What kind of landscape will the building materials industry face in 2016?
Release Time:
2016-01-11
Source:
What kind of landscape will the building materials industry face in 2016?
The fiercely competitive year of 2015 has now come to a satisfying close. As businesses across the board take stock of their successes and challenges over the past year, they are also turning their attention to 2016—specifically, the market landscape that the home furnishings and building materials industry is poised to face. By planning ahead and adopting a long-term perspective, and by thoroughly analyzing and researching the opportunities and risks of 2016, companies can remain calm and composed in the face of change, ready to respond with confidence and agility.
1. The market landscape is being redefined, and industry reshuffling will become the new normal.
The industry’s past reliance on extensive, unregulated growth has become a fatal flaw that has drawn widespread criticism. Industry consolidation is now imperative: over the long course of marketization, an increasing number of companies have gradually exited the sector due to operational and developmental challenges. As a result, larger, scale-driven enterprises now enjoy greater market opportunities. Reorganizing and redefining the industry landscape to promote healthy development will be a key priority in 2016—and for the foreseeable future.
2. Essential demand has become the mainstream consumer segment in the market.
The golden age of real estate has passed. Under the new market landscape, core housing demand is the primary driver for the home furnishings and building materials industry. In this era of essential demand, consumers are becoming increasingly discerning when it comes to home renovation. From first-home renovations to upgrade-driven remodels, these segments will dominate the consumer market in 2016.
3. The development of the renovation industry will compel the home furnishings and building materials industry to transform its business model.
Against the backdrop of the internet-driven transformation spearheaded by EMKT.com.cn, an increasing number of innovative home-decoration business models are emerging. Home-decor firms like Xiaomi Home Decoration are leveraging internet-based thinking to reshape the traditional industry landscape. In this context, home-furnishings and building-materials companies must adapt to the evolving market and new consumer habits—rethinking and transforming the home-decor sector through an internet-centric lens.
4. Capital financing and consolidation in the home furnishings and building materials industry are imminent.
Faced with the enormous opportunity presented by the home furnishings and building materials industry, an increasing number of major investors are now scrutinizing and entering this sector, while home furnishings and building materials companies are accelerating their efforts to pursue capital-driven growth. Leveraging the power of capital to rapidly scale up and strengthen businesses has become a widely shared consensus in the industry.
5. The overall home furnishings industry is stabilizing, with consumer demand becoming increasingly rational.
Driven by the hype surrounding the “whole-home” concept, an increasing number of companies are entering the industry. As a brand-new business model, it has gradually evolved from being unfamiliar to well-known among many enterprises—and consumers are likewise becoming more familiar with and receptive to this approach. With such market development, the whole-home sector is poised to accelerate rapidly, and 2016 is expected to see robust growth in this market.
6. A service-oriented value chain will reshape the home furnishings and building materials industry.
In the home furnishings and building materials industry, where products are highly homogeneous, service offers an excellent entry point for differentiating one company from another. In 2016, as demand for offline internet-based services continues to grow, more and more companies will place greater emphasis on integrating service offerings to drive product sales—effectively shifting from a traditional product-driven service model to a service-driven sales model.
7. E-commerce consumption will become more rational.
The e-commerce boom is gradually fading, and in the home furnishings and building materials sector—where service has become the primary value proposition—more and more companies are reevaluating their e-commerce strategies. As consumers adopt a more rational approach to online shopping, an increasing number of firms are leveraging the internet to drive foot traffic to their brick-and-mortar stores, thereby maximizing the customer-attracting power of digital channels. At the same time, growing consumer demand for product experiences is prompting even companies that originally built their businesses on e-commerce to expand into offline operations.
8. Personalized needs are becoming increasingly apparent.
The rising consumer demand, centered on those born in the 1980s and 1990s, has made diversity and personalization the mainstream in the market. An increasing number of consumers are gravitating toward personalized products, shifting their focus from traditional factors such as quality and environmental friendliness to the appeal of customization. For many companies that prioritize personalization in their value proposition, this represents an exceptional growth opportunity.
9. Fine-grained operational management by distributors will become the trend.
Dealers have faced tough times in recent years. Under the pressure of a challenging market, many have struggled to stay afloat. Operating under a traditional, high-volume, low-margin model, their survival has largely depended on market conditions, with little focus on strategic business development. In 2016, refined, data-driven management will become the primary driver of future growth for dealers. Significant investment in store operations, business processes, team building, and marketing efforts will be essential—only by doing so can they scale their businesses sustainably and build long-term success.
10. Promotional activities are becoming more rational.
Under the shadow of an industry where sales fail to pick up without aggressive promotions, promotional activities have come to be seen as the sole driver of industry growth. However, as consumers become increasingly sophisticated, traditional promotional tactics can no longer ignite their purchasing enthusiasm. Consequently, there is a renewed demand for more rational and strategic promotion strategies. Home improvement and building-materials companies must therefore adopt a more measured and data-driven approach to market dynamics and evolving consumer preferences in their promotional efforts—thus paving the way for sustainable business growth.
