The Furniture Industry is Full of Difficulties to Solve These Problems in Order to Survive the Crisis
For furniture companies,it was another bad year for furniture manufacturing in China in 2018.The annual report of listed furniture companies in the first half of the year showed that most of the companies’ sales were acceptable, but the growth rate slowed down noticeably. In August,bankruptcy news of furniture companies came out one after another.Small and medium-sized furniture brands are facing risks at any time.Furniture manufacturing in China just showed signs of improvement but began to decline. The fundamental reason is that the external competition in the industry is fierce, and the internal difficulties are in a hurry and need to be resolved.
High price and low profit
Despite the rising popularity of consumer upgrades in recent years, furniture is still a large and expensive commodity for most consumers. The requirements of furniture for young consumers are higher and higher,such as quality, appearance, and function, and they are more careful about the price. Behind the beautiful gross profit of furniture companies,the net profit is bleak. Even in the hot custom furniture area, the net profit of enterprises can only reach 3%~7%, and the leading enterprises are only more than 10%, which is not in line with its rapid development.
Consumers condemn industry profits, but companies are unable to make ends meet. Where did the money go? It was “swallowed up” by a series of hidden forms: store rent, furniture product packaging and transportation, various standard certifications, participation fees, personnel costs (including design, production, operation, after-sales and other departments), product packaging costs ( Marketing, publicity, endorsement), the superposition of various costs swallowed up the survival space of the enterprise, which is furniture manufacturing in China.The exploration of new channels is also the last profit of the company. For this difficulty, companies have given corresponding solutions: for example, standardization and informatization of furniture production, physical stores with soft fittings, small home accessories to increase Profits, etc.
Commodity prices are always a contradiction between enterprises and consumers. Under the market environment of oversupply, while reducing the cost, how to let consumers truly recognize the value of goods and let their products have their own core competitiveness is a problem that enterprises need to think about and an effective way to help importers obtain quality products.
Market homogenization is serious
So how does the core competitiveness of the product build? In addition to product quality,the brand has to open the gap with competitors.At present, the homogenization of products of different brands in the market is serious, and there are few truly innovative designs.There is no competition distance in different enterprises.It is difficult for consumers to find out the differences in appearance, materials and functions between different products.The measurement standard of furniture has changed to price, which forces enterprises to start price wars.
Innovation and design are the foundation for maintaining the survival of the company. But why is it still a difficulty that the industry is hard to solve? On the one hand, there is a lack of long-term design talents in the furniture industry; on the other hand, the market plagiarism costs are low, and the life cycle of original products is shortened. Plagiarism products use the design cost of original brands to fight price wars, and some importers will feel confused, care price but neglect quality, and CLI sees one after another real case and reminds importers the importance of product quality inspection.
Fortunately, the team of outstanding domestic designers is constantly growing.Some companies with original design as the core of the brand, although they are unable to compete with the first-in-class companies, but self-sufficiency, and have a number of loyal fans. Consumers’ pursuit of beauty and humanity will also increase as consumption levels increase. In the future, furniture manufacturing in China still relies on original design.
Safe question
The big problem of furniture manufacturing in China is still the security issue. At present, most of the complaints about furniture products are still concentrated on the product quality is not up to standard, including product safety issues, product damage cracking and bending problems, after-sales service is not in place. Among them, complaints about furniture safety accounted for the bulk,commonly including the release of harmful substances in furniture exceeded the standard, the performance of products was not up to standard, and the design of children’s furniture products did not meet the standards. Every brand knows that the product must pass lab testing, but not every laboratory’s operating procedures are very standard,so choosing a formal laboratory for testing is also key.
Every year, there are brands on the black list which are not eligible for quality inspections, and many of them are well-known companies. The recent news of excessive formaldehyde also make the public focus on the issue of furniture safety. The corresponding standards set by the state for furniture products are still being improved, and these standards will ultimately be in line with international standards. This is a long-term battle, and companies must obey the rules.
Retail store expansion and survival
Opening a direct-operated store can be described as a business of burning money. Most furniture companies rely on large-scale furniture stores and rely on dealers to operate. However, the core area of the furniture store is the high price, and it is difficult for ordinary furniture brands to compete with big brands for the site. Coupled with staff salaries, water ,electricity and store promotions, it is a sum of money that can’t make ends meet.
Furniture manufacturing in China generally shows that small and medium-sized brands are difficult to maintain their livelihood, while big brands are taking risks on the road of channel expansion.Judging from the semi-annual report of listed companies in 2018, the large expenditures of many enterprises are used in mergers and acquisitions, channel expansion, new brand operation and maintenance, etc., to seize market share as soon as possible.Behind the rapid expansion,it is the risk of corporate capital chain breaks. For example, several large companies that broke out in August have been blindly expanding.
Some people say that furniture manufacturing in China is difficult to change for a while, because the furniture market is a big filter in the industry, first screening out the enterprises that are unqualified,and then screening out the backward enterprises that have not kept pace.In the process, new brands will continue to be filled in to accelerate the knockout process. For importers and manufacturers, the market is cruel, but the principle of winning has not changed.
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