On one side, there's fire, and on the other, there's seawater; on one side, there's the hustle and bustle of selling goods every day, while on the other, there's a grim-faced struggle with no business. After entering 2024, the household appliance industry has observed a significant polarization in the business of many dealers in the first-tier markets, with a phenomenon akin to "acceleration": the good ones have no trouble selling, while the bad ones suffer greatly. Of course, there's a general trend of declining profits.
Here, within dealer companies, from bosses to employees, it's a daily hustle, either selling goods or hustling on the road to sell goods. Many business owners are still busy selling in group chats at night. Although the fact of declining profits is undeniable, the goods are selling quite well, with basically no inventory pressure. It's expected that payments will continue to be made and goods delivered until April.
On the other hand, the boss stays in the shop every day, and even though the salespeople are busy promoting and contacting friends and relatives to sell, the business just isn't picking up. Even if someone comes in to inquire about prices, it's difficult to seal the deal. The goods ordered and delivered in February have not been fully sold, and there's no answer or idea about what to do next in April.
This year, focusing on the business of many dealers in the first-tier household appliance market in offline stores, the industry has noticed a strange phenomenon: facing the same market and users, there are radically different business situations. One type is doing reasonably well; although profits are low, the goods are still moving, and there's a consistent demand from users. The other type struggles with sluggish sales, even with constant price reductions. They can't seem to find where the users are and how to meet their demands.
Based on feedback from multiple dealer groups, during the traditional peak sales period of home appliances like refrigerators during the Chinese New Year in February, demand was low, and other categories of home appliances also performed poorly, especially TV sales. Sales showed some improvement in March compared to February, but with a trend towards lower-priced consumption and fewer new home renovations. However, there's good news in the increase in the "trade-in for new" user group due to industry subsidy policies.
Faced with external economic, market, and consumption environments, all home appliance manufacturers are unable to change. The only thing that can change is the business ability, methods, and means of home appliance dealers. This year, many home appliance dealerships in the first-tier market have experienced severe "polarization" in their operations. The reason is simple: the group of home appliance dealers is accelerating differentiation and shuffling, ultimately forcing a large number of dealers to bow out of this year's market competition.
Business logic remains unchanged; only time is delayed. It's an indisputable fact that in the home appliance market, whether it's home appliance brands or dealer groups, there's a situation of "supply exceeding demand." Honestly speaking, the only way out in the future is: either keep up or fall behind, and even if you're slow, you still have to retreat.
However, the home appliance industry has found that many dealer groups are facing the impending "market reshuffle and business closures" situation, which has been going on for over a decade.
Many years ago, many home appliance companies warned that the dealer group would be reshuffled, and at least half of the businesses would be eliminated. However, with the rise of e-commerce platforms and the activity in the sinking market, many weak dealers found a new development opportunity through "hitching to a big brand."
In recent years, the group of dealers selling home appliances has rapidly diversified, with a large number of asset-heavy dealerships in both online and offline stores, as well as a large number of "light asset" micro-businesses with "a mobile phone and a dozen WeChat groups," and even individuals. The commercial group selling home appliances has doubled in just three years.
As a result, starting this year with a new round of adjustments in the home appliance market, the most critical challenge is the sluggish demand from users, the high threshold of competition in the trade-in market, and the intense price competition among different businesses. This brings a challenge to all dealer groups in the first-tier market: "the strong win, and the weak exit," as the fast fish eat the slow fish.
The decline in business for some home appliance dealers in February and March is not a random occurrence but an inevitable trend. It is believed that in the coming second and third quarters, the business of some dealers will only continue to deteriorate, rather than improve or rebound due to changes in the market.
The invisible threshold is getting higher, and dealers need more than just daring to compete.
In recent years, in the home appliance retail market, the number of people who seem to be "selling appliances, and those who can sell appliances" has increased. In fact, the number of businesses that can steadily and fiercely sell home appliances in the first-tier market is decreasing.
The reason is simple: the invisible threshold for retailing home appliances is steadily rising and showing a trend of "boiling frogs in warm water." In the eyes of the home appliance industry, many businesses face two invisible thresholds:
Firstly, from major home appliance manufacturers, the assessment thresholds and requirements for authorized dealers are increasing, and market management is becoming tighter. Monthly assessments that "follow the rhythm" are generally adopted, with real-time assessments, and failure to meet standards may lead to expulsion from groups or circles, etc., raising the threshold for merchants to purchase goods. Although many non-branded and platform authorized dealers can smuggle goods through third-party platforms, the stability of supply and the poor selection of sources make it difficult to ensure stable and sustainable market operations. For example, platforms like JD.com, Tmall, as well as enterprises like Haier, Midea, Hisense, Gree, etc., will prioritize resources and support for their own channel merchants.
Secondly, major users are demanding higher standards for home appliance products, not only chasing big brands but also seeking good products at low prices with good service. As a result, many small and medium-sized enterprises' miscellaneous discount machines, although the supply is continuous, do not perform well at the terminal. Many dealers' hot-selling goods are hard to obtain, and the unsalable goods are also difficult to take in, resulting in weak market operations and competition. Simply put, what dealers are competing for now is not just price but also service, brand, product, responsiveness, and aggressiveness.
It can be said that in the upcoming business environment of the home appliance market, for all dealers, the requirement is to dare to compete fiercely. However, the reality pressure lies in how to seize the market without stable sources of goods, continuous service, and support from manufacturer resources, which is a difficult problem. Copyright Notice: Original articles from Home Appliances Circle are strictly prohibited from being reproduced without authorization. Disclaimer: Personal original content provided for reference only.
