2021 is nearly halfway through. Looking at the business trends of this year, it is a general trend to build an ecosystem around a certain lifestyle and cross-border industries.

In fact, the home furnishing industry has been playing cross-border with home appliance brands as early as two years ago. Oppein and Panasonic have joined forces to select good products from around the world and customize "Chinese kitchens"; Sogal and Gree Electric have reached a strategic cooperation to launch customized smart home solutions; OLO HOME and Fotile provide customers with more complete whole-house product support harmony one-stop service; Gome Online and Dongyi Risheng cooperate to launch an online home improvement e-commerce platform "Gome Home"; Suning and Hanssem Group released the "24-hour rejuvenation plan" and set up an offline experience store...

Data: Category convergence drives performance growth

From the financial report for the first quarter of 2021, it can be found that several companies have performed well. The revenue growth rates of Oppein and Sogal are 130.74% and 130.59% respectively. In terms of net profit growth rate, Oppein is as high as 340.02%. Also realized a turnaround. Among them, the contribution of the home appliance category should not be underestimated.

As a common category with strong connections, various home furnishing companies have been pushing the purchase and sales of home appliances in the past two years. In addition to strong alliances such as Sogal & Gree, OLO Furniture & Fotile, which vigorously promoted the cross-banding of the brands of the two sides, Oppein, GOLDENHOME, OLO Furniture, ZBOM, Piano and other cabinet parties have also adopted changes the scope of business, the release of new products, new investment and other methods, more or less to enter electrical appliances, water purifiers, kitchen and bathroom related products, making the two trillion industries of home appliances enter a new round of "hot integration" period.

Some surveys also show that the products used in the kitchen are highly relevant and consumers’ brand awareness is also relatively strong. 70% of households have a tendency to buy integrated brands, such as cabinets, gas stoves, range hoods, microwave ovens, dishwashers, water heaters, and disinfection cabinets are all purchased from one brand.

“Integrated kitchens that integrate cabinets and electrical appliances have long been popular in developed countries and have become an important part of home improvement. The household ownership rate is close to 100%. However, the overall kitchen ownership rate of urban households in my country is only about 1%. This shows that despite the head enterprises are already moving first, but the market potential of the overall kitchen is still huge." Industry insiders said.

Interpretation: the multi-factor drive behind home crossover

Not only the integration of kitchen and electricity, the tentacles of home furnishing companies have almost extended to every corner of the whole house space. For example, Oppein cabinets, wardrobes, wooden doors, and sanitary wares work together to create a "unbounded" path from large home furnishings to complete furnishings.

However, this "no cross-border, no home" industry situation may just be the beginning.

One is that changes in consumer groups have led to an increase in the demand for cross-border integration. As the generations born in the 80s and 90s become the main consumers, they have higher requirements for aesthetics, household taste, and convenience of purchase. And the whole-house home of the whole category and style can match their needs in home appearance and design. In addition, the time-saving, labor-saving, and economical one-stop whole-house customization solution has also precisely hit the pain points of young consumers in the fast-paced life.

The second is the endogenous demand of enterprises to increase the customer unit price and expand the volume. The whole house space not only includes customized home furnishings, but also non-customized products such as tiles, floors, ceilings, and bathrooms. It is actually an upgrade and extension of the concept of "whole house customization". In the same store scene, whoever can meet customer needs with high efficiency, high quality and high reputation can get larger orders. A whole-house customization order that includes home appliances must be much larger than the amount of customizing a wardrobe or cabinet alone, and the profit is naturally much higher. This is an impulse opportunity that any home furnishing company does not want to miss.

The third is the gathering effect brought about by the strong alliance. Whether Sogal joins Gree, or Oppein joins with Panasonic, there is a strong alliance. The stronger the industry brand, the better it can be integrated into high-quality strategic partners. The result is that the strong are always strong, large companies, and big brands. In this way, it will further squeeze the living space of small businesses and home furnishing companies without brand advantages, trigger the survival of the fittest in the industry, and promote brand concentration in the home furnishing industry further improve.

Driven by the above factors, it is very likely that more categories will be deeply integrated and share market shares in the future.

Calm thinking: Only with core advantages can we have the right to speak in the ecosystem

The concept of whole house space is becoming more and more widespread, and cross-border integration has become an inevitable trend. However, for any company, multi-category expansion is a double-edged sword, and it needs to keep a cool head in the cross-border boom.

On the one hand, with the gradual expansion of the packaged market, the original single-category store model will be gradually eliminated, replaced by multi-category integrated management. If you don’t change your mind as soon as possible and make an active layout, you will soon be marginalized.

On the other hand, the channels, supply chain, marketing, and after-sales service of each sub-industry have different models. Brand companies that can stand out in this industry have been deeply cultivated in this field for more than ten years or even decades and have created its own commercial barriers. If a layman enters across borders rashly, it is easy to fall into a trap and even bring down the original main business.

Therefore, it is particularly important to expand what kind of category. While expanding the category, how to continue to exert strength in one's own strong subdivisions, highlight one's own advantages and traditions in brand strategy, and maintain one's core competitiveness in the industry is also the way. The stronger the segmented areas, the more powerful brands that can be integrated into other areas. If in the continuous category expansion, the more you lose or obscure your own subdivision advantages, you will lose your right to speak in the home ecosystem.

Whether it is the “deep integration” of home appliances or the pan-integration under the concept of whole-house space, the expansion of categories is to seize more market share and achieve profit growth, and focusing and strengthening a certain segmentation direction will help further establish the brand differentiated competitive advantages, gain the initiative and bargaining power for resource integration in the industry.