Chinese Market’s Downfall
The Chinese refrigerator industry experienced a downfall of 3.6% in the first quarter as compared to last year. Will this affect the year-round trend of refrigerators?
The trend of the high-end refrigerator is becoming popular. The dual internal power, channel construction and product structure adjustment need to be intelligently boosted. These three methods will be the saviour of this year and even in the future. In the case of the relatively slow refrigerator market, the experts were asked for a diagnosis and they gave a “good solution”
It is the China Household Electrical Appliances Association that has opened this “good solution”.
On May 16th, during the period held in Beijing by the China Household Electrical Appliances Association and the Information and Industry Development Department of the National Information Center and the China National Grid’s “Huan·Fresh 1+X LIFE – 2019 China Refrigerator Industry Summit Forum” Senior people give the above-mentioned “prescription”.
“In recent years, the refrigerator industry has entered a stage of ‘steady state’ development.” Wang Lei, vice chairman of the China Household Electrical Appliances Association, pointed out that although the annual market increments have fluctuated, the overall change is small. However, if the refrigerator industry is regarded as a sea, the sea surface is calm but the depths are turbulent.
The refrigerator industry is becoming more and more sophisticated
If you look at the overall background of the home appliance industry, the downturn in the refrigerator is not abrupt.
From the external environment, after the peak of the market in 2013, the refrigerator industry entered the sideways adjustment channel. In 2014-2016, there has been a trend of falling in volume for three consecutive years. Since 2017, it has continued the “new normal” of steady growth. Since 2018, the external development environment of the home appliance market has become increasingly bad.
However, as far as the refrigerator market is concerned, although the upstream costs are still high and the demand for redemption is slow to release, it is getting smaller and smaller due to external factors such as real estate.
In terms of market performance, according to the total data of China Market Monitor Co. Ltd, the retail volume of the refrigerator market in 2018 was 31.48 million units, down 6.2% year-on-year; the retail sales were 93 billion yuan, a slight increase of 0.7%.
In the first quarter of 2019, the retail volume of the refrigerator market was 6.78 million units, down 3.6% year-on-year; the retail sales was 20.4 billion yuan, down 5.9% year-on-year.
Zuo Yanzhen, general manager of China Market Monitor Co Ltd Brand Center, described the trend of the refrigerator industry as “high growth is no longer needed, and dialectical rational adaptation window” is needed-.
From the demand structure, the data shows that as early as the end of 2016, the average number of refrigerators per 100 households in China has reached 93.5. Due to the high penetration rate and low population growth, the sales growth of the domestic refrigerator market tends to be updated under the structural upgrade. Replacement needs.
The relevant person in charge of Bosi Home Appliances said that in the past two years, the Chinese refrigerator market has bid farewell to the period of rapid growth. Since 2018, the overall size of the refrigerator market has remained stable, and the market for high-end products such as multi-door and door-to-door refrigerators is on the rise. The refrigerator industry has changed from high-speed growth to high-quality growth.
Wu Shuangxi, general manager of Jingdong Household Appliances Refrigerator Production and Sales Department, said that from the data of the first quarter of 2019, it continued the rapid growth of multi-door refrigerators and large-capacity refrigerators since 2017, and continuously opened up the future product upgrade space of the market. This also reflects the increasing acceptance of consumers for mid- to high-end products.
Double repair internal power and channel construction will become the norm
Lu Shenghua, editor-in-chief of China National Grid, believes that the Chinese refrigerator industry has experienced three different stages of development in this decade.
The first stage is policy-driven. In 2009-2011, domestic sales of refrigerators increased significantly, from 26 million units in 2008 to 59 million units in 2011.
One of the important measures is that in February 2009, the country began to implement the first time home appliances to the countryside, plus policies such as replacing old appliances with new ones, saving energy and benefiting the people, and other policies to stimulate home appliances to the countryside. At that time, the refrigerator was quickly promoted in rural areas. popular.
In 2008, the number of rural refrigerator households was 30/100 households. By 2010, the number of rural refrigerator households reached 48/100 households. The explosive growth of the domestic refrigerator market at this stage is mainly driven by policy.
The second stage is that the refrigerator enters the consolidation period. In 2013, with the end of related policies such as home appliances going to the countryside, the refrigerator market entered a “policy blank period”. In the post-policy era of the second stage, the refrigerator industry entered a sideways adjustment channel that lasted for three years.
The third stage is dominated by marketization, and the refrigerator industry has begun to return to the internal drive. Since 2016, with the withdrawal of policy influence, the industry has returned to the market to dominate the “main theme”, and the fluctuation of the volume of the refrigerator market has gradually narrowed.
Industrial upgrading, product structure adjustment, and technological innovation have become the first impetus. Refrigerator companies have also emphasized product upgrades to promote the replacement of refrigerators.
Traditional stores no longer have a single sales channel diversified
Similarly, the refrigerator channel level has undergone significant changes over the past decade.
More than a decade ago, the major chain stores of home appliances dominated. However, with the rise of online shopping platforms, online sales have gradually become the main channel for home appliance retail.
Up to now, with the rise and rapid development of new retail, offline experience and online purchase development have become a normal channel model.
“Today’s e-commerce is not only a simple production and sales system, but the consumer order data presented by the e-commerce channel will ultimately affect the company’s pre-judgment of products and markets and even the strategic positioning of the company.” In the recent survey of China National Grid, most refrigerator companies have also reflected similar status:
Channel integration is a key point in 2018 and will continue to deepen in 2019. The decline in the offline market is more about turning to online consumption. The gap between the two has become smaller and smaller, and competition between channels has begun to heat up.
Brand concentration is getting higher and higher industry shuffle
From the brand point of view, in the fierce market competition, the brand concentration of refrigerator companies is getting higher and higher. Many refrigerator brands that emerged when the home appliances went to the countryside were gone.
According to China Market Monitor Co Ltd data, in 2018, the number of brands sold in the offline market of refrigerators was 119, a decrease of 4 compared with the same period in 2017; the retail share of the top ten brands was 93.0%, compared with the same period last year. 2.6 percentage points.
In the online market, the number of brands sold in 2018 was 138, a decrease of 3 compared with the same period in 2017; the retail share of the top ten brands was 86.7%, an increase of 0.4 percentage points compared with the same period in 2017.
In addition, in Q1 of 2018 and Q1 of 2019, the CR3 brand share of the refrigerator market was 57.0% and 57.6%, respectively, and the brand concentration was still improving.
China National Grid research shows that most refrigerator companies also believe that according to the current development of the refrigerator market, the shuffling process will continue.
Product structure adjustment needs an intelligent boost
The development of the refrigerator industry has reached an unprecedented height in terms of technology, design and function.
From the past two years ago, the two-door/three-door direct cooling mainly consisted of two-door side-opening, cross-cutting, French four-door, Chinese-style split, five-door and six-door refrigerators. In the wave of consumption upgrades, the structure of refrigerator products has undergone rapid changes.
According to China Market Monitor Co Ltd data, in 2016, the proportion of retail sales of multi-door refrigerators was 12.3%, and the proportion of retail sales was 24.1%. In 2017, the proportion of retail sales of multi-door refrigerators was 15.6%, and the proportion of retail sales was 29.0%; The proportion of retail sales was 18.5%, and the proportion of retail sales was 33.1%. The market share of multi-door refrigerators can also be seen in the rising trend, product upgrades have become a significant feature of the refrigerator market in recent years.
Product function and technology, the market penetration of refrigerator products with air-cooling, frost-free, frequency conversion, and storage functions is rapidly increasing. The intelligent technology of refrigerators has also shifted from the “hot” concept of “hot” in the past few years to the “introverted” type. problem.
With the advent of the 5G era, smart refrigerators or welcome new outlets. Not only can we use intelligent image recognition technology to automatically identify food types, analyze and provide fresh-keeping suggestions; it can also monitor the fresh state of ingredients in real time and automatically give tips; it also has the functions of Zhilian recipe recommendation and online shopping.
At the market level, after various rounds of selling points took turns, the technology and design of the sleek technology used to slow down the sales of refrigerators. Enterprises in product innovation began to focus on the preservation and intelligent needs of refrigerators. More and more attention is paid to consumer trends in the segment.
“It’s been 10 years since the opening of the dividend policy for home appliances to the countryside. We have seen great progress in today’s refrigerators in terms of energy efficiency, intelligence, functional segmentation, manufacturing processes, etc. Although the market growth has slowed down, China’s existing refrigerator market has an annual sales volume of around 45 million units. This is also the world’s largest single refrigerator market, which is still a promising market.”
Wang Lei said that in the new 10 years of the future, with the technology and Internet, big data, 5G and other technologies empowered, consumption upgrades and upgrades will become the main theme of the industry.
From the enterprise level, the China National Grid survey shows that most refrigerator companies are cautiously optimistic about the 2019 refrigerator market. The person in charge of the relevant refrigerator companies said that although the amount of the Q1 refrigerator market has dropped in this year, the overall factor of maintaining market sales growth has not changed much. The total sales volume in 2019 will remain basically stable.