Home Circulation Encounters Expansion Confusion Channels High Risks Promote Emerging Models

Love and hate are intertwined, this is a vivid portrayal of the current attitude of home manufacturing companies and distributors towards channels. With the continuous increase in store rents and new store operating costs that open up traditional channels, the physical distribution channels of home furnishing companies are facing high cost challenges. "Channel is king", and strong channel is good for enterprises. However, in the era of high-cost channels, the expansion of traditional sales channels, active or passive, may bring new risks and tests.

Year-on-year rising store costs

"The investment to open new stores is getting higher and higher. The first TATA store was opened in Tianjin. At that time, the investment was only 70,000 yuan, but now it takes at least 70 to open a standard store in first-tier and second-tier cities. Ten thousand. "Wu Chenxi, chairman of TATA Mumen, lamented that the current cost of opening a store is getting higher and higher, which has become a huge challenge that companies have to face.

There are still many people facing this challenge, EGGER floor and Feimei furniture. According to Zhong Hongwen, chairman of EGGER Floors, at present, it is necessary to open a floor store of about 150 square meters in the home store to invest at least 500,000-600,000. If you add the cost of advertising and event promotion when you open the store, you need 1 million. . "To open a new store of about 300 square meters in the furniture city, the initial hard cost investment (including entrance fee, store decoration, sample purchase) will need 700,000!" Zhou Kaijun, general manager of Feimei Furniture, said that the cost of opening the store has been increasing year by year. undeniable fact.

"Not only the increase in the cost of opening a store, in fact, the operating costs of the original traditional channels have also risen sharply." Chen Xiaotai, general manager of Top 100 Furniture, said that on the one hand, the rent of the store is rising; on the other hand, due to the impact of inflation, Wages and commissions have also been increasing substantially; coupled with the increase in logistics and transportation costs, channel costs are increasing at an average annual rate of 15-30%.

According to Sun Wei, the chairman of Shichuang, the current rent of mainstream building materials stores in Beijing is not less than 300 yuan per square meter per month, and some stores even exceed 500 yuan, plus store decoration, samples, personnel, water and electricity expenses, etc. In a specialty store, there is no loss of hundreds of thousands of monthly sales. If more than a dozen or twenty stores are opened at the same time, the investment will be quite large, and the business risk of the company will increase accordingly.

Three factors push up channel investment

According to industry insiders, there are three main reasons for pushing up channel costs, among which are the store rents first. It is understood that the rents of home stores have risen extremely fast in recent years. This is an indisputable fact. A person in charge of a furniture company, who asked not to be named, said in an interview: "Home furnishing stores are a form of commercial real estate. The property costs of newly opened stores are rising. At the same time, the operating costs of home furnishing stores are increasing year by year. In recent years, rents have increased by more than 10% in recent years. "

In fact, the continuous increase in operating costs is another reason for the high cost of channels. According to Zhang Zhiliang, vice president of Hua Nai Lijia, China has now entered the era of high wages. Almost all household furnishing companies have greatly increased their labor wages for channel operations, which has also led to increased channel operating costs. "Now the market competition is fierce. For the terminal, excellent staff are scarce core resources. In order to retain people, high wages and high commissions are also things that companies have to do." Chairman of Guofu Zong, a professional furniture consulting and marketing agency Zhao Long believes that in the era of high wages, the hard labor costs of enterprise channel operations will only continue to rise.

Yang Tao, chairman of Kumanju, a professional children's furniture, believes that "the disorderly expansion of hypermarkets is also a factor that cannot be ignored." At present, the volume of many urban home furnishing stores is close to saturation, and even a phenomenon of excess appears. Costs increase. If the store is not well-managed and closed, the enterprise will have to bear high losses. According to Zhao Long, chairman of Guofu Aspect, the transition of home furnishing stores is unreasonable, and the layout in some cities is unreasonable. Home furnishing stores of commercial real estate have a false prosperity, and expanded home furnishing companies have to pay for it. The water rises.

Emerging channel model will emerge

Now, the traditional physical channel has become a double-edged sword for home furnishing enterprises. "The home furnishing industry is highly free to compete and is a fully market-oriented industry. Therefore, in the face of accumulated competition, many companies regard the channel as the king and invest in the construction and management of the channel regardless of the cost." Industry insiders believe that enhancing channel competition The advantage cannot be at the cost of high cost, otherwise it will "make the channel, and lose the channel."

"The home furnishing industry is a typical channel distribution brand is stronger than the manufacturing industry. For the average consumer, they often only remember where they bought furniture and building materials. Therefore, relying on the traditional channel model of the home store will naturally With the continuous increase in store rents, pushing up channel operating costs. "Yang Tao, chairman of Kumanju, believes that in the existing traditional channel model, it is difficult for home manufacturing and distribution companies to have a say. In addition, there are too many levels of traditional channel models in the furniture industry. Regional distributors, provincial distributors, prefecture-level agents, and county-level agents. After the products have been increased in price, the final price has deviated greatly from the real price. It will also be passed on to consumers to pay the bill.

In fact, history proves that nothing can hang on a tree. Zhao Long, Chairman of Guofu Zong believes that at present, home furnishing companies have begun to realize that there is a flaw in the original traditional channel model, and many companies have begun to diversify the construction of channels. Among them are independent stores other than home stores. The channel is also an emerging channel that has received the most attention at present. According to the survey, at present, Chinese home furnishing companies with considerable scale and brand awareness, including Qumei, Sacred Elephant, Nature, Kumanju, Ruibao Wallpaper, Hua Nai Lijia, Ximengbao, and TATA wooden doors, have begun to test water electronics Business and emerging online sales have opened a huge imagination space for the home furnishing industry in traditional industries.

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