Optimize the layout of offline stores, and accelerate the reshuffle of the home textile industry

In the first three quarters of this year, affected by the domestic and foreign macro situation and multiple factors exceeding expectations, the scale of production and sales of home textile industry shrank, and the profit declined year-on-year.

In the first three quarters, the revenue of Luolai Life reached 3.718 billion yuan, down 7% year on year; Net profit was 392 million yuan, down 20% year on year. The revenue of Mercury Home Textiles in the first three quarters was 2.498 billion yuan, with a year-on-year growth of 1.69%; Net profit was 183 million yuan, down 27% year-on-year. Mengjie's revenue in the first three quarters was 1.396 billion yuan, down 8.76% year on year; The loss was 98.07 million yuan, down 4.57 times year-on-year.

Yi Changhai, a professor at Wuhan Textile University, said in an interview that the profit decline of home textile enterprises is caused by many reasons. First, the rising labor cost and the rising pressure of raw material cost this year, as well as the increased logistics pressure caused by the spread of the epidemic in China, the benefits of home textile industry have fallen sharply. Second, affected by the slowdown of world economic recovery and many factors such as geopolitics and trade friction, the demand of home textile foreign trade market is generally weak compared with last year. Third, the environmental protection pressure at the production end also makes small and medium-sized home textile enterprises face the pressure of transformation.

At the same time, since the outbreak of the epidemic in 2020, more and more consumers have changed their shopping habits, the online customer flow has increased significantly, and the offline sales are generally facing difficulties. The sharp decline in profits makes home textile enterprises begin to optimize the scale of offline stores.

Luolai Life still maintains a store elimination rate of about 5%. Its semi-annual report shows that by June 30, 2022, the company has a total of 2,518 stores of various domestic brands. In the first half of this year, 21 directly operated stores were opened and 14 were closed. A total of 115 franchise stores were opened and 85 were closed. A reporter from China Economic Weekly found that the number of terminal stores of Luolai in 2020 and 2021 decreased by 14.8% and 7.4%, respectively, compared with 2019.

Affected by the epidemic in 2020, Mengjie Stock's channel sinking strategy was blocked. From 2020 to 2021, the scale of offline stores was reduced for two consecutive years, and offline sales were greatly affected. In 2020 and 2021, 830 and 700 terminal stores of each brand will be closed respectively. Take 2021 as an example, Mengjie Stock will close 180 directly operated stores due to reasons such as operation not meeting expectations. Due to the impact of the epidemic and contract termination and other factors, 520 franchise stores were closed.

In the first half of 2022, Mengjie Shares continued to "close stores to stop bleeding". According to the semi-annual report, as of June 30, Mengjie Shares had 1127 franchised stores, 45 newly opened, and 125 franchised stores were closed due to unsatisfactory business expectations and the company's proactive strategy adjustment.

In the semi-annual report, Fuanna also said that with the fierce market competition of consumer brands, offline stores in the home textile and home furnishment industry have been cleared, and only some brands have developed their offline directly operated stores with refined operation.

Mercury Home Textile said that in the past two years, under the impact of the epidemic, small and medium-sized home textile enterprises are facing a more difficult business environment, from the offline channel, the core commercial bodies have limited capacity for home textile brands.

Yi Changhai thinks: "Home textile industry offline store contraction trend will continue. In the weak consumption background, the store labor, decoration, rental and so on to the home textile enterprises bring huge cost pressure. If the home textile enterprises can not achieve a better integration of online and offline development, offline physical stores may "drag" the enterprises to death. The online transformation of home textile enterprises has been the general trend."

To transform home textile enterprises, how to go through the "Internet +" mode?

Due to the high degree of product standardization and low barriers to entry, the domestic home textile industry has an extremely fragmented market. With the rapid development of the Internet, some small home textile brands have joined the tide of e-commerce live streaming, and they impact the business of traditional home textile enterprises with the help of the "Internet +" model. Leading companies are also moving faster online.

According to the data of Euromonitor, the proportion of e-commerce channels in the home textile industry increased from 9% in 2016 to 18% in 2020. The online process of leading enterprises far exceeded the average level of the industry and still maintained strong growth.

The change of consumption habits, so that more and more home textile enterprises with online platforms to carry out sales. In 2021, all textile enterprises will focus on online marketing and obtain new growth points through live streaming, community marketing, brand mini programs and other tracks.

Pacific Securities research report shows that in 2021, Mercury home textiles online account for 51.7%, online volume is 1.965 billion yuan, still maintaining a strong growth trend; The online proportion of Luolai Life is 28.0%, and the online volume is 1.612 billion yuan, which is expected to continue to exert power online. Fuanna online accounts for 41.6%, and online volume is 1.323 billion yuan.

Pacific Securities research report said that with the sinking of the leading brand channel squeezing regional brands, and power in the e-commerce channel, the industry accelerated reshuffle, market share to the home textile leading, concentration continues to improve, especially the e-commerce channel strong companies.

Xiong Fei, a senior figure in the home textile industry, told reporters that from the online channel, consumers online to buy home textiles product price, customer price are constantly improving, consumers are more willing to choose brand products. The epidemic has promoted the digital transformation of home textile enterprises, promoting digital transformation in production, logistics supply chain and internal management of home textile enterprises.

Yi Changhai told reporters that the advantages of traditional home textile enterprises focus on the channel resources of offline stores, but faced with the impact of e-commerce, many home textile enterprises are reluctant to go out of the "comfort zone", and the slow transformation leads to their own business difficulties. "The key to the transformation challenge of home textile enterprises facing digital transformation is the transformation of thinking. From the perspective of supply chain efficiency, traditional home textile enterprises do not discard the original operational ideas, but face low operational efficiency. The successful home textile enterprises will focus on the intelligent management of the supply chain, such as reducing the logistics and communication costs of the supply chain, balancing capacity and inventory pressure, and improving the overall efficiency of production and rapid response ability."

Xiong Fei frankly, for home textile enterprises, e-commerce team construction is also essential. Only highly specialized e-commerce business teams can quickly respond to the changing trends of online channels, which is completely different from the original operating capacity defined by home textile enterprises.

"Home textile enterprises integrate upstream and downstream resources and attract customers through short videos, live streaming and other ways, so as to explore the road of integrated development of online and offline." Yi Changhai is optimistic about the future of the home textile industry, believes that the large-scale growth of married and child-bearing population will greatly drive the consumption demand of household products. In addition, birth liberalization will also stimulate the growth of residents' demand for improvement of the home environment.

Fujian ZhangpingXielong Group High-tech Chemical Fiber Company Co., Ltd. leading products of include:nylon thermal fuse, TPU special filament, polyester thermal fuse, TPU hot melt omentum, PA hot melt omentum,.The company has always adhered to the 3s core service tenet: "saving time, cost savings, saving losses", advocates a total of industrial value, and is committed to providing a better solution for the overall industrial chain. Plan, welcome to buy the nylon thermal fuse，polyester thermal fuse!