Second and third tier cities will become the leader in the Chinese furniture market

In recent years, the industry's reshuffle, industrial transfer and market layout have accelerated, and China's furniture industry has presented a special situation. That is: the proportion of the first-tier urban furniture market has declined, and the proportion of second- and third-tier cities has risen, and it has become a hot spot for the growth of the furniture market and a competitive focus, playing an increasingly important role in the decision-making of furniture enterprises.

Relative market share in first-tier cities

It is understood that since 2010, the real estate market in China's first-tier cities has been affected by many factors, gradually slowing down the pace of development. In particular, in order to curb the excessive rise in housing prices in some cities and effectively solve the housing problems of urban residents, the state has launched a series of macro-control policies for the real estate industry, and has focused on first-tier cities. According to the data on housing transactions in key cities, by the beginning of May 2010, the transaction area of ​​new houses in first-tier cities in China fell by 35% year-on-year, and the national average new house transaction area decreased by 6% year-on-year. The demand for about 40% depends on real estate-driven For the furniture industry, the blow is quite large.

Under the stagnation of real estate transaction volume, household consumption in first-tier cities is naturally more rational. "When the market develops to near saturation, there will definitely be some companies looking for another way. At present, there are many companies that choose to leave when the market is cold." Huayi Fabric Liao said, "The business in the first-tier cities is now coming. The harder it is to do, the faster the price rises, the rising prices of raw materials, labor costs, venue fees, etc., which makes my manufacturers a little breathless. The increase in operating costs directly leads to a decline in profits, if you want to raise prices, customers If you don't accept it for a while, you can't sell it. If you don't raise the price, you will face a loss." This embarrassing situation is very representative in the first-tier cities, and it has become the unspeakable "pain" of most manufacturers operating the first-line market. Compared with other cities, the “low profit era” of first-tier cities came earlier.

Second and third tier cities took over the lead "Battery"

In the context of the “stagnation” in first-tier cities and the overall unsatisfactory industry, second- and third-tier cities have shown strong late-comer advantages. Take Foshan, Guangdong as an example. In 2011, Foshan’s first-hand commercial housing transaction volume remained at a high level, reaching 7,823,600 sets, about 30% more than Guangzhou, and sat firmly on the “Guangdong First Brother” throne. The performance of the furniture industry in the second and third tier cities is mainly due to the following reasons:

First, the real estate industry in the second and third tier cities is full of stamina. After the introduction of the national real estate regulation and control policy in 2010, the government still grasps the first-tier cities, while the control of the second- and third-tier cities is relatively loose, so that the volume of housing in the second- and third-tier cities has a “quantity and price increase” situation. According to the statistics of the monitoring and statistics of 105 cities by the Ministry of Land and Resources, in the two years of real estate regulation and control, there are 14 cities in China where the comprehensive land price has increased by more than 5%. The first-tier cities are only listed in Shanghai, and the rest are all second and third. In the cities, the land price of second- and third-tier cities has risen more than that of first-tier cities. As the downstream industry of real estate, the furniture industry naturally benefits greatly.

Second, compared to first-tier cities, second and third tier cities the basic material and labor costs low, cheap venue rental and low labor costs in the operating costs to ease the pressure on the furniture business.

Third, the development strategy of China's small and medium-sized cities and towns, the preference of the 12th Five-Year Plan for people's livelihood, and the migration of the furniture industry have also promoted the development of the furniture industry in the second and third tier cities.

Fourth, China is entering the peak of marriage after 80 and 90. The average annual birth population of the whole 80 years is more than 20 million, most of which are concentrated in second- and third-tier cities and rural areas. The post-80s wedding tide will inevitably promote the development of the furniture market. The development of the furniture market in the second and third tier cities is vast, and it will surely become the “leader” of the next furniture market, thus promoting the continuous development of the furniture industry.

A series of favorable factors have made furniture dealers and manufacturers optimistic about the second and third tier cities, and many companies have also launched the development strategy of “mainly attacking second and third tier cities”.

Layout of second and third tier cities needs rationality

While seeing the broad market prospects of second and third tier cities, enterprises must also recognize their own situation and problems. Only by adhering to the principle of seeking truth from facts and adapting to local conditions can the road to market development be smoother and farther. The author combines the respondents and their own thoughts, and puts forward the following suggestions for the layout of the second and third tier cities:

First of all, accurate positioning is the key to developing second- and third-tier cities. Before opening up the market, we must do a good job in market research, and combine the current economic environment and the big situation to formulate corresponding strategies and accurately locate, so as to develop products suitable for the market demand of second and third tier cities. Second, do a good job and increase the added value of the product. With the continuous improvement of people's life and cultural level, the furniture market has also gained more understanding, and the concept of consumption has changed a lot. Therefore, good service quality can win the reputation of consumers and establish a firm foothold in the market for a long time. Finally, we must do a good job in brand promotion and focus on the brand effect. The brand awareness of consumers needs long-term guidance from the market. In the furniture industry, the all-friends like Sichuan are more successful. They don’t hesitate to pass their own brands to every place through various advertising channels.

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