practices are very different.
For example, in the eyes of many home furnishing stores, the designer is just a traffic entrance for the purpose of sales, and if the understanding of the designer stays at a shallow level, it is difficult to give full play to the value of the design. On the other hand, Red Star Macalline looks at the value of designers from the perspective of providing personalized home decoration for mid-to-high-end consumers, and does not give priority to traffic, but lays the foundation for greater traffic in the long run.
Another example is the "533" policy provided by Red Star Macalline for the M+ High-end Home Improvement Design Center, which is based on the pain points of designers. This is true whether it is a 5% discount on rent, a three-year lease period, and a three-month free extra-long renovation period. When a platform formulates policies, operates communities, and cultivates ecosystems not from its own perspective, but from the perspective of designers, it is destined to enable the business to achieve sustainable development.
In terms of high-end electrical appliances, Red Star Macalline released the "New Three-Year" five-fold upgrade plan, which is a comprehensive empowerment for brand owners and dealers. Whether it is the expansion of scale, the continuous enrichment of the electrical appliance ecology in the market, or the "trade-in" in the community to activate the stock consumption, or even the business interaction with the M+ high-end home decoration design center, brand joint promotion and other operational upgrades, all for the construction of the platform's ecological prosperity and lasting vitality.
The test of long-termism is especially evident in difficult times. Just like in the current situation of increasing uncertainty in the home furnishing industry, although Red Star Macalline is also facing a lot of pressure, it can balance its short-term business interests, firmly implement its long-term strategy, and build a healthy and sustainable business ecology, and its future path is destined to be different.
In fact, there are two modes of development of business ecology, one is the ecological chain and the other is the ecological network. The ecological network is a relationship of integration, symbiosis and win-win, and the platform and merchants and brands work together with only one goal, that is, to share ecological value on the basis of serving customers together.
What Red Star Macalline has built is an ecological network with comprehensive human settlements services as the core. The core of this ecological network is not to seek short-term profits for the platform, but to position long-term value, and make the cake bigger by activating value on the consumer side, so that the entire ecological participants can share the value. This ecological network is also constantly changing. From the previous trillion-level home furnishing track, to the integration with the trillion-level home appliance track, and then to the trillion-level home improvement track, the ecological network is generating nearly unlimited traffic and unlimited space in aggregation and co-creation.
Use design to connect categories, use electrical appliances to connect smart home life, and lead the industry to jointly explore the new future of "three in one". A wonderful business model for a win-win situation for all parties in a big home, this is the correct posture to break the "integration of three families".