2012 third-fourth line city furniture market channel expansion

In 2011, the sales of furniture in first- and second-tier cities nationwide showed a significant decline, while the performance of third- and fourth-tier cities was relatively stable. However, as more and more furniture brand companies and stores adopt channel sinking strategies, competition in the third and fourth-tier markets will become more intense, and their profits will be thinner and thinner. In 2012, the furniture market in the third and fourth tier cities will have an unprecedented fierce competition.

Marketplace: increased quantity shuffling

In 2012, the number of home stores in third- and fourth-tier cities will increase significantly. The main reasons are twofold: First, due to the influence of real estate control policies, many real estate developers in first- and second-tier cities have begun to look to third- and fourth-tier cities that are less affected by real estate control policies. Especially under the guidance of the Western Development Policy, in most western regions such as Yunnan and Guizhou, foreign investors have received local government support. Therefore, advancing into third- and fourth-tier cities has become a new direction for real estate developers. Second, as the market share of first- and second-tier cities is becoming increasingly saturated, the market competition of major brands in first- and second-tier cities is becoming increasingly fierce. Therefore, more and more furniture companies have “sinked” the channels to third- and fourth-tier cities. The demand for these brands for the stores and real estate developers can be described as a hit.

Under the temptation of furniture consumption cakes in third- and fourth-tier cities, on the one hand, large-scale home stores will open chain stores in third- and fourth-tier cities, which will bring huge impact to the local furniture market. Those stores with insufficient professional standards, poor publicity, poor environment and poor service awareness will dump new large-scale chain stores; on the other hand, the original strength home stores in third- and fourth-tier cities may strive to optimize and upgrade. Defend the original site and avoid becoming a victim of external shocks. Relatively speaking, low-end stores in third- and fourth-tier cities still have a certain living space because of the superior price of products and the needs of most low-income people.

Dealer: Choose a store to save strength

In the case of intensified market competition, furniture dealers in third- and fourth-tier cities should choose stores according to their own business strength, the strength of the agency brands and market positioning. In many supermarkets of the same grade, dealers should consider the store from the location, planning and layout, internal management, facilities construction, publicity, and business support. It is worth pointing out that there are many large-scale mature stores in China that adopt commercial real estate operation mode. These stores do not care about making money without making money, so dealers should not see hypermarkets and want to enter. It is too late to repent after entering the market.

In 2012, the market will remain sluggish. Therefore, dealers should not blindly open new stores, and optimize the operation of existing stores to preserve their own strength. In 2011, many dealers opened their stores because of blind expansion. After the completion of the store, they found that the store was losing money, causing the capital chain to break and had to close some stores. It is understood that in 2011, more than 10% of first-line furniture stores were closed due to poor management, and many of them were stores opened by dealers for expansion.

In addition, dealers should not follow suit, blindly want to change the industry, change brands, or seek new channels around, trying to increase sales. For most dealers, these practices do not solve the problem fundamentally. First of all, changing a less-than-understood industry or brand has certain risks. If there is no deep understanding and grasp of the manufacturers and industry markets, then the risk will be very high. Secondly, it is not practical to focus on relying on cooperation with home improvement companies or relying on various group purchase networks. According to the author's knowledge, due to the fierce competition between the group buying websites, many group buying nets have difficulties in self-protection, and the operation is not standardized, and it is not worth relying on. Therefore, these methods can only play a supporting role. The main energy and direction of the dealers must be “positioned” in the store, and the store is fundamental.

Dealers should adhere to the store-based, supplemented by other sales channels, save the strength, and strive to become a survivor of shuffling. After the new round of shuffling, there will be 1 or 2 high-end stores in each of the third- and fourth-tier cities, three mid-end stores, one or two low-end stores, and about 10 street-side single stores. The overall pattern, each store has its own place, the entire market will become orderly, and the days of furniture dealers will gradually get better.

In 2012, it was a year of channel expansion for the third- and fourth-tier urban furniture market, and it was also a year of shuffling. How to deal with the new situation is an issue that existing stores and dealers should consider carefully.