"The conclusion of the double-season Golden Week sales promotion marks the end of the peak sales period for the year. Given the challenging market environment this year, we’ve remained prepared, maintaining promotions even during traditionally slow seasons. However, sales figures in October have been disappointing, and the anticipated year-end surge hasn’t materialized as hoped," said a shop owner who operates a ceramics store in the Venus Building Materials Market on Tianbei Road in Luohu. "This year is undoubtedly tough."
With the end of 'Silver October,' this year's final peak sales season has drawn to a close. Back in February, a reporter from Southern Daily noted in an article titled 'The Cooling of the Housing Market Induces the "Butterfly Effect": The Home Decoration Industry Enters "Severe Winter."' Fast forward a year, and revisiting the home furnishing stores along Tianbei and Baoan North Roads, those interviewed shared that even during last year’s downturn in the property market, the market wasn’t this sluggish.
It’s concerning that despite widespread aggressive promotional strategies, the market hasn’t seen much improvement. What’s behind the weakness in the home furnishing market? And how will the home improvement industry progress in the future?
Are Stores Empty?
Since late last year, there have been numerous reports of home stores across the country shutting down or changing their business models. As early as the start of the year, insiders had predicted that by the end of this year, Shenzhen might see a significant number of brands withdrawing.
It’s reported that during the October double holidays, major home stores like Shenyejiafu, Jinhaima, and Red Star Macalline claimed that the promotions had significantly boosted merchant performance. Yet, after the initial buzz died down, visiting these same stores on weekdays and weekends revealed a quieter atmosphere. Amidst this stillness, a noticeable trend emerged: the vacancy rate in stores has increased compared to earlier in the year.
Reporters observed that some stores had posted "internal renovation" notices. While there are vacancies, they don’t seem to exceed 10% overall. However, speaking with merchants across multiple stores, some revealed that every July, September, or October, home stores face the challenge of renegotiating leases with existing tenants. During these periods, over a dozen stores in some locations chose to withdraw.
"Clearance" and "Nothing Left"—eye-catching promotional phrases occasionally attract a few customers into the store, but inquiries often lead to fewer sales. The ongoing downturn in the broader economy has led some store owners, like those in the door and window business, to discuss conditions with the store management, deciding to close the store by the end of the year. "Most stores don't make money from rentals. Only one or two out of ten stores actually turn a profit. Except for the factory-operated stores, most are losing money."
Boss Gong mentioned that everyone is striving for an aggregation effect and popularity, but the situation isn't ideal right now. "By the end of the year, we’ll sell as much as possible and then close the store."
Is Expansion the Breakthrough Path?
While some stores are closing, others are opening new ones—a peculiar phenomenon among current brand home furnishing stores. But whether the path of expansion can truly help stores escape the "icy period" of the market remains questionable.
At the end of July, the new Phuket Style Home opened. Reports indicated that on the first weekend of its opening, the store’s foot traffic and transaction volume surged, tripling typical weekend figures. In August, the newly opened European City Xiangjiang Home, billed as China's first 5G home complex, saw profits rebound by 8 million yuan in just two days after reopening. On September 23, the Shajing Store of Huameiju Home Life Plaza in Shenzhen opened—the second store Huameiju has opened in the city, with continuous promotional activities...
For traditional home furnishing stores, rent is a key source of survival. Without opening new stores or raising rents, expanding turnover becomes impossible.
For home manufacturers and distributors, the downturn in the broader economy has made most companies reluctant to invest further, yet they fear poor performance and hesitate to act. Consequently, the tension between market players has intensified.
Domestic and international home improvement companies have gradually realized that this state of affairs is unsustainable. Wang Tingguo, General Manager of Milan Spring Radiator, said that current building materials companies need to be selective about opening new stores. "Last year, many stores in newly opened locations incurred losses. Blindly pursuing market share can become a burden for companies." He mentioned that Milan Spring's approach to opening new stores has always been targeted.
"The home furnishing industry, like many other sectors today, is in a state of surplus—excess products, production capacity, and sales outlets," said industry expert Mr. Han. "As thresholds decrease and homogenization competition intensifies, coupled with the impact of the broader economic environment, the furniture industry is inevitably feeling immense pressure."
It’s noteworthy that, despite the sluggish overall economy, the concept of the home museum has emerged as a new trend in the past two years. For instance, the Art Exhibition Center expanded from Phase I and II to Phase III, with storefronts still in short supply. Before the opening of Shenzhen's first home furnishing market, "Slow Life," 95% of the shops in the third phase of the Slow Life · Home Furnishing Center of Sungang Craft City were already rented.
Jewelry boutiques or home experience museums provide new spaces for furniture sales. By treating home products as exquisite jewelry, the industry plays a role in greening the sector, and these differentiated stores are maturing.
The Limited Favorable Impact of Property Market Recovery
A sluggish home furnishing industry often points fingers at the unrelenting property market regulation policies. They argue that the sluggish overall property market has dragged down the downstream home building materials industry.
You Guozhong, Chairman of Shenzhen Renhao Furniture, urged companies and distributors to prepare for a prolonged battle. "We hope distributors understand that within the next three years, macroeconomic control won’t ease significantly. This year isn’t good, and next year might not be either."
"Real estate and the furniture market in Chengdu are inseparable, like teeth and lips." Zhu Changling, Chairman of the China Furniture Association, stated in an interview that typically, a downturn in the real estate industry affects the home furnishing industry after about a year or half a year.
However, interviews with several industry insiders revealed that even if the current trend of the housing market recovering could positively impact the home furnishing industry, companies remain uncertain about the extent of the favorability.
The question of whether the real estate market can truly recover is indeed "hanging." The report from the 18th National Congress of the Communist Party of China only mentioned once the establishment of a housing system combining market allocation and government security, strengthening the construction and management of affordable housing. Dong Fan, Director of the Real Estate Research Center at Beijing Normal University, views this as top-level design for solving housing problems, though it’s not a novel statement.
"In the face of rising and falling housing prices, the policy cannot be canceled in the short term until a suitable solution is found. Even after the 18th National Congress, certain aspects will continue to be severely restricted. If suppression is lifted, house prices will rise, affecting stability. This remains an unresolved issue," Dong Fan said.
"Home furnishing companies must find their own ways to survive and can no longer rely solely on real estate" became the consensus among interviewees. According to He He, Chairman of the Guangdong Furniture Chamber of Commerce and Chairman of Fuzhidao Furniture Co., Ltd., internally, while focusing on sustainable development, the industry should tap into its strengths to enhance product competitiveness and vitality.
Product vitality stems from quality, variety, and originality. Externally, attention should shift to emerging foreign trade markets like Southeast Asia, the Middle East, and Africa, exploring the "blue ocean." In China, initiatives like "furniture for the elderly" and "furniture for rural areas" may be worth exploring.
Transformation of Models to Break the Dilemma?
Gradually, online shops are becoming a new channel for home building materials.
Mr. Zhong and his wife, who live in the Longhua New District, are currently busy renovating their house. They entrusted the renovation project to a decoration company using a half-package model. Most of the tiles, flooring, kitchen and bathroom fixtures, appliances, wallpaper, hardware, etc., used for the renovation were purchased online.
He told reporters that the reason for purchasing online is convenience—it allows one to do renovations without leaving the house. Additionally, prices for building materials bought online are cheaper than in physical stores, and some products are primarily sold for promotional purposes. Sellers' detailed introductions and guarantees of quality are appealing.
Mr. Zhu also provided an example. Before the renovation began, he came across a special event on the official website of a well-known home improvement brand. A lower cabinet measuring 3 meters and an upper cabinet measuring 1.2 meters, along with drawer rails, hinges, handles, and disinfection equipment, cost only 10,000 yuan, with additional items discounted at 10% off.
"My kitchen isn't large, and 3.8 meters of cabinets is sufficient. The difference doesn’t add much to the cost—it’s very affordable." After placing an order online and registering at the physical store, the designer measured the size, and he concluded, "For such a low price, it’s a great deal to buy branded goods without leaving the house and enjoy the service!"
Faced with high store rents, many companies have ventured into new development paths. Traditional home stores have opened e-commerce channels, and home e-commerce platforms have set up offline physical stores. With the continuous growth of online shopping groups, the transformation of traditional furniture companies into e-commerce has become a trend.
According to data from the State Administration for Industry and Commerce’s website on September 10 this year, the number of online shopping users nationwide has reached 210 million, accounting for 39% of the 538 million internet users. Online shopping has become an integral part of people’s lives. Last year, the national e-commerce market transaction volume was 7 trillion yuan, with the online shopping market reaching 773.56 billion yuan.
With such prospects, the slogan "If you don’t do e-commerce, you'll regret it in five years" is everywhere. As a result, many companies are placing high hopes on e-commerce. This trend has led many home furnishing and home improvement building materials companies to establish online malls. With the growing popularity of the internet, consumers are increasingly preferring online shopping as a convenient method.
He Bin, Director of the Shenzhen Real Estate Information Network’s Furniture and Decoration Department, who is familiar with group purchases of home improvement and building materials, told reporters that to cater to different consumption levels, many first- and second-tier building materials merchants now collaborate with building materials group-buying websites. The online price of a product is generally 20-30% cheaper than in physical stores. Group-buying websites directly cooperate with manufacturers, cutting out middlemen costs. Mature websites also monitor merchants’ after-sales services. Now, many consumers are gradually purchasing home improvement building materials online.
So-called online shopping is also online shopping. He Bin said that although there are many substandard products on the internet, negatively impacting the entire industry, the shrinking market and rising costs have indeed made the home furnishing market sluggish. Therefore, online sales have had a significant impact on the traditional market, making life difficult for physical stores.
In summary, the combination of e-commerce and physical stores may become the future trend of the furniture market.
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