Custom Furniture Second Half: Fight Is Integration, Thinking, Strategy

- Oct 07, 2019-

The era of opportunity-driven era is gone, and replication expansion is no longer the main theme. This is not an era in which success can be achieved by hard work. To survive and develop, it is not the factory, not the production capacity that lacks the custom enterprise. The lack of strategy, the mode, the talents, the integration of ideas, and the coordination of resources and capital.

In the whole house customization industry that was hot in 2016-2017, growth began to decline significantly since 2018. Judging from the average growth rate of nine listed whole-house custom-made enterprises, starting from 2017, the rate is about 7-8%, and the trend is getting worse. In 2017, it will grow by 33.83%, and in the first half of 2018, it will increase by 25.27% (-8.56%). In 2018, it increased by 18.78% (-6.49%), and in the first half of 2019, it increased by 11.08% (-7.7%).


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The growth rate of the customized industry has generally slowed down, which is related to the macroeconomic and capital market down cycle. However, the deeper reason is that the market and channel dividends in the context of rapid real estate growth no longer exist, industrial supply and demand, entry barriers, consumer demand and other industries. The structural elements have undergone fundamental changes.

In the first half of the competition in the custom industry, regardless of the size of the company, everyone can rely on dividends, strategies and resources to drive rapid development; but in the second half, the big brands in the industry rely on many years of industry deep-rooted, and have formed a moat of brands and channels, regardless of price competition. Or channel expansion, small and medium-sized custom enterprises are faced with too many barriers and constraints such as resources, scale, capacity, etc., and are strongly crushed by the head enterprises.

This is not an era in which success can be achieved by hard work. In the era of great change, it is difficult to accurately predict the future, and can only move forward in change and uncertainty. Under pressure and challenge, customized enterprises should no longer be able to fight with the strength of the husband, but should be integrated with thinking and strategy, in order to improve the survival rate, and achieve rapid growth, to achieve corner overtaking.

Customized companies must think clearly about the big strategic logic

Teacher Chen Chunhua said that in the era of digital survival, enterprises must have two sets of strategies, one is a business-level strategy, which is reflected in the market and competition, and the other is called a company-level strategy. The past strategies were all done for business, or for competition, competition won, and growth was solved, but today is not. Today, even if you win the competition, you can't solve the problem of growth. In order to win competition and achieve growth, there are several big strategic logics that must be clearly considered.

(1) What changes have occurred in the customer needs of custom homes?

(2) What future opportunities need to start investing?

(3) How to reduce current costs and maintain growth?

(4) What are the things that are far from the core competitiveness that can be abandoned?

Think about these issues and think clearly, and then think about what resources are available and what opportunities are available.

The result of thinking about the above strategic logic determines the development path of the customized enterprise.

(1) What changes have occurred in the customer needs of custom homes?

A large group of urban middle-class and new middle-class companies are growing, pursuing upgraded homes such as personality, health, comfort, intelligence and green.

They are more critical about product quality and have higher requirements for product value. From functional satisfaction to emotional satisfaction, they are willing to pay a higher brand premium for ideal home design and products.

(2) What future opportunities need to start investing?

According to the "White Paper on China's Home Furnishing Design Trends in 2018", the proportion of people who choose the "family-friendly, self-contained" approach is 20.81%;

The population of “stay in the bag, the whole house is installed” is 39.6%. The choice of "stay in the bag, the whole house is complete" decoration method, accounting for 43.57% after 80, and 38.93% after 90.

“Full house decoration” is designed according to the wall structure of the living room. The decoration is modular, and the ceiling and wall in the home decoration are combined with the furniture, furniture and accessories. This is a change from product customization to customization. It will become a new market growth point for the potential of the customized home industry.

(3) How to reduce current costs and maintain growth?

The biggest problem with custom furniture development is the high cost of small batch production. Industrialization is not like the carpenter workshops that can be started at any time. If the order quantity is small, the light production will take half a month.

Automation, unmanned factories, big data, cloud computing, etc. brought about by the industry 4.0 era are prerequisites for improving the level of intelligent manufacturing technology.

Compared with many old-fashioned home furnishing enterprises, SMEs use the previous production methods, the machines and equipment are also quite backward, the production efficiency is not high, and the resources are not optimally configured. To achieve cost reduction, we must rely on scale.

(4) What are the things that are far from the core competitiveness that can be abandoned?

The core competitiveness of the future industry is product advantages, service advantages, information and industrialization capabilities, organizational efficiency improvement, operational efficiency improvement, and production efficiency improvement. There must be no shortcomings in competition in these dimensions.

Because of the limited resources, no enterprise, especially small and medium-sized enterprises, can do everything well. Therefore, it is necessary to rationally judge, gather and hold their core competence.

In summary, China's home furnishing industry is moving towards integration, customization and personalization; the custom industry is moving in the direction of multi-category and overall home. Whether it is single item, multi-category, or large home, they all have their own market needs and space.

It is a reasonable path to customize the survival and development of the enterprise by making use of the resources of the enterprise's manufacturing, production and marketing as much as possible to expand the single product category and open up the multi-category integrated large home.

Low-cost expansion, light asset operation becomes a rational and pragmatic strategic choice

For most small and medium-sized custom enterprises, although they occupy the main body of the customized home industry, in order to develop under the strong suppression of the head brand, resources must be optimally configured and utilized. At this time, we can't be greedy and fast, we can only choose the right development strategy and cooperation platform according to our own situation, and operate in a low-cost way of expanding and light assets. At this point, the “shared factory” became a viable option. "Shared factory" means that traditional manufacturing enterprises use the Internet to digitize and online manufacturing resources. By sharing technology, equipment and services to the society, they promote the interactive integration of online and offline resources, greatly improve marginal efficiency and promote formation. Industrial system with high production efficiency.

There are many companies trying to customize the industry's shared factories:

Anhui custom-made furniture brand Claifu United 3D home, based on information system, front-end integration technology, to achieve large-scale production, to achieve efficient collaboration of the former store and the factory, speed up research and development, shorten product life cycle.

The Guangzhou-Aizhijia, which is cultivated by the three-dimensional family, is a S2B packaged supply chain platform model. To Aizhijia to establish a city service center, establish a localized "factory, shop, warehouse" integrated package service, to close-range radiation, quickly respond to the market demand of the B-end, through the process of exporting processes, technology, supply chain, etc. for members Service to gain business value.

The shared factory model of Foshan Deshangmu, a solid wood custom enterprise, emphasizes that it is clearly different from the traditional OEM foundry model. The model is characterized by not only processing products on behalf of customers, but also achieving customer service cooperation that is shared and shared. Boschman's model of “Thousands of Factory Alliance” is controlled by Boschman, allowing small and medium-sized custom companies to jointly create and promote a brand, so that the brand can generate value as quickly as possible, and then participate in it. The factory shares the brand value. Guangzhou Meishi Technology's "sharing mode" is going earlier, faster and farther. Guangzhou Meishi Technology owns the custom furniture brand “Minami” which has developed for 7 years. Its headquarters in Guangzhou has a perfect output in the production system, management system, information construction system, supply chain system and brand operation system. mechanism.

In the past two years of mode operation, it has successfully empowered three major shared factories in Wuhan, Kunming and Changde, and established a standardized production system to achieve production synergy and product synergy. After the smooth operation of the three factories, the brand investment process was greatly stimulated, and the terminal stores quickly settled in the local market. The national outlets continued to expand, and then achieved brand collaboration and marketing synergy. This has formed two "nets", one is a fast and efficient capacity supply network to radiate the national terminal, to protect the terminal development; one is a pragmatic and fast raw material procurement chain, which greatly reduces the production cost.

Liu Hui, co-founder and CEO of Meishi Technology, believes that the premise of a custom enterprise to establish a shared factory is that there is a mature brand that can form a hub of a shared factory with the function of fusion and divergence. Strategy is not a goal. Strategy is not an operational activity. Strategy is a reflection and action plan on how to “make money” for a long time.

The big home industry has formed a trend of cross-border integration and multi-category integration. The total number of players participating will be less and less, and the volume will be larger and larger. The competition in the second half is destined to be “quick-fix”. As long as you don't die, you will fight. This is a long-term battle for competition. The competition is no longer a method and skill, but an industrial infrastructure upgrade and the evolution of the overall organization.

If the customized enterprise does not have the awareness and ability of strategic thinking, it can not rationally layout, select the model, integrate the corresponding resources, and establish the corresponding capabilities, either continuously consumed in mediocrity, or lost in the huge waves, failure only Will be the only result.