"Prosperity without growth" | 2021 China home appliance market sales summary and 2022 market outlook

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Can prosperity be achieved without growth or low growth? Economist Tim Jackson argues that for many countries, regions and cities, this is not only possible, but the only option. Because the energy and environmental carrying capacity of the earth is limited.

We will eventually face no growth/low growth in the market, so can China's home appliance market also create a "boom without growth"?

【Review 2021: The market has entered a "no growth" cycle】

On the other hand, the current Chinese home appliance market, under the superposition of many factors such as the exhaustion of real estate dividends, the approaching bottleneck of penetration, low-frequency consumption and weak cyclical attributes, and the weakening of residents' willingness to consume, has also entered the era of "no growth". In 2021, although the external environment of the market has eased compared with 2020, it is still bad, the cost pressure caused by the rise in raw material prices is high, the uncertainty of regional development caused by the scattered outbreak of the epidemic, and the insufficient release of demand caused by insufficient consumer confidence, as of November 2021, the cumulative retail sales of China's home appliance market will be 702.2 billion yuan, a year-on-year increase of 4.9%. However, if compared with the same period in 2019, it is still down 7.4 percentage points.

The development of market categories is still unbalanced, and the growth of mature home appliances is sluggish, but emerging categories still maintain a high degree of prosperity. In view of the high saturation of the market demand for the living room scene, the kitchen scene with many categories and still in the growth period is the most eye-catching. The growth rate of overseas export business has slowed down after the middle of the year, but it still maintains growth.

【Looking ahead to 2022: "Prosperity without growth"】

Looking ahead to 2022, a stable and sustained economic recovery is a foregone conclusion, but the consumer side is expected to continue to be under pressure. The cost pressure of household appliances is expected to improve, which is good for both the production side and the demand side. However, for the shipping price of household appliances with a high degree of concern, there is still no sign of loosening at present. It is estimated that in 2021, the scale of China's home appliance retail market will reach 762.2 billion yuan, a year-on-year increase of 4.1%. The market size in 2022 will be 779.5 billion yuan, a year-on-year increase of 1.6%.

In this case, how can we, as home appliance practitioners, seek growth from the "no growth" market? In other words, how do we create "prosperity without growth"?

First of all, we need to be sure that China's market, with a population of 1.4 billion and 490 million households, is still the largest market in the world with consumption potential. Secondly, the consumer demand for household appliances in the market is still there, but it is unevenly distributed in structure. That being the case, this requires us to identify the areas with the highest concentration of demand and the greatest development potential in the market. The competition for market share is always a "zero-sum" game, but the growth rate of the market is not! If you find a potential market that is in line with the trend, you may find your own development growth rate.

The market is always rewarding those who are "first-handed", those who are "forward-looking", and those who are "good at understanding users", forming alliances with users, innovating products around the specific needs of different user circles, giving resources new capabilities to create wealth, and reshaping the marketing and sales processes according to the needs of users.

Growth to the high-end: China's vision for 2035 is to reach the level of moderately developed countries in terms of per capita GDP of Chinese, which means that per capita GDP needs to reach about 23,000 US dollars, and the number of China's middle class may double. If the future is bound to happen, then let's get into that future first. High-end is the "future" that is happening; In addition, almost all the low-end demand in the current home appliance market has been transferred online, and the high-end demand is being fully deployed and blossomed in all channels. High-end is also an unavoidable "future".

To the scene set to grow: home appliance sales are entering the scene, and the set of home appliances products play a key role in it. In developed countries in Europe and the United States, more than 30% of families choose to buy home appliances as a set. Although the domestic market has just started, its market share has grown very rapidly. From the perspective of enterprises, packaged products can increase the overall customer unit value, avoid consumer outflow, and help the drainage between strong and weak categories. From the consumer's point of view, it helps the coordination and unification of home appliances and home decoration styles, and is more convenient and labor-saving in terms of delivery and after-sales compared with single products, and can also enjoy overall packaging discounts in terms of price.

Amplify the brand resonance effect and create a complementary brand matrix. The market is changing, and the needs of users are changing. From the moment some companies, especially the leading enterprises, take the first step into the full-category competition, it seems that they have been doomed to the fate of multi-brand operation. Under normal circumstances, the market positioning and brand power of a single brand often cannot cover people with different incomes, ages and preferences, and at the same time, the differentiated marketing strategy of the enterprise cannot be maximized. In addition, if a brand has been operating in a certain field for a long time, it will also be branded as a specific category in the psychology of consumers, so the continuous use of the brand to participate in the competition of other categories is not conducive to the further expansion of the market. Therefore, we see that many brands take the initiative to cut their own cakes, create different sub-brands for different market segments, and participate in market competition through the construction of brand matrix. And it turns out that only by cutting the cake can the cake be made bigger. However, special attention should be paid to the fact that since it is a brand built for different user groups and market segments, there should be a good distinction between each brand, including but not limited to product segmentation, price positioning segmentation, marketing method segmentation, and organizational differentiation of the operation team.

Using the high frequency band and low frequency, we can drain each other between products and seek growth in the movement of the structure.

Re-examining the rhythm, with the normalization of promotions, the importance of sales in the year has also weakened, and with it, the importance of enterprises to flat peak promotions needs to be further improved. Of course, we are not rendering the big promotion node as unimportant, and its scale is still an existence that no enterprise can take lightly. We just emphasize that especially some high-end products, should actively promote the cultivation of brand awareness and product positioning awareness at the peak time, and through activities and promotions during the big promotion node, improve users' perception of the price reduction amount and break through sales.

The biggest difference between the new retail traffic thinking and the traditional traffic thinking is that it transforms "people looking for goods" into "goods looking for people". So how can goods find people? Judging from the current situation, enterprises have a good eye for the sales of e-commerce transaction platforms, but the construction of traffic positions on content platforms is still insufficient; However, the fact is that after sharing, fission, and users are educated on the content platform, they go directly to the transaction platform to place orders silently. Therefore, we should strengthen the creation of content platforms and build our own traffic pools.

Redefine the sinking market: the rotation of the giant wheel of internal circulation will promote the growth of new consumer demand on the one hand, and help the upgrading of original consumption on the other hand. The above two aspects are promising in the sinking market, especially driven by e-commerce consumption. Although the sinking market has been deeply cultivated by major platforms, the growth momentum of consumption is still full, and far-reaching changes have taken place. However, at present, the company's understanding of the sinking market is still insufficient, which is mainly reflected in the inherent thinking of the enterprise sinking is the low-end, and the enterprise only gives low-end products, and the high-end does not give policies. However, the fact is that the shopkeepers of the sinking channel have the willingness to sell the mid-to-high-end, but lack support.

Pan-home industry integration: The home improvement market will bring a huge space of 3 trillion yuan, and the integration of home appliances and home appliances is reconstructing the consumption link of home appliances. In the past, when we mentioned pre-installation, we would suggest that everyone go forward to intercept the flow and put the store in front of it, seize user contact points, and open up various cooperation opportunities. And today, in addition to this, we would like to highlight the huge need for retrofits/retrofits. In fact, many purchase needs, such as smart toilets, will be released when the user decorates or partially decorates, so how to reduce the user's worries about the complex process of modification through the service, truly simply keep a customer, leave the complexity to yourself, and release the user's update needs, testing the service and marketing capabilities of the enterprise.

Finally, I also hope that we will continue to broaden the business boundaries according to their own strength or spare strength, in the medium term, the export of household appliances is still one of the main business logic in the next few years, and the building of independent brands in overseas markets will become the key strategic layout of a large number of enterprises. In other words, if the market is a battle within the walls, then there is only the blood and cruelty brought by "limited competition", and if the market is an arena that breaks through boundaries, then it becomes an "infinite game".

May you grasp the market trends and create prosperity in an era of no growth, and may you be calm and calm and meet your own times.