The household penetration rate has just exceeded 10%. Why is it regarded as a future explosion in the home appliance industry

The huge market potential stimulated by China's consumption upgrade will in turn promote the technological iteration and innovation of a certain product or industry, which in turn will promote the rapid popularization of this product. The home appliance industry, which is closely related to people's lives, has followed this rule of development.

The household penetration rate has just exceeded 10%. Why is it regarded as a future explosion in the home appliance industry

In 2017, the vacuum cleaner as a representative of cleaning appliances continued the blowout growth of the previous two years, in stark contrast to the poor performance of traditional household appliances such as TVs, refrigerators, and washing machines. Some people attributed its sudden rise to the gradual increase in consumer awareness of environmental protection and health, as well as the healthy competition of leading domestic and foreign brands such as Dyson, Philips, Puppy Appliance, Midea, etc., which cultivated the market. The above two forces use consumption upgrades as the substrate to help the domestic niche product become an explosive product on the road to popularization, vividly explaining the delicate relationship between consumers' pursuit of "a better life" and the growth of the home appliance industry. .

When the seemingly contradictory keywords of "Chinese household penetration rate of 10%" and "global market-scale products" are integrated, the vacuum cleaner industry has already opened up a space with unlimited development potential.

Consumption upgrades spawn explosive products, and vacuum cleaners do their part

According to the monitoring data of the market research agency Zhongkang, a total of 15.668 million units were sold in the domestic vacuum cleaner market in 2017, with a year-on-year increase of 30.2%, far exceeding the overall growth rate of the home appliance industry. Another survey agency, GfK China, is more optimistic. It predicts that the growth rate of the vacuum cleaner retail market in China will be 44% in 2017, which is higher than 2016, and the overall development trend is accelerating.

In the current home appliance industry, there have been two highly popular and highly sought-after products in successive years, vacuum cleaners and dishwashers. However, due to the high installation space requirements, dishwashers are difficult to overcome in a short period of time under the Chinese market environment, and there is no such obstacle in the use of vacuum cleaners. In addition, a family usually has a dishwasher, but many users will consider buying multiple vacuum cleaners in order to cope with different application scenarios. A famous household appliance brand has conducted a global survey. Nearly 30% of the surveyed users have two vacuum cleaners, and 6% have three or more. Therefore, from the perspective of growth, in a longer period of time, the vacuum cleaner will be superior to the dishwasher.

The household penetration rate has just exceeded 10%. Why is it regarded as a future explosion in the home appliance industry

In the next 5 years or even 10 years, China's vacuum cleaner market will maintain rapid growth. Such judgment is based on the following three points.

First, the family penetration rate is low and there is huge room for growth.

Compared with the nearly 100% household penetration rate of vacuum cleaners in developed countries such as Europe and Japan, the vacuum cleaner is still a niche product in China, and the household penetration rate has just exceeded 10%. Even in China's first- and second-tier cities, the vacuum cleaner distance has become the "standard" for household There is still a distance. Judging from the popularity of vacuum cleaners in developed countries, China's vacuum cleaner market has great growth potential. The product attributes of multiple vacuum cleaner application scenarios also mean that a family can have multiple vacuum cleaners, which will greatly increase the domestic ceiling of vacuum cleaners and provide a very broad space for the development of the industry.

Second, consumption upgrades stimulate demand and the market enters a golden period.

On the time axis, the rise of the vacuum cleaner market coincides with the rise of the domestic middle class. In fact, it is also the consumption upgrade driven by the middle class that has driven the vacuum cleaner market in China. "The Economist" predicts that China's new middle class will reach 470 million by 2020. The increasingly large "new middle class" has the characteristics of pursuing the quality of life and strong acceptance of new things. This also determines that they have a high degree of recognition for the enjoyment of vacuum cleaners just after the needs of the home appliances are met. As supporting evidence, while the market scale is expanding rapidly, the sales growth rate of the vacuum cleaner market in the past two years has been much higher than the sales volume growth rate, indicating that high-end products have experienced rapid growth. In the next 3 years, China will enter the sprint stage of fully building a well-off society. Whether it is national policy support or residents' consumption level, consumption upgrade will lead the vacuum cleaner industry into a golden period of product upgrade, market iteration, and high-speed growth.

Third, the growth prospects are optimistic, and companies are working hard to make money.

From the data provided by Zhongyi Kang and GfK, it can be found that since 2015, the average unit price of the vacuum cleaner market has shown an upward trend. This is not only a manifestation of consumption upgrades, but also due to the joint efforts of Chinese and foreign brands to promote the rapid upgrade of products. From an industry perspective, vacuum cleaners are products of global market size, and the industry's profitability is strong and relatively stable. In the past two years, more and more foreign brands have entered the Chinese market, and domestic brands such as Puppy Appliances, Midea, Haier, and Lake have also begun to be fully deployed. The symbiosis and win-win of Chinese and foreign brands not only add more product choices to consumers, but also accelerate the rate of increase in the overall market size.

Domestic and foreign brand games, domestic manufacturers perform strongly

According to Zhongyikang's monitoring data, domestic brands represented by Puppy Electric and Midea in 2017 performed well in the vacuum cleaner market, accounting for more than 60% of the sales share. The total sales of these two brands in 2017 exceeded 1.5 million units, of which the sales of Puppy Electronics exceeded 2 million units, ranking first. The market shares of domestic brands such as Midea, Haier, Lake, and Delmar have also increased to varying degrees. There are three reasons for the strong performance of domestic brands.

First, China's vacuum cleaner market with low penetration rate and high growth is undoubtedly a "big cake". With the influx of more brands, market competition will test the comprehensive strength of enterprises, including core operating capabilities such as supply chain, channels, and marketing. , Also includes the company's adaptability to the market environment and insight into the consumer population. Domestic brands that understand the flexibility of the local market, channels, and business strategies have a firm foothold and are clearly more likely to gain market advantage.

Secondly, the diversified consumption structure of the Chinese market provides different enterprises with development opportunities. For example, Dyson focuses on high-end, the main advantage is that the product is simple and easy to use. Although the high price makes ordinary Chinese families prohibitive, it does not hinder the hot sale of its products among the small crowd. Puppy appliances focus on the product and focus on user experience. The "central maintenance" after-sales service model is very popular. The high- and low-end full-coverage product line and cost-effective market strategy are quite appealing in the new middle-class families, so they have gained Higher market share. As a domestic old brand, Midea vacuum cleaners have a group of loyal users in the urban public class. In the past two years, they have integrated Toshiba Japan and EUREKA in the United States to form a new business department and exert their strength on products and core technologies. Based on the existing brand positioning, these brands have found good market entry points for their respective development directions, and have achieved good results.

Third, the rapidly developing e-commerce platform has become a booster for the rise of domestic brands. According to the "2017 Power Grid Purchase Analysis Report", on the e-commerce platform, the top few sales of traditional home appliance categories are domestic brands. If viewed from the proportion of sales, domestic brands have an overwhelming advantage.

A similar situation also appears in the emerging vacuum cleaner industry. In 2017, among the top ten brands of vacuum cleaner online sales and sales volume, 7 were from China. The strength of domestic brands lies in catching the rapid development of the Chinese e-commerce platform earlier, which in turn attracts young consumer groups chasing the concept of quality life. The success of Puppy Appliances, which focuses on the e-commerce market, has become a model. In the online market, Puppy Appliances' sales have occupied the top spot for many consecutive years. It is precisely by virtue of the wind and water in the e-commerce platform, Puppy Electric has always ranked first in the vacuum cleaner industry. At present, all major brands in the home appliance industry have embraced e-commerce, and offline brand competition in various fields is being transplanted online. The opportunities for new brands or companies that miss the outlet to take advantage of online rapid expansion of the market are greatly reduced. Cases like puppy electric appliances in vacuum cleaners have been difficult to replicate.

The household penetration rate has just exceeded 10%. Why is it regarded as a future explosion in the home appliance industry

Before, many consumers lacked confidence in domestic vacuum cleaners mainly because of technical concerns. Industry experts said that there is no so-called "bottleneck" in vacuum cleaner technology. The advantages of Chinese brands are localization and scale. The increase in investment is not only the same as that of foreign brands in terms of technical level, but the breakthroughs made at the market level are even more significant. For example, in recent years, wireless handheld vacuum cleaners are accelerating the pace of replacing horizontal vacuum cleaners. Through a series of product upgrades, domestic brands such as Puppy, Midea and Lake have not lost to foreign brands in this field. It is worth noting that China ’s consumption upgrade potential is huge, which in turn will also promote technology upgrades and innovations, combined with its relative advantage in market size, these factors will help domestic brands to achieve post-control.

As the category with the most development potential in China's home appliance industry, vacuum cleaners face a series of variables such as upgrading of consumption structure, channel integration, changes in market demand, and application of new technologies. But it is foreseeable that these changing factors will cause intensified brand competition and accelerated industry concentration, and the trend of the strong will become more obvious, but the consumers will ultimately benefit.

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