Big Prospects for Small Appliances in China Small Appliance Industry
We all know that Coronavirus came from China. Let us understand their Business situation in Coronavirus era.
The traditional home appliance industry is a very
high-quality investment track for A-shares, and many high-quality enterprises
have also been born in the home appliance industry, such as Gree Electric,
Midea Group, Haier Zhijia and so on.
As the development of traditional home
appliances becomes more mature, small home appliances products gradually enter
people's vision. Let's take a look at the future development prospects of the
small home appliance industry.
1. Large industry space
As China's economy develops steadily, the rate of
urbanization, the increase in per capita disposable income, and the upgrading
of consumption concepts, small appliances are becoming more and more popular
with consumers as a symbol of high-quality life.
Driven by the single economy,
silver-haired economy, white-collar economy, mother group, and student party,
the industry has grown steadily.
According to the statistics of the Prospective
Industry Research Institute, the market size of China's small home appliance
industry is 401.5 billion yuan in 2019, with an average annual compound growth
rate of 13.3% from 2012 to 2019.
It is predicted that the market size will
exceed 640 billion yuan in 2023, reaching 6460 100 million yuan.
Small household appliances mainly include three categories,
small kitchen appliances, small environmental appliances and personal care
small appliances.
At present, small household appliances in Chinese households
are mainly based on small kitchen appliances.
In addition to home appliances
(electric rice cookers, induction cookers, electric pressure cookers, electric
kettles, soy milk machines), the penetration rate of other small appliances is
still at a low level.
According to Euromonitor data, the number of small
household appliances in urban areas in China is about 10, and the number of
rural households is less than 5, which is far less than the level of 30 kinds
of households in developed countries in Europe and America.
From the perspective of industry space and penetration rate,
small home appliances are promising.
2. Catalytic development
During the outbreak of the Spring Festival, consumers went
out for dinner, travel, and consumption were greatly weakened.
Closed
management increased the time for residents to stay at home, and household consumption
increased sharply.
Small household appliances benefited from this, coupled with
the dominance of small household appliances online channels, the epidemic
further amplified the comparative advantages of small household appliance
brands with an online advantage layout.
Home time is extended, the frequency of cooking is
increasing, and the demand for small kitchen appliances is increasing.
The
category of small home appliances is suitable for online sales, and compared
with traditional home appliances, the installation-free and low unit price
attribute has better online sales.
After mid-January, residents' awareness of
epidemic prevention increased, and offline retail experienced cold.
According
to Aowei Cloud retail data, during the 4-7 weeks (ie 1.20-2.16), the small
kitchen appliance products faced different declines in the offline range, and
the offline sales of most common categories fell by about 60%. However, at the
same time, there is a trend of high growth online. Frying machines, electric ovens,
electric baking pans, cooking machines, wall breaking machines, etc. have all
achieved a growth rate of more than 50%.
According to Suning's big data on
small appliances in February, the small electric appliances in the kitchen
increased by 280% year-on-year, the air fryers increased by 659%, and the
electric lunch box increased by 2612%. Among them, during the period of
2.9-3.5, Suning's electric lunch box sales increased by 1958.6% year-on-year,
and electric hot water cup sales increased by 459.4% year-on-year.
According to
the data released by Tmall, the first three hours of sandwich machine sales
increased by 1500% year-on-year, and the 38-minute sales of chef machines
exceeded that of the same period last year.
The popularity of environmentally clean appliances has
accelerated, and the epidemic has accelerated category education.
Under the
influence of the epidemic, residents' demand for sterilization and disinfection
has increased.
The disinfection scenes in the home environment mainly include kitchenware
disinfection and environmental disinfection.
In the past, the utilization rate
of disinfection machine categories was low, and the growth rate was
significantly increased under the influence of the epidemic situation.
In
February, the suning disinfection machine category increased by 137.77%, and
the sales of hanging ironing machine categories that also have the ability to
eliminate epidemics increased by 120%. The category of vacuum cleaners
increased by 76% year-on-year.
3. Consumption upgrade is essential
During the epidemic, the development of small household
appliances was promoted, but the root cause was the upgrading of consumer
concepts.
China ’s per capita GDP has exceeded 10,000 US dollars. With the
increase in consumption levels, the demand for small household appliances has
gradually increased. This is the intrinsic driving force for the market
expansion of the small home appliance industry.
The new generation of consumer groups represented by
"post-90s" and "post-00s" have continuously increased their
purchasing power.
Under the premise of basic functional attributes, they pay
more and more attention to value and temperament. The so-called "value is
justice".
At present, there are some soft and cute products in the market.
The design is exquisite and cute, and the color is cured, which makes people
feel full of happiness. For example, the yoghurt machine, egg cooker, toaster
and so on.
In addition, according to data from the Ministry of Civil
Affairs, in 2018, China's single adult population exceeded 100 million, and the
single adult population exceeded 77 million. The huge single population has
resulted in "single economy" and "lazy economy".
Consumers'
personalized demands have prompted one-person small appliances to become popular
in the market, such as small rice cookers, portable accompanying cups, single
small ovens, and sweeping robots.
In 2019, the share of online single-function
small-volume electric ovens accounted for 13.2%, an increase of 4%
year-on-year.
With the growth of new generation consumer groups and single
consumer groups, consumption concepts and consumption structure have been
slowly changing.
These new consumer groups are pursuing a higher quality of
life than older generation consumers, so the development of small household
appliances Health.
4. Reconstruction of marketing methods
With the vigorous development of the Internet, the market for
small home appliances has become increasingly diverse.
In addition to the
traditional e-commerce companies Tmall, JD.com, and Suning, social platforms
(Xiaohongshu, Pinduoduo, WeChat), short videos (douyin, Kuaishou), live
broadcasts (Taobao, JD.com), and a built-in shopping mall on the platform (AIQI
Art) has gradually become a new battlefield.
With the rise of live streaming
e-commerce and the formation of consumers' online shopping habits, small home
appliances benefit from the advantages of small size, exquisite appearance,
unique functions and other advantages in the live streaming dividend.
The new marketing methods such as live broadcast and short
video not only spread quickly and cover a wide area, but also greatly improve
the conversion rate through the push of AI algorithm.
Furthermore, the sales
rate of live broadcast is fast, the turnover rate of inventory is fast, and the
middle is reduced.
The cost of many channels, the overall cost has dropped
significantly, which is conducive to the rapid penetration of small household
appliances.
5. In the growth period
From the point of view of product cycle, many small appliances
now have obvious penetration rate and rapid growth rate, which are obvious
characteristics of the growth period. Now is the best time for growth and the
best stage of investment.
Such as hair dryers and vacuum cleaners, which are in the
middle stage of growth in China, benefiting from the stimulation of new
categories, the market will continue to increase.
According to industry online
data, by 2020, the penetration rate of electric hair dryers and vacuum cleaners
is expected to be 20% and 18% respectively, which is still far from the
developed countries.
Another example is water purifiers, dishwashers and air
purifiers, which are defined as small appliances that cannot be released once
used, and are expected to become the standard for home / office, sinking into
hard and rigid products.
The penetration rates of water purifiers / air
purifiers / dishwashers in Europe, America and Japan are 70% / 70% / 70%, 90% /
60% / 35%, and only 10% / 1% / 3% in China. In the early stages of growth,
there is still a lot of penetration space.
With the advancement of
urbanization, the spread of "quality life" and "lazy
economy", and the strengthening of industry promotion, the market broke
out in anticipation.
6. Investment advice
From the perspectives of the above industry space, product
cycle, short-term catalysis, essential development, channels, etc., the small
home appliance industry has very good development prospects, and people believe that
in the future, they can grow high-quality enterprises such as Gree and Midea.
In
terms of the subject matter, it is recommended to focus on Midea Group, Supor,
Xiao Xiong Electric and Supor.
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