At AWE 2024 in March, the Ray Technology Reporting Team witnessed the birth of many innovative kitchen appliances, with manufacturers upgrading and transforming their product lines to varying degrees around the themes of "intelligence" and "scenario-based usage".
However, despite the manufacturers' focus on iteration in both large and small appliances, the market feedback for the two was starkly different. Compared to the slight overall growth in the domestic large appliance market in 2023, the performance of the shrinking kitchen small appliance market appeared somewhat weak.
Data from AVC (All Channel Total Sales Promotion) in 2023 showed a shrinking trend in the domestic kitchen small appliance market, with the overall retail sales amounting to 54.93 billion CNY, a year-on-year decrease of 9.6%; and retail volume of 265.43 million units, a year-on-year decrease of 1.8%. AVC estimates that in 2024, the Chinese kitchen small appliance market will continue to decline, with retail sales amounting to 50 billion CNY, a decrease of 2.1% year-on-year.
Against the backdrop of three years of the "stay-at-home economy", the rapid development of new channels such as retail e-commerce and live streaming e-commerce has helped the kitchen appliance industry achieve rapid expansion. Categories such as electric ovens, food processors, blenders, air fryers, and coffee machines have benefited from industry dividends and become well-known small appliance hot sellers.
However, even the hottest market ultimately returns to rationality. With the slowing down of new purchases, updates, and penetration of kitchen small appliance products, the market is gradually becoming saturated, and consumers' consumption concepts have also changed. "Differential treatment" and rational decision-making are the two main characteristics when consumers choose small appliance products.
Source: Xiao Bear Appliances
The concept of "differential treatment" manifests in consumers' attitudes toward essential and non-essential product categories. For core essentials like rice cookers and induction cookers, consumers prioritize product quality and are willing to allocate a higher budget for high-quality products. In contrast, for non-essential products like juicers and blenders, consumers value product cost-effectiveness, fearing that after the novelty wears off, the product will become a dust collector.
Understanding rational decision-making becomes easier in this context. After experiencing rapid development, the small kitchen appliance industry has reached a saturation point, leading to inevitable competition among brands in a limited market space. This abundance of choices prompts consumers to compare options before making informed purchases, which is the best approach.
Given the cooling of the market and changing consumer perceptions, the kitchen appliance industry is widely predicted to further decline in 2024. Faced with this situation, players in the small appliance industry are seeking ways to break through using their own methods.
As the overall market for kitchen small appliances shrinks and the industry landscape shifts, brands naturally seek survival strategies. They are exploring various avenues to seize both existing and potential market shares.
Channels: Grasping both online and offline, seeking growth overseas
In the past, kitchen appliance brands primarily relied on traditional e-commerce platforms and offline channels for sales. With the rise of mobile internet, platforms like Douyin, Kuaishou, Xiaohongshu, and Pinduoduo have also become crucial sales channels for kitchen small appliances.
Source: Lei Technology
From the channel competition during Double 11 in 2023, the sales channels in the kitchen small appliance industry have shown a diversified characteristic, with the importance of a single channel declining. Traditional channels like offline department stores are experiencing a revival. Despite the fact that according to AVC's 2023 total channel promotion data, the offline sales proportion of kitchen small appliance products remained at 23% in 2023, compared to the invisible and intangible online channels, consumers' demand for offline physical stores experience has always existed.
For brands operating kitchen small appliance products, the layout of each channel is crucial, especially emerging channels like content e-commerce, which have gradually become important directions for consumer migration. In 2024, multi-channel layout is particularly important for brands to maintain their market share in the existing market.
Not only the domestic market, but the overseas market has always been an important sales channel for home appliance brands. According to data from the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, the export volume of kitchen small appliances increased by 14.3% year-on-year in 2023. According to GfK data, global (excluding North America) small appliance sales increased by 1.2% year-on-year in 2023.
The overall overseas market is improving, and the proportion of overseas business for home appliance brands is gradually increasing. Taking Bear Electric as an example, as a "creative small home appliance + internet" company, Bear Electric mainly goes overseas with its own brand. In 2021, Bear Electric entered Lazada, the largest e-commerce platform in Southeast Asia at that time. According to the company's annual report, the overseas business revenue in 2022 was 180 million CNY, accounting for 4.36% of the total revenue, and the offline channel revenue proportion was 14.6%. In 2023, the overseas business made further breakthroughs, with foreign sales revenue increasing by 105.66% year-on-year.
Similarly, Joyoung, which is also deeply cultivating small home appliance products, officially established its overseas department in 2008. The annual report shows that the overseas business income of Joyoung in 2023 was 2.239 billion CNY, accounting for 23.29% of the operating income, with a revenue growth of 68.79% compared to the same period of the previous year.
Source: Joyoung
For home appliance brands, venturing into the seas is not just about expanding sales channels but also a great way to seek market breakthroughs. Overseas market expansion doesn't solely rely on solo efforts of proprietary brands; the strategy of multi-brand operation and localization is believed to be a crucial direction for tapping into emerging markets. In 2024, kitchen small appliance brands will continue this comprehensive approach to seek breakthroughs in channels.
Scenario: Identifying demand, discovering demand, expanding demand
Apart from widening sales channels, exploring new scenarios for short-term hot demands is another ace up the sleeve for domestic small appliance brands to cope with industry cyclical adjustments.
In 2022, camping economy emerged as a new "hotspot" in cultural and tourism consumption. Though this trend cooled down midway, it surged again in 2023, igniting a new wave of camping fever. Data from iMedia Research shows that in 2022, China's camping economy core market reached 113.47 billion CNY, with a year-on-year growth of 51.8%; driving the market to a scale of 581.61 billion CNY, with a year-on-year growth rate of 52.6%. It is estimated that by 2025, China's camping economy core market will rise to 248.32 billion CNY, driving the market to reach 1.44028 trillion CNY.
Source: Veer.com
Driven by the camping economy, demand for low-cost portable products in small home appliances continues to rise. Outdoor camping fans, mosquito repellent night lights, portable juicers, sandwich makers, and other products have become the preferred choices for many campers. According to online monitoring data from AVC (All View Cloud), handheld fans saw a year-on-year increase in sales of 125.5% in 2023. This is just a glimpse of the many outdoor small home appliances, and it is believed that brands will launch more portable products related to outdoor camping this year.
Not only in outdoor camping, but small home appliance products also have good growth potential in other areas. At the annual China market conference this year, home appliance brand Gree revealed plans to deepen its presence in scenarios such as electric cars, RVs, trucks, and high-speed trains, launching products tailored for vehicle scenarios, such as in-car microwaves. On the other hand, targeting office buildings, schools, airports, and other scenarios, there will be iterations of commercial-grade pre-made meal microwaves.
Source: Xiao Bear Appliances
Innovation: Building Core Competitiveness with Technology
Ultimately, to maintain and even surpass its current market share in the small home appliance industry, a brand relies on technological innovation and product strength. Overall, some companies in the small home appliance industry still lack independent innovation capabilities, producing products highly homogenized with others on the market. There's a significant gap in R&D capabilities between different companies, especially in high-end products.
Xiao Bear Appliances is a prime example. As a leading domestic kitchen appliance company, Xiao Bear Appliances introduced the concept of digital kitchen appliances in 2022 and launched the world's first AI cooking assistant—Mr. ROKI. Unlike traditional smart kitchen appliances, this innovation combines artificial intelligence with kitchen appliance products, providing users with a smarter cooking experience.
Moreover, the i7 series of digital kitchen appliances introduced by Xiao Bear Appliances tightly integrates numerous kitchen appliances, forming an interconnected network that creates new kitchen appliance scenarios through mutual cooperation between devices.
Source: Boss Appliances
Compared to traditional household appliances, small household appliances iterate at a faster pace, with users having more complex and variable demands for product appearance and functionality. They exhibit strong trends and variability. Therefore, brands operating in small household appliance products face higher requirements. Fundamental to a brand's long-term development in the small household appliance industry is the enhancement of product competitiveness through technological innovation, creating differentiation advantages relative to competitors.
Despite the less-than-ideal industry environment, some outstanding enterprises manage to break through. Recently, Bear Electric Appliances and Supor released their performance reports for 2023. The annual reports show that in 2023, Bear Electric Appliances saw a year-on-year increase of 14.43% in operating income, reaching 4.712 billion CNY, with a net profit increase of 15.24%. Supor's operating income in 2023 increased by 5.62% year-on-year to 21.304 billion CNY, with a net profit increase of 5.42%.
In the increasingly competitive domestic small household appliance market, product homogenization has become the norm. Faced with the growing personalized demands of consumers, Bear Electric Appliances actively develops emerging categories of small household appliances such as electric hot pots, noodle makers, and electric cookers favored by young people, aiming to meet the personalized needs of more young consumers.
Source: Xiaobear Appliances
In addition, Xiaobear Appliances continues to expand its mass categories. According to official data, Xiaobear Appliances currently has over 80 product categories and more than 900 models, covering different scenarios in the lives and work of infants, young people, and middle-aged and elderly people. The benefit of this approach is to reduce the risk of setbacks in individual categories affecting the overall business, while strengthening category diversification, providing consumers with more choices.
According to Lei Technology, vigorously expanding emerging categories and continuously creating personalized small home appliance products are key factors for Xiaobear Appliances to achieve counter-growth.
Similarly, Supor, which is also experiencing counter-growth, further consolidates its leading position in core essential categories such as electric rice cookers and electric pressure cookers in the kitchen small home appliance business. Since its launch, the core product, the far-infrared electric rice cooker, has accumulated sales of over a million units. However, Supor is evidently not satisfied with the performance of its advantageous categories. Last year, Supor accelerated the layout of product lines such as small capacity, multi-function, and outdoor products, while also launching other categories such as portable coffee machines and smart frying machines.
Source: SUPOR
From a specific business perspective, SUPOR's revenues from cooking appliances, food processing appliances, and other household appliances all experienced positive growth. Among them, the category with the highest revenue growth is food processing appliances, which increased by 12.87% year-on-year. It can be seen that these categories of SUPOR still maintain a certain advantage in the industry.
In fact, SUPOR's domestic sales revenue only increased by 0.88% year-on-year in 2023, while the export revenue, which grew by 19.28% year-on-year, was the biggest contributor to SUPOR's counter-trend growth. Through a strong partnership with the SEB Group, SUPOR secures stable export orders annually, and at the same time, the broad overseas market offers more market opportunities than the domestic market. When the domestic market stagnates, the overseas market continues to provide SUPOR with stable growth in export revenue.
Compared to the performance of Bear Electric and SUPOR, Joyoung appears much more low-key. In fact, Joyoung also made efforts last year to expand into kitchen small appliances and other segmented categories, among which the "Space Technology Series" with a focus on space technology left a deep impression on the industry.
Source: Jiuyang
At AWE 2024, Jiuyang unveiled its second-generation non-stick rice cooker N1S with 0 coating and the water purifier Space Thermal Purifier R5, featuring innovations such as water moisturizing film replacing chemical coatings and antibacterial technology using zinc oxide crystals, all aimed at promoting user health with cutting-edge technology.
As proven, as long as home appliance brands keep up with innovation and product strength and focus on meeting consumer demands and tapping into niche markets, they can achieve commendable results.
As mentioned earlier by Xiao Lei, regardless of how the overall environment may influence, there will always be standout performers. In 2023, despite the adjustment cycle in the small kitchen appliance sector, there were more brands achieving growth against the trend than just the few mentioned above. Xiao Lei believes that in 2024, many brands will achieve growth by expanding scenarios, increasing channels, and innovating products.
