China's home appliance market showed strong market resilience in the first half of 2019

Consumption upgrade + consumption sinking stimulates the potential of home appliance market
 

On July 29, the China Center for Information Industry Development released the "China Home Appliance Market Report for the First Half of 2019" (hereinafter referred to as the "Report") in Beijing. The "Report" shows that from January to June 2019, my country's home appliance industry operated stably and made steady progress, with production and sales both higher than the same period last year. Among them, domestic sales further expanded, and the total retail sales in the domestic market reached 429.7 billion yuan. The "Report" shows that the contribution rate of online channels to home appliance sales has further increased, exceeding 40% for the first time, an increase of 7.5 percentage points over the same period last year; e-commerce has occupied two and a half seats in the top three home appliance retail channels, among which JD.com ranks first among all-channel single retailers in my country's home appliance market with a share of 22.7%, O2O retail giant Suning.com ranks second with a share of 21.1%, and Tmall ranks third with a share of 10.1%. An Hui, deputy chief engineer of the China Center for Information Industry Development, said that driven by the two major factors of consumption upgrading and consumption sinking, the home appliance market in the first half of 2019 showed strong market resilience.

Emerging categories drive consumption upgrades and add market vitality.
After more than 30 years of development, the home appliance industry as a whole is in a mature stage and the market is saturated. The report shows that in the first half of 2019, the average retail price of most home appliance categories fell, but the price reduction did not bring about sales growth. Sales of traditional home appliances such as color TVs, air conditioners, refrigerators, washing machines, range hoods, gas stoves, and water heaters were weak. For example, color TVs fell 11% year-on-year, air conditioners fell 3.4% year-on-year, and refrigerators fell slightly by 0.8% year-on-year. On the other hand, emerging home appliances such as kitchen appliances such as dishwashers, steamers, and integrated stoves, and personal care and living appliances such as electric toothbrushes, curling irons, facial washers, and sweeping robots have achieved significant improvements and have become the main force driving the growth of home appliances in the first half of the year.

The report pointed out that in the first half of 2019, the consumption upgrade trend of China's home appliance market was strong. Home appliance consumption has shifted from functional consumption that meets rigid needs to quality consumption that meets improvement and enjoyment needs. New home appliances that meet the requirements of personalization, intelligence, and service have changed the structure of people's home appliance consumption and the home appliance market itself. An Hui used vacuum cleaners as an example to illustrate this change: vacuum cleaners are traditional small home appliances and are in the mature stage of the product life cycle. In recent years, with the development of technology and the promotion of leading enterprises, sweeping robots, mite removers, upright cordless vacuum cleaners, handheld push rod vacuum cleaners, micro vacuum cleaners, barrel-type household vacuum cleaners and other products have emerged, forming a huge product array with unit prices ranging from 60 yuan to 6,000 yuan, meeting the diverse segmented needs of consumers. The vacuum cleaner market has regained vitality, which is a successful case of supply-side structural adjustment to drive consumption upgrades and make the market full of vitality.

The explosion of the village-level market, the sinking of consumption and the tapping of market potential
. While expanding the "breadth" of the market through consumption upgrading, in the first half of 2019, driven by e-commerce channels, China's home appliance industry has made remarkable achievements in deepening the village-level market and increasing the market depth. The "Report" shows that in the first half of 2019, less than 20% of China's home appliance online shopping sales came from the village-level market, but the growth rate reached 96%, far higher than the 19% growth rate of China's home appliance online shopping market in the first half of the year. Taking the "6.18" in the first half of the year as the node, the village-level market home appliance online shopping has exploded, injecting momentum into the sluggish home appliance market.
The report pointed out that the expansion of the rural home appliance market and the explosion of the village-level home appliance online shopping market are representative of the prosperity of my country's rural consumer goods market in the first half of the year, mainly due to the role of five factors: first, the increase in per capita disposable income of rural residents and the upgrading of rural consumption concepts; second, the rural population base is large and less affected by real estate regulation; third, it is driven by young people in small towns and returning youth; fourth, leading e-commerce companies continue to deploy village-level markets, and network and logistics infrastructure are gradually improving; fifth, my country's leading home appliance brands are accelerating the sinking of channels. The report shows that in the first quarter of 2019, Alibaba added 102 million active consumers, of which 77% came from the village-level market; as of the end of June 2019, the number of JD.com's home appliance township stores has increased from 11 in the same period of 2016 to more than 10,000, and JD.com's service stores have increased from 1,500 to nearly 3,000.

An Hui analyzed that in the second half of the year, the effectiveness of consumption policies of the central government and governments at all levels will become increasingly stronger, consumption upgrades and consumption penetration will further expand, and the home appliance market will continue to develop steadily.