Push the "trade-in" industry to respond positively to the gradual recovery of the home market prosperity
According to the public data of the Ministry of Commerce, in April this year, the national building materials and home furnishing prosperity index (BHI) was 117.65, and the sales of building materials and home furnishing stores above designated size exceeded 110 billion yuan, and the cumulative sales from January to April exceeded 420 billion yuan.
Although the above data decreased slightly compared with the same period of last year, with the introduction of "trade-in" policies in various places since April, and the favorable factors such as the overlapping market entering the traditional peak season, the household sector continued to release consumption vitality, the industry prosperity rebounded, and the "Xiaoyangchun" market in the home building materials market also continued.
The market potential of "trade-in" is huge.
At present, China’s real estate market is still in the adjustment stage, but since the beginning of this year, favorable policies have been implemented in various places, and industry insiders expect that the industry will accelerate its stabilization. As the downstream industry of the real estate market, the consumer demand of the national building materials and home furnishing market continued to be released from January to April. Although the sales data decreased slightly year-on-year, thanks to the help of the policy side, the overall situation was still improving.
In March this year, the State Council issued the Action Plan for Promoting Large-scale Equipment Renewal and Trade-in of Consumer Goods (hereinafter referred to as the Plan) to promote economic transformation and upgrading and improve the quality of life of urban and rural residents.
The "Proposal" pointed out that for the trade-in of household appliances, it is necessary to improve the convenience as the core and smooth the consumption chain of household appliances; In order to promote the replacement of home improvement consumer goods, it is required to support residents to carry out local renovation of old houses, kitchens and bathrooms, continue to promote the aging renovation of homes, and actively cultivate new consumption such as smart homes. Promote home improvement model rooms to enter shopping malls, communities and platforms, encourage enterprises to build online model rooms, and provide affordable products and services to meet diversified consumer needs.
"The introduction of the trade-in policy is a major positive for the home furnishing industry." Qin Zhanxue, president of China Building Materials Circulation Association, pointed out that the relevant data of the Ministry of Housing and Urban-Rural Development showed that by the end of 2022, the total number of urban and rural housing construction in China had exceeded 600 million, with huge market potential. "As houses enter the aging cycle one after another, the demand for renovation and functional upgrading will gradually increase. It is expected that the industry will usher in a new round of trade-in climax in the future."
According to incomplete statistics, in the past year, the total output value of China’s home improvement industry was about 2.77 trillion yuan, of which the demand for local decoration exceeded 35%. "It is conservatively estimated that the replacement scale of the home and home improvement market will exceed one trillion yuan." Hu Yanan, secretary-general of China Building Decoration Association’s Residential Decoration and Parts Industry Branch, said that according to the association’s rough calculation, there are more than 200 million houses in urban housing that are over 20 years old, and the demand for renovation and transformation at the consumer end is strong.
Grasp the "renewal" cycle and accelerate the layout of enterprises
The promulgation of the "Program" has given industry support and guidance at the policy level and brought new development opportunities at the development level. Many home associations and head home stores have acted quickly, actively responding to the policy call and helping to release the potential of home consumption by issuing trade-in coupons, promoting in communities, and granting subsidies.
At the end of April, at the annual meeting of the housing industry in 2023-2024, the Residential Decoration and Parts Industry Branch of China Building Decoration Association, in conjunction with the head home improvement enterprises and parts and materials enterprises all over the country, officially launched the "Home Improvement Trade-in Action". "I hope that through this action, a group of’ home improvement practitioners’ will be cultivated, and typical cases of enterprises will be launched to create a more assured, worry-free and secure consumption environment." According to the relevant person in charge of China National Equipment Association, this action aims to promote the effective implementation of "trade-in" related programs in the home improvement and home furnishing industries, and call on the whole industry to respond to the replacement of home improvement consumer goods, and encourage member units to actively carry out local upgrading and renovation of old houses, kitchens and bathrooms, and aging renovation of homes.
On May 6th, in response to the "Consumption Promotion Year" policy of the Ministry of Commerce, and vigorously promoting the trade-in of the household industry, China Building Materials Circulation Association also launched the "Third National Green Smart Home Consumption Festival", which empowered enterprises by implementing the relevant action plan of "trade-in" and issuing exchange vouchers for trade-in.
Focus on home stores. According to our understanding, the heads including Red Star Macalline and Easyhome made relevant implementation plans as early as the "trade-in" scheme was put forward.
Among them, Beijing Red Star Macalline has invested more than 10 million yuan since March to promote trade-in, benefit consumers, and help people rejuvenate. It is reported that in order to make more consumers enjoy the trade-in benefits easily, Beijing Red Star Macalline not only joined hands with 17 brand enterprises such as Xilinmen, Wrigley Sanitary Ware and Boloni to participate in the trade-in activities of green smart consumer goods, but also distributed subsidies of about 8 million yuan in different forms through online and offline channels.
The relevant person in charge of Red Star Macalline said that consumers can make an appointment to drag the old service through the "Red Star Home" applet, and they can enjoy the 600 yuan subsidy at the highest; Go to the offline store for "replacement", and you can also enjoy the government subsidy and superimpose the joint discount. "At present, relevant subsidies have been launched in five major shopping malls in Beijing, and consumers can get subsidies and enjoy the benefits of renewal."
The data shows that since the beginning of this year, Red Star Macalline has launched a large-scale "trade-in" campaign for home appliances in many shopping malls across the country, taking the demand for trade-in as the contact point to obtain accurate store traffic for shopping malls, and guiding the related sales between home appliances and other categories through refined operation.
On May 9, Easyhome also revealed the progress of "trade-in" on the investor interaction platform. It said that this year, it will comprehensively promote the three major IPS of "trade-in furniture and household appliances", "old houses for new looks" and "it is difficult for families to find them", which will drive the rapid growth of home sales.
The relevant person in charge of Real Home pointed out that the company released the "trade-in" strategy as early as 2022 and carried out related business. "According to statistics, a number of IP activities related to’ trade-in’ achieved remarkable results last year, achieving 207,000 customers, guiding sales of 650 million yuan and recycling 68,000 old things." The person in charge said.
At the same time, many home furnishing enterprises also seize the favorable market cycle and fully exert their strength in the stock market.
At the beginning of May, Qumei Home officially launched this year’s trade-in activities in the "Huanxin Plan Conference". In fact, since the first launch of this activity in 2013, Qumei Home has positioned it as a long-term and far-reaching important action. Zhao Ruihai, chairman of Qumei Home Furnishing Co., has repeatedly said that "trade-in" is not only a commitment to consumers, but also a manifestation of corporate social responsibility.
"Among about 300,000 customers accumulated by enterprises, some of them are currently in the consumption cycle that needs to be updated and iterated." Recently, Meike Home also publicly stated that this year, it will increase visits to early users, carry out maintenance and clue acquisition, with a view to providing consumers with diversified replacement programs. Oupai Home has launched the whole house renovation and whole package services, such as package storage, package discount, package design and help to move, to meet the diversified needs of consumers.
The industry believes that promoting the trade-in of household products requires both upstream and downstream synergy, and the household industry needs to continuously and deeply tap its own resources to promote the sustainable development of trade-in in a more market-oriented way and more convenient activities.
Both ends of supply and demand still face corresponding difficulties.
Although the market potential of trade-in is huge, it faces many difficulties in practical operation.
From the consumer side, how to deal with the replaced furniture, where to store the old furniture, and how to find a "reliable" decoration company and foreman may all hinder the implementation of the old-for-new policy. On the supply side, trade-in, local renovation and other links have a large amount of work, relatively low customer list value, and most of them are concentrated in old communities, so the construction difficulty is relatively high.
"At present, the residual value of many furniture recycling and dismantling wastes is relatively low, and the willingness of large-scale platform enterprises to participate in recycling is insufficient, but consumers do not have the ability to handle large pieces of furniture by themselves, which will become a constraint for replacing new ones to some extent." Zhu Jiagui, CEO and general manager of Red Star Macalline Home Furnishing Group, said that it is not easy for most home furnishing enterprises to provide large-scale trade-in services and handle old furniture well. "It is necessary to pay higher operating costs in terms of management, operation, normative environmental protection and demolition." Zhu Jiagui said.
In view of the problem that "trade-in is easy to abandon the old", Qin Zhanxue believes that the focus of trade-in should be on the "new" and the treatment of the "old" should not be ignored. "Old products should not be treated as garbage, but should be reused." He said, for example, furniture products can be dismantled and recycled, while construction waste can be reprocessed into floor tiles for municipal decoration materials.
The relevant person in charge of the Consumer Promotion Department of the Ministry of Commerce said that the trade-in work involves thousands of households and the vital interests of consumers. Promoting the trade-in of consumer goods is not only a powerful measure to enhance the momentum of economic growth and consolidate the good momentum of recovery, but also a long-term strategy to promote the high-quality development of the home furnishing industry. In the future, the industry should gradually establish an effective mechanism of "it is easier to get rid of the old and more willing to replace the new", so that consumers can enjoy better services and the trade-in action can be truly and thoroughly carried out in the industry. Text/Zhang Xinyu
Source: Beijing Evening News