The recent home appliance industry is going crazy in the frontline market, with major companies going crazy too! Many distributors are on the verge of going crazy.
By Zhou Jian
Have you heard? Recently, a leading home appliance company in China has issued a tough statement: for businesses that fail to complete their tasks in the first half of the year, without reason or explanation, there will be a complete adjustment and optimization. The company aims to select capable, innovative, and willing businesses to break through together.
Have you heard? Soon, a leading air conditioning company will start a round of price cuts, offering subsidies for new purchases, and other companies in the same camp will quickly follow suit. This year's 618 shopping festival is bound to be a strategic turning point for the air conditioning market. As a result, many small and medium-sized air conditioning manufacturers will face more difficult times.
In recent times, as the market assessment for the first half of 2024 is coming to an end, it affects the semi-annual assessments of many home appliance marketing teams and the market operation pace for many township distributors in the second half of the year. Faced with sluggish market demand and hesitant mainstream consumers, most home appliance companies are feeling very anxious. Not only are they issuing tough statements to marketing teams and channel distributors, but they are also starting to brainstorm on retail prices.
Currently, the main issue in the entire home appliance market is the imbalance between supply and demand: the shipment tasks and targets of many home appliance companies and businesses far exceed the market and user demand. Trying to grab more than their share in a crowded market naturally leads to a series of market contradictions, conflicts, and dilemmas.
Many distributors are feeling helpless because of the channel policy-driven stockpiling that started in February this year, round after round. The shipment tasks of many companies have been pushed onto various commercial channels, leading to historically high inventory levels for many businesses by the end of April. The reason being "one end of the factory steadily pushing shipments, while the other end sees continuously low retail purchasing power from users." For many distributors, sacrificing profits to lower prices is not realistic, as running a loss-making business is not an option. However, while A, B, C, and other businesses refuse to lower prices, waiting for the company to take action, they are being overtaken by a large number of D, E, F, and other businesses who are not playing fair.
The interim result and situation are: the more businesses that fail to make sales, the less support they receive from home appliance companies, such as special price resources and promotional policies. The big channel distributors who dare to engage in price wars and fierce competition end up gaining support from the companies. In the end, a large group of distributors can only endure in a state of helplessness, facing a gradual decline in revenue and shipments, even though they are not running at a loss.
If you don't act, someone else will; if you don't dare to compete, someone else will; if you fear losses, someone else won't. The threshold for selling home appliances has lowered significantly, with many businesses in the sector. For home appliance companies, this situation has conveniently isolated many distributor groups, leading to a process of "survival of the fittest" among channel distributors.
Correspondingly, there are two smaller issues: one is the continuous decline in consumer confidence, which hinders the release of purchasing power and consumption for rejuvenating and upgrading lifestyles, resulting in a stagnation of activating existing home appliances; the other is the sharp decline in the volume of transactions in the closely related real estate industry, affecting the essential demand for home appliances. After multiple factors combine, it further suppresses the demand and desires of many users in the market, leading to the biggest operational crisis and challenge in the Chinese home appliance industry in the past 40 years.
All home appliance manufacturers are well aware that many users have money but are hesitant to spend it in the past two years. The reasons behind this include increased uncertainty due to ongoing global economic turmoil, job and income instability for some individuals, and inner anxiety, ultimately resulting in a situation where most families are holding onto their money instead of making purchases. People are reluctant to upgrade their lives unless their appliances are broken and cannot be repaired, which has hindered the effectiveness of recent "trade-in" policies in the past month.
Another significant issue that cannot be ignored is the unprecedented decline in the volume of real estate transactions associated with the home appliance industry since the beginning of this year. Both new housing transactions and existing housing transactions have decreased significantly. Although the government has introduced three consecutive policies to stimulate the real estate industry at the national level, the actual impact on purchasing behavior still needs to be observed. Furthermore, any rebound or heat in the real estate market transferring to the home appliance industry will take at least six months or more. This implies that the fierce competition and activation of the home appliance retail market will face a period of struggle for at least another six months.
Ultimately, this has directly led to the current frenzy and helplessness in the home appliance market, with a large number of distributors facing operational challenges, contradictions, and a cycle lasting at least six months. Therefore, many home appliance manufacturers are not just preparing to "weather the storm," but to "endure the storm."
Copyright Statement: Original article from the home appliance industry, unauthorized reproduction is strictly prohibited.
Disclaimer: Personal original content, for reference only.
