On December 27, the slate industry development strategy summit and the 2nd "Golden Rock Award" award ceremony with the theme of "One Rock and Nine Tripods" were held under the guidance of Foshan Ceramic Society and hosted and undertaken by China Ceramics Network. The Ceramic Theater of China Ceramics Headquarters in Nanzhuang, Foshan was grandly held. At the scene, strategic marketing expert Han Fengzuo, known as the "living marketing fossil" in the field of home building materials, gave a wonderful speech titled "Looking at the future life and death of rock slab customization from the perspective of the whole house customization industry."
The following content is a transcript of Han Feng’s speech (not verified by myself):
Han Feng, founder of Guiren Xiuzhu Strategic Marketing Consulting
The annual market size of the whole house customization industry is about 400-600 billion. I have noticed that several slate brands have begun to do high-end customization and complete slate customization. Slate has crossed over into the custom home furnishing industry. What will the future look like? Today I am sharing my views from the perspective of a senior practitioner in the custom home furnishing industry, hoping to give you some inspiration and help.
01
The development history of China’s customized home furnishing industry
In 2000, China’s customized home furnishing industry was dominated by wardrobes, and around 2014-2015 it became whole-house customization. The so-called whole-house customization refers to the cabinets on the walls of the whole house, from the shoe cabinets at the entrance, entrance cabinets, sideboards, bookcases, wine cabinets, wardrobes, to coffee tables, sofas and other finished furniture. The next stage is wardrobe + customized furniture + household products + doors and walls + soft furnishings. In 2021, Sofia proposed a new concept - whole-home customization. The so-called whole-home customization is wardrobe + cabinet + wooden door + wall panel + furniture + floor + electrical appliances. It is a one-stop solution, just bring your bags. The ultimate stage of whole house customization is whole house customization + basic decoration, which requires paving and construction. From the era of single products to complete decoration, this is the development history of the whole house customization industry.
Discussing whether cross-border customization of rock slabs is possibleBefore answering this question, we must first understand the market structure of China's customized home furnishing industry.
Before 2017, it was the first half of China’s customized home furnishing industry. Oppein, as we know it, started making cabinets in 1994, and it has been 27 years now. The current market value is about 100 billion; Sophia has a market value of 10 billion; Shangpin Home Delivery It's about 6 to 7 billion. From Oppein in 1994 to Sofia Wardrobe in 2003, the industry developed for more than ten years, and in 2017 a landmark event occurred. In 2017, eight companies in the customized home furnishing industry were listed together. This was the most glorious moment for China's customized home furnishing industry.
Then the industry entered an inflection point, and China's customized home furnishing industry entered the second half. A very iconic event in the second half was the "Formaldehyde-Free War" that started during the epidemic last year.
The core of the customized home furnishing industry is boards, which account for 80% and other materials only 20 to 30%. Formaldehyde-free means that formaldehyde is not added to the board during the production process. In 2020, almost all first-line brands have participated in the "formaldehyde-free war", including Oppein. We know that the ceramic tile industry has negative ion ceramic tiles that can release negative ions, and now the boards made by Oppein have become aldehyde-free, antibacterial, odor-free, mildew-proof and other functions, and the price is very low.
02
The market structure of China’s customized home furnishing industry in the next ten years
Based on the Chinese home appliance industry in the past ten years, we can conclude that the market pattern of China's customized home furnishing industry in the next ten years is "under the big tree, a hundred flowers bloom." Popular customization first-line brands are represented by Oppein, Sofia, and Shangpin Home Delivery. These brands will exceed RMB 100 billion in the next ten years; while rock slabs, stainless steel, balconies, etc. will evolve into segmented customization brands. In the next ten years, with the upgrading of consumption, the size of China's high-end market will increase. The large high-end market can reach a scale of 2 to 3 billion, and the small one can reach hundreds of millions.
After rock slab companies enter the field of rock slab customization, the future ecology of China’s customized home furnishing industry will be the “African Savannah Ecology”. In the future, the customized home furnishing industry will not be dominated by one company. It must be a diversified market structure.bureau. "Lion" refers to leading brands represented by Oppein, Sofia, and Shangpin Home Delivery; "Buffalo" refers to second-tier brands, with a volume between 5 billion and 10 billion; "Antelope" represents third-tier brands, which only It is deeply rooted in the local area and responds very quickly to after-sales service. It is a regional customized brand; "Giraffe" refers to a high-end brand that targets high-net-worth individuals at the top of the market; in addition, there are also "Giraffe" companies with a volume of less than 100 million. Hyena", these brands can rely on their own advantages to survive locally.
03
The core competitiveness of customized homes has never been materials
If stone slab companies want to cross over into the customized home furnishing industry, they must first know what the core competitiveness of the industry is. The core competitiveness of a brand refers to something that others cannot take away or learn. Even if I tell you in black and white, you still can't learn it. This can be called core competitiveness.
First of all, refer to the analysis of their core competitiveness in the annual reports of six listed companies, Oppein, Sophia, Shangpin Home Delivery, Holike, Zhibang, and Gold Medal (marked yellow and green in the picture below). What is the core competitiveness of customized home furnishing companies? In addition to the so-called brands, channels, and products, all listed companies mentioned "informatization", "automation" and "flexible manufacturing" (marked yellow and green in the picture below). The customized home furnishing industry was the first to introduce information industry 4.0 and smart factories. For example, Sofia's current factory is a "black light factory". The lights are black and there are no workers in the factory.
Back to the slate industry, slate can now be made 3mm or even thinner, and it can be used for cabinets and decorative panels. However, judging from the nature of the customized home furnishing industry, its core competitiveness has never been materials, but large-scale flexible manufacturing capabilities based on Internet informatization. This is also the case for China's customized home furnishings represented by Oppein, Sophia, and Shangpin Home Delivery. The fundamental reason why enterprises can rise. The key is that this kind of experience is not formed in a day or two, and it cannot be achieved with money.
Many slate companies want to enter the customized home furnishing market. As an industry practitioner and observer, I have seen many R&D brands transform cabinets and door panels intoAll are made into rock slabs, which is called full rock customization. This is technically possible, but will consumers pay for it? This is a big question mark.
04
Why do many companies fail to do cross-border customization?
In fact, there have been many cases of cross-border customization of home materials other than boards. Since 2010, many flooring, tile, sanitary ware, and even plumbing companies have tried to cross-border. Lesso invested 200 million yuan in 2013 to enter the customized home furnishing industry. In the end, it did not understand it. After losing money, it no longer does so. .
I summarized four reasons for the failure of the cross-border customized home furnishing industry: too impatient, too long hands, too weak kidneys, and too weak legs.
First, be too impatient. The custom home furnishing industry seems very simple. Isn’t it just stacking a few boards and turning them into cabinets? wrong! Why do so many cross-industry investors in the custom home furnishing industry fail no matter how much money they invest? Just because you don’t have awe for the industry and don’t respect the laws of the industry, you will definitely suffer. The customization industry is an industry with low capital and high ability threshold, and has high requirements for bosses and employees. In the customization industry, slow is fast. When the basic skills of brand, product, and production and manufacturing have not been firmly established, seeking speed is not enough. This is the first reason why many cross-border brands fail.
Second, the hands are too long. To give an example, everyone knows Haier. Haier's most famous categories are refrigerators, washing machines and air conditioners. Its market share is the first in the industry. In 2003, Haier also produced TV series, mobile phones, and laptops, which are still available today. But have you ever bought a Haier mobile phone? Have you ever bought a Haier TV? Have you ever bought a Haier computer? No. A brand must represent a core category, and it cannot represent both ceramic tiles and bathroom ware. In fact, Oppein also makes sanitary ware, but Oppein has been in the business for nearly 20 years, and its current output value is only 600 million. In terms of market perception, Oppein is equivalent to cabinets and wardrobes, and whole-house customization. It cannot be equivalent to bathroom products. No matter how good its bathroom products are, it cannot be Oppein. This means stretching your hand too far.
Third, the kidneys are too weak. The development of the tile and sanitary ware industry in the first ten years was extensive. Manufacturers transferred inventory to dealers, and dealers sold the inventory to consumers, and that was it. But there is no way to transfer it if you want to customize it.shift. Customized home furnishings are sold with zero inventory. Each order is a small engineering project, from order sales to measuring tape design, to order production, delivery logistics, installation and after-sales. This kind of exclusive project customization requires very high process control. Strictly speaking, manufacturers only output semi-finished products, and a large number of sales and service processes are completed at the terminal. Customized home furnishing is a typical service-oriented industry. Why can’t many ceramic tile dealers sell slate? The core reason is the lack of service capabilities.
Fourth, the legs are too soft. The competency model of a dealer in the custom home industry is completely different from the finished product. To be a customized dealer, you must first have a complete team, including sales, design, installation, and service; secondly, have a good sense of service and service capabilities, and be able to do dirty and tiring work; and finally, have the long-term ability to devote all your energy to research and focus. Dispersion of business ability and energy are taboos for custom home furnishing dealers.
05
Looking at rock slabs from the perspective of systems theory
What does it look like to look at rock slabs from a systems theory perspective?
One includes three parts, elements, connections, and functions. For example, what is the difference between New Oriental University and ordinary universities? In fact, they all look the same. Elementally, both have students, teachers, and classrooms. But their "connections" are completely different. In ordinary universities, teachers grade students and cultivate talents for society; while New Oriental is a commercial institution, students grade teachers, and its core function is to make money. This is connection, and connection leads to functional differences.
When we look at a system, we often only notice the elements of the system, but ignore the connections and functions of the system. In fact, for a system, elements are often the least important and can be replaced at any time. If you think slate can be used as a panel, you think it can be customized, but in fact, customized wood, metal, stone, glass, etc. can all be customized materials, and slate is just one of many materials.
What does customized system theory look like? Its elements are diversified materials. In addition to solid wood, the materials for custom home furnishings also include particle board, core board, OSB board, etc., of which rock board is one; the connection is precise user positioning, firm design direction, original design capabilities and The ability to deliver on the ground is the connection between manufacturers and C-end consumers; the final function is to meet the personalized customization needs of users with high quality.
There are lessons learned from the past when customizing rock slabs, including stainless steel customization and all-aluminum customization. Ten years ago, stainless steel wanted to develop from kitchen to whole-house customization. Five years ago, aluminum alloy also wanted to develop from bathroom cabinets and balcony cabinets to whole-house cabinets. However, stainless steel customization has developed for more than ten years, and currently there are only three brands with over 100 million yuan. And there is no 500 million-scale brand. What causes this? It's the material.
Chinese people have a love for wood. They need warmth at home, and wood can give them warmth. This is the mainstream. If you say that all cabinets should be made of stainless steel or aluminum, there is no technical problem, but consumers do not need it. Stainless steel and all-aluminum customization can only be niche and segmented markets, and the same goes for rock plate customization.
06
Stone slab companies enter the Achilles’ heel of customized homes
Stone slab companies should avoid four "dead spots" when entering the custom home furnishing industry across borders:
First, there is insufficient understanding of the industry. You can never make money beyond your knowledge. If you don’t have adequate knowledge, you will lose the money you earn. What I talked about before is all about the understanding of the industry. If you want to make money in this industry without an in-depth understanding of the industry, the difficulty level is very high.
The second is the distortion of corporate values. Why did Evergrande collapse? Because the underlying values are wrong. Why did Wei Ya have a problem? Her business logic is simply incorrect. Many companies that make customized home furnishings do so in order to truly meet the individual needs of consumers and want to continue doing so for a long time. If you are doing slate just to attract traffic and make a little money, then you will be vulnerable and unable to compete with long-termism.
Third, the original resources cannot be expanded. Success is failure, prosperity is failure. This means that if you are on the road to success, it means that you are already on the road to failure. All the resources for success will lock you up. Why did Gree win? Because its offline resources are strong. So why is it down now? The original resources allowed him to survive for 24 years, but also locked it in place. The same goes for slate. The original resources of ceramic tile companies are not customized resources.
The fourth is to copy the process of the customization industry. It’s easy to learn from others. The business owner wants to poach a few people who customize home furnishings.Corporate executives think that copying the process is customized, which is useless. What you can learn is not core competitiveness.
Hegel once said that the only lesson humans can learn from history is: humans never learn lessons from history! After more than 10 years of working in the industry, I have seen many companies pay tens or hundreds of millions in tuition fees, but in the end they all came to nothing. But now I see again that many slate companies are paying tuition fees for cross-border customization, which is repeating history. I hope that today’s speech can help everyone avoid detours and avoid paying tuition fees.
