Rural Appliance Market Calls for Channel Change

Looking at the current domestic appliance market, the industry's overall capacity surplus, the urban household appliance ownership tends to be saturated, the market sales situation is not optimistic. In terms of sub-regions, the household appliances market in the 3rd and 4th levels has shown a sudden emergence trend. The imbalance between supply and demand caused by insufficient regional supply will become the development opportunity for the home appliance industry in the future.

According to the China Yikang Research Report, China’s 3rd and 4th appliance market has a population of 70% of the country and contributes 40% of the country’s retail sales of consumer goods, which has a huge influence. Data show that in 2011 China's home appliance market sales of 34 million yuan reached 540 billion yuan, for 4 consecutive years the market growth rate of more than 20%, far exceeding the industry growth rate, becoming China's home appliance market, the main source of growth.

At the 2013 China Rural Household Appliance Market Channel Transformation Summit Forum, Yang Jun, General Manager of Changhong Air Conditioning Marketing Company revealed that Changhong Group had sales of about 25 billion yuan in the rural market last year, accounting for about 30% of its business. However, air-conditioning is still less than 10% of the rural market, and there is still much room for growth in the future.

Even Si Qing believes that the acceleration of urbanization will bring about policy dividends for the development of third- and fourth-tier cities. During the “12th Five-Year Plan” period, the level of urbanization in China will reach around 60%, and the home appliance retail industry will share the long-term dividend of this social development. At present, there are about 500 prefecture-level cities in the country, more than 2,100 county-level cities, more than 40,000 townships and villages, and rural families account for 67.6% of the total households. However, household appliances such as refrigerators, washing machines, air conditioners, color TVs, etc. The amount of ownership lags far behind the city. Even Si Qing indicated that after several consecutive years of implementation of home appliances to the countryside, the business environment for rural household appliances has improved, and more importantly, it has cultivated rural household appliance consumption habits. Even if the policy is withdrawn, the demand for home appliances in the rural market will continue to be released, and there will be ample room for market expansion in the future.

Exploring the new mode of channel management is different from the first-tier and second-tier cities being home appliance giants such as Gome and Suning as well as major mainstream electricity suppliers. Because of decentralized personnel and high channel construction costs, the rural home appliance retail market is still not very concentrated. Statistics show that Suning and Gome currently have a total market share of less than 16% in the home appliance retail market, and the other 30 home appliance chain stores in the country have a combined market share of only 26%.

In the rural household appliance market channels, the proportion of single-item appliances is large, and its drawbacks have become prominent. First of all, the individual appliance store products and prices basically do not have the ability to fully participate in market competition; secondly, the single product line has a single product line, which cannot meet the diversified consumer demands of consumers; again, the single-item appliance stores lack the ability to plan activities. It is still in the stage of "shopper business" and it relies more on acquaintance marketing and word-of-mouth marketing. In addition, in cities, e-commerce is developing rapidly. However, e-commerce is making slow progress because of the relatively backward rural economy, unbalanced regional development, and difficulty in achieving logistics distribution.

At present, some emerging companies in the industry have begun to explore new business models in the rural market and want to share a share. Since last year, many home appliance retailers that focus on the rural market have rapidly emerged. The multi-dimensional reach of the United States, Suning and Haier, Midea, Gree business model is different, the use of franchisee system, "brand unification, unified procurement, unified standards, unified image" business strategy, and strive to reduce the intermediate circulation, reduce marketing costs. This model has attracted much attention in the industry. “Companies operating in the rural market must change their thinking.” Li Hanyang, general manager of Dufangda, said that the shift from single-store procurement to centralized procurement, single-store distribution to intensive distribution, single-store sales promotion to joint promotion, single-store operation to chain Management is the best way to transform the rural household appliance market channels.

Vice President of Hisense Kelon and general manager Wang Yunli of the marketing company stated that with the continuous improvement of urban and rural residents' consumption levels and continuous improvement of consumer standards and requirements, the trend of integrated retail stores, branding, and chaining will be further reflected. Peng Baoquan, chairman of the China Household Electrical Appliances Association, pointed out that without scale, there is no efficiency, no chain, no efficiency. Collaborative procurement, joint distribution, and resource sharing are the inevitable paths of "reducing costs, improving efficiency, market prosperity, and industrial rejuvenation" in rural household appliances circulation market. .