Home Retailing - China - December 2018

OVERVIEW
What you need to know
Covered in this Report
Excluded
Sub-group definitions
EXECUTIVE SUMMARY
The market
Figure 1: Best- and worst-case forecast of total furniture market value, China, 2013-23
Companies and brands
Figure 2: Market share of top 10 furniture brands/manufacturers, China, 2013-17
The consumer
Consumers are active in decorating their home
Figure 3: Attitudes towards home decoration and home retail products, August 2018
Essential homeware items are the most purchased home retail products
Figure 4: Home retail products purchased in the last 12 months, August 2018
Functionality or emotional need, what drives consumers to buy?
Figure 5: Reasons to purchase home retail products, August 2018
Functionality comes before appearance
Figure 6: Top three factors influencing choices of different home retail products, August 2018
Online channels outshine different offline channels
Figure 7: Purchase channel for home retail products, August 2018
Consumers like to get information from offline and online
Figure 8: Source of information for home retail products, August 2018
What we think
ISSUES AND INSIGHTS
Retailers need to be more approachable online and offline
The facts
The implications
Consumers care more for lifestyle brought by brands than prices
The facts
The implications
Extra functions on home retail products will become essential
The facts
The implications
Figure 9: OOO My Design’s Shy chair set
THE MARKET – WHAT YOU NEED TO KNOW
Challenges brought by control on real estate and environmental regulations
Upgrade in consumers’ needs will empower the market again
Transformation in business brought by digitisation
MARKET SIZE AND FORECAST
2018 is a challenging year
Figure 10: Total sales, wholesale and retail sales of the furniture market, China 2013-18
Market will suffer for few more years but still has potential to rebound
Figure 11: Best- and worst-case forecast of total furniture market value, China, 2013-23
MARKET FACTORS
Government control on real estate and on environmental issue
Consumers’ upgraded needs on home decorating will empower the growth of market
Figure 12: Attitudes towards home and home decoration, August 2018
New capitals starts to push transformations in home retailing
KEY PLAYERS – WHAT YOU NEED TO KNOW
Local retailers/brands are dominating the market
Fully assembled products are still the main stream though customised products are uprising
Distribution is getting streamlined as well as multichannel
Innovations are brought by technologies and reformation in distribution
MARKET SHARE
Fully assembled furniture brands are leading the home retail market
Figure 13: Best- and worst-case forecast of retail furniture market value, China, 2013-23
Figure 14: Market share of retail sales value of top 10 furniture companies, China, 2013-17
COMPETITIVE STRATEGIES
Home retail business is streamlined by digitisation
Figure 15: Purchase channel for home retail products, August 2018
Emphasis on lifestyle instead of functionality itself
Increase customer touch points at different consumption scenarios
Figure 16: Shangpin collection store in Shanghai, 2018
Customisation can be affordable
Leverage young consumers’ desire for sharing
New marketing strategies move towards home retail
WHO’S INNOVATING?
VR/AR assist home décor
Figure 17: Placing IKEA virtually via IKEA Place in real environment, 2018
Well suited for different living scenarios
Figure 18: Bene’s Work and Life table piece
Bringing your home living elsewhere
Figure 19: MUJI hotel’s room
A more eco-friendly home
Figure 20: EcoQube greenhouse set, 2018
THE CONSUMER – WHAT YOU NEED TO KNOW
Consumers like to decorate home and to buy home retail products
E-commerce channels are most popular
Consumers are purchasing for both functional and emotional reasons
Function factors drive choices
ATTITUDES TOWARDS HOME DECORATION AND HOME RETAIL PRODUCTS
Home reflects personality and style
Figure 21: Perception of the importance of home decoration, August 2018
Home should be multifunctional
Figure 22: Attitudes towards home functions, August 2018
Continuous willingness to spend on decorating home
Figure 23: Attitudes towards keeping informed of and purchasing home retail products, August 2018
Figure 24: Attitudes towards purchasing and updating home retail products, by family status, August 2018
HOME RETAIL PRODUCTS BOUGHT
Essential homeware items are more welcome than decorative ones
Figure 25: Home retail products purchased in the last 12 months, August 2018
Consumers aged 20-24 are least likely to buy kitchenware
Figure 26: Kitchenware purchased in the last 12 months, by age, August 2018
Decorative homeware items are popular among 80s and 90s consumers
Figure 27: Home air fresheners and home decoration products purchased in the last 12 months, by generation, August 2018
Household population determines purchase incidence for furniture
Figure 28: Furniture purchased in the last 12 months, by demographics, August 2018
FACTORS INFLUENCING CHOICES OF HOME RETAIL PRODUCTS
Consumers consider functionality of home retail products first
Figure 29: Top three factors influencing choices of different home retail products, August 2018
Consumers aged 20-24 care about design of furniture mostly
Figure 30: “Good-looking design” as a factor influencing choice of furniture, by age, August 2018
Natural materials are important for household linens
Brand name would affect more choices for essential home items
Figure 31: “Brand” as a factor influencing choice of kitchenware, by demographics, August 2018
Eco-friendly factor is effective enhancer for decorative homeware choice
Figure 32: “Eco-friendly” as a factor influencing choices of decorative homeware items (home decoration products and air fresheners), by age, August, 2018
REASONS TO PURCHASE 
Purchasing home products is a functional and emotional decision
Figure 33: Reasons to purchase home retail products, August 2018
Figure 34: Reasons to purchase home retail products, by age, August 2018
Consumers aged 30-49 purchase mainly for upgrade existing product
Figure 35: “Renewing items with upgraded features” as a reason to purchase, by age, August 2018
20-24-year-olds buy home retail products for basic function
Figure 36: “Replace worn-out/broken items” as a reason to purchase, by age, August 2018
Figure 37: “Make home premium and luxurious” and “keep up with latest fashions” as reasons to purchase, by age, August 2018
Post-80s and post-90s contradict on personal styles and limits through living situations
Figure 38: Housing situation of consumers, by generation, August 2018
PURCHASE CHANNELS
Welcome to the era of e-commerce
Figure 39: Purchase channel for home retail products, August 2018
Figure 40: E-commerce and supermarkets/hypermarkets as purchase channel for home retail products, by age, August 2018
Stores specialising in home retail are less competitive
Figure 41: Different channels used for purchasing furniture, August 2018
Fast fashion retailers have their best chance in decorative homeware
Figure 42: Decorative home retail products purchased cross-channels and at fast fashion retailers, August 2018
Variety stores are favoured by female consumers under 30
SOURCES OF INFORMATION
Consumers use both offline and online sources for ideas and inspirations
Figure 43: Source of information for home retail products, August 2018
Consumers with higher income would like to get information from more sources
Figure 44: Repertoire analysis of information sources, by household income level, August 2018
Lifestyle content impacts consumers aged 25-29 most
Figure 45: Lifestyle content as information for home retail products, by age, August 2018
MEET THE MINTROPOLITANS
Mintropolitans enjoy lifestyle content more
Figure 46: Selected source of information for home retail products, by consumer classification, August 2018
Mintropolitans seek more eco-friendly home retail products
Figure 47: Selected factors influencing choices home retail products – eco-friendly, by consumer classification, August 2018
APPENDIX – MARKET SEGMENTATION
Figure 48: Total value sales of home retail market, by segment, China, 2013-23
APPENDIX – METHODOLOGY AND ABBREVIATIONS
Methodology
Fan chart forecast
Abbreviations