For building materials dealers, home building materials stores are a thing that people either love or hate. It brings customer traffic to dealers and feeds itself from dealers. This kind of home furnishing store model with Chinese characteristics is rare even in the world.
In the past, stores "occupied land, attracted investment, and collected rent". A combination of these tricks could make a lot of money. Merchants (building materials dealers) believed that with the clustering effect, their benefits far outweighed their costs. Come on, bear with it for now. However, the sudden COVID-19 epidemic has made it impossible for home building materials stores to play the game of "collecting rent on the ground", and their hidden conflicts with merchants have gradually become apparent. While some stores are actively seeking changes, some stores are still continuing the "game" of the past.
But times have changed.
01 It is unsustainable to collect rent on the ground
When it comes to the topic of home building materials stores, the two industry giants, Red Star Macalline and Easy Home, are unavoidable. In early July this year, Red Star Macalline and Easy Home reached five consensuses and launched an industry alliance. Since this news was officially confirmed, there have been divergent opinions among the public, but there is still a consensus on one thing: life in stores is difficult, and even industry giants need to temporarily put aside industry competition and work together to tide over the difficulties.
From a superficial perspective, the 2020 financial reports of the two giants also confirm this statement from the side. Red Star Macalline achieved operating income of 14.236 billion yuan in 2020, a year-on-year decrease of 13.56%; net profit was 1.731 billion yuan, a year-on-year decrease of 61.37%; the asset-liability ratio continued to grow, from 54.72% in 2017 to 61.16% last year. As of the end of 2020, Red Star Macalline's available monetary funds were 6.511 billion yuan, but its liabilities had reached 80.450 billion yuan, of which current liabilities were 31.639 billion yuan. The financial report of Easyhome is relatively good. In 2020, it achieved operating income of 8.993 billion yuan, a slight decrease of 2.56% year-on-year; net profit was 1.363 billion yuan, a decrease of 56.81% year-on-year. Even though 2020 is very special. The two companies have reduced rents for merchants for 1-3 months and closed operations for 2-4 months. A drop in profits is inevitable; but if the net profit drops by more than half, we have to ask whether it is too high.
Figure丨Red Star Macalline 2016-2020 operating data summary
Figure丨Summary of operating data of Juran Home from 2011 to 2020
The giants of home and building materials stores are having a hard time, and small stores are having an even harder time. Many of them close down, and there are also many who raise prices on the ground. The former, such as the Jisheng Weibang Green Island store on Jihua Road, Chancheng, Foshan, officially stopped operating on August 31, quietly; the latter is an industry phenomenon.
“At the moment, it is not that one or a few stores are increasing prices, but that the entire industry is increasing prices.” In an interview with China Ceramics Network (2021 “Tao Xing China” National Tile and Bathroom Market Survey [Fuzhou Station] ), Mei Jinan, deputy general manager of Haisheng Global Group and executive vice president of Haisheng Xiyingmen, said this. Taking Fuzhou as an example, the rent of the local home building materials store Xiyingmen Store 1 has been rising again and again, reaching 300 yuan/㎡, which is very close to the rent level in Shanghai.
In the early years, the rents of home building materials stores have been rising, but this does not prevent merchants from living comfortably. The game of attracting traffic and collecting rents in home building materials stores can continue to be played. However, in the past two years, while rents have increased, the flow of people in the stores has continued to decrease, so that merchants can no longer work and feel that they are being sucked by the stores, and conflicts between the two parties continue. One of the more serious recent conflicts was the physical conflict that broke out between the Daming Palace Hanguang Road store in Xi'an and a merchant in June. Merchants at the Daming Palace Hanguang Road store in Xi'an broke the news that the store had increased the rent without authorization during the contract period, and the management team had gathered idle members of the public to harass merchants operating normally, harming the legitimate interests of the merchants. Suddenly, everyone is in danger.
02 When disaster approaches, everyone looks for a way out
The home building materials store’s unauthorized rent increase has led to a tense relationship with the merchants, making the model of collecting rent on the ground unsustainable. Both merchants and stores have a clear understanding of this point, and they all show their own unique skills and find their own way out.
As for home building materials stores, let’s take the two giants as an example. Easyhome has embarked on a multi-business consumption development route, from Ankang imported food supermarket to the opening of children's paradise, Fukang senior care, mini zoo, Hema fresh food and other different business formats. By expanding its business scope, it has developed into a home furnishing store. Mainly, it is a complex integrating retail, catering, leisure and experience businesses. Red Star MeikaiLong is deeply involved in the home furnishing industry and has created its own label as an "omni-channel pan-home furnishing business platform service provider". On the one hand, the main business is asset-light, and on the other hand, it is deploying home decoration. Today, the business has expanded to O2O platform business, prepaid card sales, Internet finance, Home design, decoration, logistics and distribution, etc., have opened up the entire upstream and downstream industrial chain of pan-home consumption.
There are other transformation directions such as the development of smart homes or linked design, which cannot be generalized. The only thing worth mentioning is Huameilijia’s “self-sustaining store”. Compared with the first two routes, it is relatively more in line with the needs of domestic dealers and manufacturers: property-right operation, long contract period, good stability, dealers do not need to re-invest and redecorate, effectively avoiding the frequent changes of shops and rent in traditional stores rising issues. However, this kind of "self-sustaining store" is not unique to the ceramics industry. Dealers in the home appliance industry also explored this route in the early years, but the results were not ideal.
To sum up, there are only two choices for home building materials stores: change the industry and do whichever one makes money; and delve deeper into the industry to see which link can add added value to itself. Everyone has a bright future, but building materials dealers are excluded - although they seem to have many choices, in fact they either choose to enter self-sustaining stores or change careers. At present, before other traffic channels for building materials dealers take shape, they are still inseparable from home building materials stores. This is not only a problem of traffic, but also a problem of market competitiveness. A clustered "group" can always beat a lone wolf, unless the lone wolf gets together and becomes a wolf pack.
03 Traffic is the most important thing
The Xiyingmen Sanhuan Haisheng store where Mei Jinan is located is also a special case in the Fuzhou market. While other home building materials stores are increasing rents, Xiyingmen Sanhuan Haisheng store is lowering rents, and the rent reduction is very strong - according to feedback from relevant merchants, in the best case the rent reduction is equivalent to One year's rent. Mei Jinan told reporters from China Ceramics Network that the Xiyingmen Sanhuan Haisheng store already has 30 ceramic tile and 60 sanitary ware brands, including many big names in the industry.
Picture丨Mei Jinan (2nd from left) was interviewed by China Ceramics Network< /span>
Mei Jinan clearly knows that stores rely on traffic, so Xiyingmen·The most important task of the Sanhuan Haisheng store this year is to organize merchants to enter the community and develop traffic: the store will fund the construction of model rooms in the community, and the merchants will be responsible for publicity and planning to attract traffic. Judging from China Ceramics Network’s visit to the ceramic tile market in Fuzhou, the Xiyingmen Sanhuan Haisheng Store’s move has worked very well, and its foot traffic is one of the best among the local home building materials stores that China Ceramics Network has visited.
Picture丨Xiyingmen Sanhuan Haisheng Store
In addition to attracting traffic, the precision marketing model of home building materials stores leading teams into communities has other benefits. "First, it solves the problem of unity between stores and merchants, and second, it solves the problem of merchants not knowing what to do when opening a store every day." Mei Jinan introduced: "The merchants in our store should be the most united and will take orders from each other, such as bathroom tiles taking orders for ceramic tiles. In addition to orders from different industries, there will also be orders between peers in a competitive relationship. For example, if Brand K brings an order to Brand M today, Brand M will return it the next day. This business atmosphere of you helping me and I helping you has also won us many customers.”
As for why other home building materials stores are increasing rents but Xiyingmen Sanhuan Haisheng store is taking the initiative to lower rents, Mei Jinan believes that the field of home building materials is currently undergoing a reshuffle, and the interests of merchants and stores are consistent. , what both sides need to do is to cooperate and work together for symbiosis. If merchants cannot survive, it will be difficult for stores to survive; and if stores cannot survive, merchants' interests will also be damaged.
"In my opinion, the store should play the role of a stage. The store sets up the stage and the dealers sing." This is Mei Jinan's role positioning for home building materials stores. "We serve as a bridge between merchants, reduce their worries, and proactively compete for the market. In essence, the competition between stores in the future will be the competition between communities of interests such as 'stores + brands'."
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In fact, what is the difference between home building materials stores and commercial real estate? Both attract traffic by occupying good geographical locations, and then reap the benefits of merchants based on the traffic. The only difference is that one is in the building materials business and the other is in the service industry. However, in recent years, traffic has been dispersed and e-commerce has emerged. Stores cannot only rely on natural traffic to rob merchants. They need to do more work to increase traffic, such as collecting traffic themselves., expand the traffic pool.
The current situation is that the only "hostage" used by the store to rob merchants is seriously ill and may die at any time. On the one hand, the store is thinking of ways to save the "hostage", and on the other hand, it is also considering how to harvest the merchants before the "hostage" dies.
(Author: No)
