Can the sinking of the home store giant channel overwhelm the "head snake"?

The giants are accelerating and sinking, and the 3rd, 4th and 5th tier cities become the heavyweights of the soldiers.

In the mall, giant companies stand taller and look farther. Along the Beijing-Kowloon line all the way down, those big brands that are widely known in Beijing, they are also in many third- and fourth-tier cities and even towns and cities, Suning, Gome, Mingchuang excellent products, SF Express...

Take the home store as an example. In the early years, the two leading stores, known as “South Red Star, North Real”, have already broken away from geographical restrictions and quickly moved to the whole country in the form of chain development.

Opening the official website of the two companies, the banner of the store has been filled with the provinces of the country. As it happens, the two companies started the “Thousand Stores Plan” at the same time in late 2018, ready to speed up the stores in the third, fourth and fifth tier cities. The pace of the chain, accompanied by the sinking of the home brand attached to the store. In the past two years, the customized home sector has entered the fast lane of crazy shop opening. From the disclosure of financial reports, listed companies have almost accelerated the expansion of the channel sinking.

Taking custom-made home leading enterprises as an example, Europa has established a nationwide marketing service network with the concept of “roots”. According to market level and importance level, Europa has subdivided the national market into nine levels. The A1 and A2 markets correspond to first- and second-tier cities, and the B1, B2, B3, and C1 markets correspond to medium-sized cities and counties with relatively high economic development levels. C2, C3, and C4 markets correspond to small cities and economic development levels. Relatively low counties and towns. Ou Pai's 2017 financial report shows that the number of stores in the A-class, B-class and C-class cities in the European-style cabinets accounted for 13%, 26%, and 61% respectively, and the number of stores in the A-class, B-class, and C-class cities in Europe. They are 15%, 29%, and 56%, respectively. Europa’s cabinets and wardrobes in C-class cities account for more than 50% of the total, and the determination to sell channels in third- and fourth-tier cities is self-evident.

Another major company in custom-made homes, Sofia, has a distribution ratio of stores at the end of 2017: 19% of provincial capital stores, 29% of prefecture-level cities, and 52% of fourth- and fifth-tier cities. By the end of September 2018, Sophia had nearly 1,400 dealers, 2,469 specialty stores (not including 400 supermarkets), 47 large home stores, and specialty stores in provincial capitals, prefecture-level cities, and county-level cities. The proportion of urban distribution is 18%, 28%, and 54%, respectively, and the corresponding income ratios are 35%, 32%, and 33%, respectively. In contrast, the intention of Sophia's heavy warehouse layout in the 3rd and 5th five-tier cities is very obvious.

A closer look at the earnings report reveals that the listed home furnishing companies such as Hao Laike, Zhibang Home, Piano, and Gold Kitchen Cabinets have clearly revealed information on increasing the sinking intensity of the channels. It can be seen that the pace of sinking channels for mainstream brand home enterprises to expand sales outlets in third- and fourth-tier cities and even five-tier cities is much faster than we expected. Most companies have a clear market-level structure, and they are now at the encryption and weaving network. process.

It is not difficult to see that the home industry has experienced the scuffle in previous years, and channel expansion has become a new round of challenges that scale enterprises must face after capacity and brand expansion.

The giant rushed to the "five rings outside", can the strong dragon over the head snake?

On the one hand, the consumption potential of low-tier cities broke out, the giants rushed to the “five rings”, and on the other hand, the regional outstanding enterprises grew rapidly, and the two formed a tit-for-tat development pattern. From the perspective of the home store field, in addition to the national store Red Star Macalline, the home of the home, there are many outstanding regional stores, such as Chengdu Fusenmei, Jiangsu Gaoli Home and Hongyang Home, Changsha Global, Nanning Fuanju and many more.

From the "2018 domestic home improvement business financing inventory", we can find that many home brands potential stocks are no longer limited to the north and the depths of Guangzhou, more choices in Chengdu, Hangzhou, Nanjing, Suzhou, Wuhan and other development potential New first-line or new second-tier cities.

How big is the market opportunity, and how difficult the offensive challenge is. Especially for the home industry where the characteristics of “big market, small brand” are obvious and the supply chain is disorderly, it is difficult for enterprises to move from the region to the whole country.

In fact, the slogan of "channel sinking" has been called for many years in the home industry, but many companies have not settled down. Generally speaking, the way the home enterprise sinks still continues the traditional dealer agent model, and it is also the big customer model of the city-level agency. A small number of enterprises have achieved one county and one agency, but the local market has its own characteristics. It is difficult to do deep penetration, the greater the density of channel particles, the difficulty in ensuring management and service, and the difficulty in sinking.

For example, in the case of custom-made home furnishing products, Shangpin Home has accelerated the pace of investment in 2017. By the end of 2017, the total number of franchised stores reached 1,557, of which 19% belonged to first- and second-tier cities, and the third- and fifth-tier cities The number of franchised stores accounted for 81%; the first- and second-tier cities accounted for about 33% of revenue, and the third- and fifth-tier cities accounted for about 67%.

However, by the end of June 2018, the total number of franchise stores in Shangpin reached 1,755, of which 21% belonged to the first- and second-tier cities, and 79% of the franchise stores in the third- and fifth-tier cities. It is 34% and 66%. During the half-year period, the number of franchisees in Shangpin's homes and third- and fifth-tier cities and the proportion of revenues contracted slightly. To a certain extent, it also showed that they encountered resistance during the sinking.

During the Spring Festival visit, the author found that in the county and township markets, some so-called “brand-name” stores did not have “no-name” stores popular, such as Huang Shanghuang, Haishu’s House, Wallace, Europa, Sophia, etc. The head enterprises in the industry have not played a significant brand effect, and some local brands that are not well-known are even popular.

There are many reasons behind this. For example, the network in the regional market is closely connected, the degree of Internet information is weak, the regional consumer brand awareness is weak or the brand is no longer deliberately valued; the sinking enterprises do not understand the local market habits and customs; local excellent enterprises Rapid rise; dealer system management is lax and chaotic, smashing goods, flying orders and so on.

According to industry analysts, every city and even every town has its own habits and characteristics. For example, the north is dry, so there are many wooden materials in the north, such as wooden floors and wooden furniture. The south is wet and cold, so there are many tiles and bamboo products. Prevent problems such as mold and deterioration. The height of the northerners is generally higher than that of the south, so the bed in the north is relatively high, and lockers can be designed under the bed. In terms of decoration style, the North prefers Chinese and the South prefers Western. In terms of heating devices, the north uses floor heating, the south uses air conditioners, electric heating stoves, and so on.

There are many similar differences. The differences in consumer preferences and service standards result in different materials and processes that companies need. In addition to such obvious differences, there are subtle differences in each of the more segmented regional markets.

If you want to dig your own vegetable fields on someone else's site, you need to be more proactive. In the new retail era where demographic dividends have subsided and Internet information has developed, it is not so simple for a giant to open a new store or recruit an agent. It is more important to consider how to sink the quality and service of the brand together, and Local companies compete to develop incremental markets, which involve the construction of internal supply chains, the guarantee of delivery quality, and the response of after-sales services. From these aspects, whether the giants sinking from the "upper" can adapt to the local market and overwhelm these "local snakes" are really a problem.

But in any case, the drums of the channel sinking have already sounded, and the confrontation of a dragon-snake battle is inevitable.

For more information, please pay attention to the official website of Xianghe Furniture City http://