From “Golden Age” to “Silver Age” custom home enterprises must complete three major transformations!


Custom home

The fundamental reason is that the market has changed dramatically.

Our analysis is that although the decline is related to the downturn cycle of macro-economy and capital market, the deep-seated reason is that the industrial structure factors such as supply-demand relationship, entry threshold and consumer demand have changed from quantitative to qualitative, and have undergone subversive changes. The industry has entered the “Silver Age” in an all-round way. Specifically:

The fundamental change at the supply side is that the blue sea becomes the red sea.

Under the background of rapid diffusion of customization technology, downward trend of industry learning curve and lower entry threshold, real estate, home furnishings, finished furniture, bathroom, ceramics and other industries have expanded product lines, business lines or set up subsidiary layout customization furniture business. At the same time, customized household enterprises have been listed centrally in recent years, with centralized release of production capacity and intensified competition.

The fundamental changes on the demand side are “consumption upgrading, stratification”, “real estate slowdown + hardcover housing policy”.

After ten years of rapid growth, the core demands of consumers have been upgraded from functional satisfaction to multi-level, high-level and comprehensive value-oriented needs, such as time-saving, heart-saving, labor-saving, tasteful and so on. At the same time, with the climax of China’s real estate construction (commercial housing sales area growth rate from 24.3% in 2016, 7.9% in 2017, reduced to 1.4% in 2018), coupled with the acceleration of the policy of hardcover housing (in May 2017, the 13th Five-Year Plan of Construction Industry of the Ministry of Housing and Construction pointed out that by 2020, the newly constructed and fully decorated finished residential area will reach 30%, the traditional “incremental market” is turning. To “structured market”.

Customized Home Transition

The arrival of “Silver Age” not only means that the growth rate of customization industry will be difficult to maintain more than 20% growth, but also represents that the advantages of traditional business model of customization enterprises are collapsing and the traditional growth model is ineffective. Furniture enterprises can win the “Golden Decade”. The key is to share the manufacturing dividend in the context of the rapid growth of real estate. Although customized furniture enterprises are different from traditional finished furniture enterprises in that they provide personalized customization services to meet customers’personalized customization needs through information-driven pull-type supply chain and construct certain modes and technical barriers, this can not hide the fact that in the past decade, most customized furniture enterprises have actually “pull-type” value chain on the surface and “service” oriented reality on the surface. On the “product” orientation, as well as channel-driven horse racing, enclosure-based growth.

When the industrial factors that depend on rapid growth are weakened or even disappeared, the disadvantages of this homogenization and extensive growth mode are exposed: homogenization of products, no viscosity to customers, low-frequency consumption, high drainage costs, no strategic moat, etc.

Three Transformations of Winning Competition in the Second Half

Faced with the Silver Age, customized furniture industry is entering the second half of the competition, which is very different from the first half of the competition, the winner must complete three aspects of transformation:

From homogenization to differentiation.

The competition in the first half was homogeneous. With the help of industrial outlets, customized enterprises should strive for production capacity layout, channel expansion and advertising investment. However, in the second half, customized enterprises should innovate business models according to their own endowments, resources and capabilities, and replace homogeneous competition with differentiation.

Transition from “Product Logic” to “Customer Value Logic”

In the first half, most customization enterprises follow the product logic. Under the product logic, “whole house” means “stuffing more potatoes into sacks” to achieve tying sales. In the second half, enterprises must transform into “customer value” logic. Under the customer value logic, the same is “whole house”, which can become a lifestyle-based solution. Seemingly the same way, but under different logic, the effect is quite different.

From “opportunity” to “ability” driven transformation.

The success of customized enterprises in the first half is not only related to their own efforts, but also benefited from chance opportunities. However, the success of the second half requires the transformation of chance opportunities into inevitable capabilities. For those enterprises that can create core competencies that are difficult to replicate and imitate in the short term for competitors and form their own strategic moat, the capital market must give them a far higher level. Valuation of competitors.

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