Why the electric dealer is the life of the leather home store?

(This article is published in "Home Wired" magazine)

In the tenth session of China Household Industry Development Summit Forum, Mr. Chei, chairman of Red Star Mei Kai-Lung, made a keynote speech on the subject of "Electric Merchant Trap", and again referred to the assertion that "electricity quotient is a revolution". The chairman of the car said that "the electric business is the life of the market, is the life of the dealer, is the life of leather factory."

This article on why the electric dealer is the life of the home shopping mall to do an analysis.

Abnormal development of home market

China's traditional home shopping malls are based on commercial real estate development, its development logic is: take the land-build the market-------------value. So far, this logic still applies. Adding value to the commercial real estate project is the basic rule of the game.

Driven by this motivation, we see that the traditional home shopping malls more and more built and made bigger. As early as 2004, the first-tier cities have a home market saturation of the speech appeared. Nearly 10 years later, the size and speed of home shopping malls do not seem to be cooling. The total area of the National furniture shopping mall may have been close to or even more than 100 million square meters, many places appear more than 1 square meters of home shopping area. According to reliable data, in the past five years, the total area of brand home chain stores increased by more than 1 time times.

At the same time, the total number of square meters in the mall, the size of a single home shopping mall is also increasing, from 230,000 meters to 50,000 square meters, increased to the present 100,000, 200,000, 300,000 square meters, or even greater.

This more and bigger trend remains. But the business situation of the shopping malls in the real estate restrictions and the double squeeze of the electricity business increasingly embarrassed. Business Retreat and store closing tide is gradually. According to the dealer to withdraw the shop survey, 2013 first-line city has 10% of the shopping mall dealers to withdraw the rate of more than 50%.

Because it is not based on the needs of household consumers to establish, so the home market is malformed development. In fact, the traditional home shopping malls, the characteristics of the current domestic brand is not concentrated, household goods brand is not concentrated, the main reason for the high price of household goods.

Low brand Concentration

Home Shopping mall brand concentration is very low. Leader of Red Star, the United States Kai Lung, the expected total sales this year is 60 billion, only accounted for home building materials Market (according to 2 trillion) about 3% of the share. The reason is simple: as long as the shopping malls can earn money, so there is almost no mechanism for the fittest. Some shopping malls can open for three years rent-free, as long as the land value-added can make money.

Household goods brand concentration is also low, which furniture brand concentration is far less than building materials brands. In addition to a few categories of building materials, most categories have hundreds of or even thousands of brands. Furniture Market brand is a dime a zillion.

Because the basic purpose of building a shopping mall is to increase the value of real estate, shopping malls are not based on the needs of the market, nor do they determine the size of the shopping malls according to market needs. Driven by the power of real estate appreciation, the demand of home market is unimportant.

Since the establishment of the shopping malls, we need enough merchants (brand) to fill the space of the shopping malls. Large-scale traditional home shopping malls need a large number of household goods brands to fill their venues. Shopping malls have thus become a breeding ground for many brands of household goods.

As long as you can rent a shop in a brand store, you are the brand. When shopping malls are growing in size, the number of household goods that are created and sheltered is growing. Therefore, the abnormal development of home shopping malls is one of the main reasons for the concentration of household commodity brands.

High commodity prices

China's modern home shopping malls are luxurious, so the price of household goods is also expensive.

The first reason for the high price is of course the channel cost. The industry has compared China's domestic commodity prices to the United States, that China's prices are 40% higher, and 20% of them because of high channel costs.

Since 2008, the rents of home shopping malls have generally risen by 50%. Recently, Liao Bin, secretary general of China Building and Sanitary Ceramics Association, said that 1/3 of the product price is the terminal cost of shopping malls.

Home Shopping malls to the brand charging high shopping malls rent as a brand of asylum fees. However, when the household commodity market is no longer as hot as in previous years, dealers withdraw from the mall and the news on the closure of the constantly spread, revealing the traditional home shopping malls business model of the fatal weakness. (However, mall real estate projects may still make money.) ）

Home goods Another 20% of the price exceeds the part is due to the commercial real estate interests driven by the domestic commodity brand imperfect market competition caused. As a result of shopping malls on the home commodity brand of asylum and lead to the lack of concentration, so that household product production generally failed to form scale, low production efficiency, high production and transport costs.

The high rents of traditional shopping malls are already the result of the production cost and the increase of transportation cost, which constitute the important component of the high price of household goods, and the most important reason for the high price of household goods.

Consumer experience issues

All said that home shopping for home consumers to provide a very good physical experience, it is said that home consumers in the home market experience should be very good. Is this the case?

Home Shopping malls in the magnificent display, indeed pleasing, causing consumers to the future of the infinite reverie. However, in the vast market, the face of many dazzling brands, consumers are dazed, they are often at a loss in the brand choice.

In other words, home Shopping provides a very good experience, but it does not provide a good brand choice for the more important consumer experience. In fact, with the increase in the size of the market, consumers in the shopping malls in the brand choice more and more difficult. The traditional market management mechanism cannot overcome this obstacle itself.

In the vast home shopping malls, the consumer's brand selection experience is overwhelmed. This may also be one reason why consumers are always rushing to discount promotions, because that's at least the direction of choice.

Electric Business Revolution

I use eggs and baskets to describe the operation of traditional home shopping malls: There may be 10,000 eggs in the market, good and bad. Someone put 500 good eggs in the basket, so everyone went to the basket to pick the eggs. So the bigger the basket, the more we can put down 1000 or even 2000 eggs, but the market only needs 300 eggs. What to do?

We should rationally from the following aspects to understand the electrical business of the traditional home market revolution.

The first is the Internet to provide consumers with the purchase of household goods before the various shopping guide information, including such as which brands are good, the approximate price is how much, where to buy the cheapest products, and so on. Accordingly, I put forward the concept of home electric business marketing chain (can be Baidu "home electric business Marketing Chain" reading), pointed out that the electricity business not only increased the sale of goods and propaganda channels, but expanded the content of household goods marketing, for consumers to provide more pre-sales shopping information.

The Front sex shopping guide information, especially by the consumer feedback commodity appraisal, will accelerate the household commodity brand the centralism. The so-called Front sex shopping guide information, the essence is the household commodity consumer information transparency. The transparency of consumer information will break the traditional shopping malls for home goods brand shelter.

Because of the brand centralization and realize the scale of production and transportation, will greatly reduce the product market and transport costs, product quality and after-sale distribution installation service quality will be improved.

At the same time, as a result of the use of online integration of Home products display experience system, so that the online experience shop sales flat effect of proliferation, channel costs are also greatly reduced.

The cost of production and transportation and the decrease of channel cost have broken the high situation of household commodity.

The transparency of consumer information promotes the market competition of household goods, more concentrated brand, more effective online display experience system, lower price, better quality of goods and service.

Take us Lele for example. U.S. Lele sales in 2013 about 2 billion. If the sales price of the traditional shopping malls, it may be up to 4 billion. This is already quite a great business in furniture. Assuming that there is no electricity business, the United States Lele can only rely on rental market venues open shop, if each store at least 1000 square meters, that the United States Lele need to shop area at least can be worth more than 5 traditional home shopping area.

Now the electric business, the United States Lele through the line under the Integrated Product experience sales system, completely avoid the traditional shopping malls, ping effect is the traditional market average ping effect of at least 5 times times, and through large-scale production and transport, greatly reducing the cost of production and transportation, sales price may only be the traditional home channel similar goods 1/2. If the United States Lele also has the brand of Amoy brands, now the United States Lele already let the first-line brand processing products, the quality of further protection.

This is the essence of the electric business to the traditional home channel revolution.

In the face of the revolution of the electric business, how to deal with the traditional home shopping malls?

Tang people, home electric business practitioners and explorers, focused on the traditional household enterprises in the development of electric business strategy and implementation. More articles, please Baidu "Chinatown home Electric Dealer."