High-end products drive growth of the home-appliance market
Wang Jing, a 32-year-old Shanghai housewife, had a long shopping list in her hands when she visited an electronic home-appliance fair in Shanghai in late March.
She was looking for the latest models of water filters, air purifiers, small robots to clean floors and windows, a largesize LED screen television and some kitchenware, such as a toaster which can also brew coffee and heat beacon and ham.
Her total budget was 80,000 yuan ($12,825).
“If I had more money I would replace all my home appliances with the latest models. They are so smart and can really free housewives like me to enjoy a higher quality of life,” Wang said.
China’s electronic homeappliance market is expanding with high-end products and environmental modifiers being major growth drivers, according to market insiders and manufacturers.
Spending money on those appliances and gadgets benefits her life on a daily basis, Wang said.
“In the past,
I might be price- sensitive,’’ she said. “Now I focus more on how they can function to give me better experiences.”
China’s electronic homeappliance market may expand to some 1.24 trillion yuan in 2014, a 3-percent year-on-year growth rate, according to data from AVC.
And in the long-term, the home-appliance market could grow to 9 trillion yuan by 2020, said Jiang Feng, head of the management committee of the China Household Electrical Appliance Association.
At the Appliance World Expo in Shanghai in late March, many consumers wanted to try the appliances.
“When the market was relatively small and consumers had limited choices, advertisements could be decisive in what a consumer might buy. However, today we may share with one another our experiences with a particular product, and perhaps a WeChat picture can be a best promotion,” said Liu Yumo, who was trying a microwave oven at the fair.
Liu said she saw the microwave on a Weibo post from her friend, who said it was the best she ever used. Then Liu asked the price and brand of the product.
“I am really going to buy this, it’s compact, effective and quiet,” Liu said in a comment on her Weibo post and attached a picture of the oven. It cost about 3,500 yuan, almost 10 times that of Liu’s current one.
Consumers with competitive purchasing power are looking for products which give them better experiences, analysts said.
A PwC survey found that consumers want to give feedback more than ever.
More than 90 percent of 900 China-based respondents and 55 percent of the some 15,000 global respondents to the survey said they posted on social media positive or negative comments about their experiences with a product or brand.
“They know what they want, and they do not need the brands to promote some fancy concepts or ideas. They just pop up and try the products, pay or leave,” said Wu Zheng, a salesman at the fair.
Today’s consumers are more challenging because they are detail-oriented and quite concise about what they need, he said.
“From display to function introductions and showroom experience, every step should make a consumer happy instead of confused,” Wu said.
Yu Liangxing, an analyst with AVC, says e-commerce has become a major driver among sales channels to consumers.
“We found that chain stores, department stores and hypermarkets are taking less of a share of electronic-appliance sales, while specialties, neighborhood stores and e-commerce platforms are expanding fast,” Yu said.
By December 2013, 10.3 percent of televisions were sold through online- shopping platforms in China, and the figures for refrigerators and washing machines are close to 10 percent, he said.
For air conditioners, however, online shopping might not be a popular choice among consumers because delivery and installation services after the sale may not be as good as the products themselves.
“About 10 percent of online shoppers who bought air conditioners on e-commerce gave negative feedback because of unhappy experiences with delivery and installation. The unique feature of a particular product also inspires us to think of diversities of sales channels of home appliances,” said Yu.
Cui Xiang, brand manager of a high-end German home appliance, said he finds realestate developers are a great sales channel.
“Developers may submit their plans and demands for our products which will be included in a gift package to the owners of the apartments,” Cui said.
“The demands may be consistent with the styles and functions of the apartments and the rooms inside, such as carpeted floors may need a carpet steamer, and an open kitchen needs powerful Kitchen ventilation.”
Each package of home appliances may represent a combined value of up to 400,000 yuan ($64,000), he said.
“Compared to the total price of the apartment, it is a small figure. A home that is not functional means little while our products may attach more meaning to the space,” Cui said.
Some high-end brands market through exclusive channels, such as inviting potential consumers to showrooms.
“Transactions are indeed important for us, but visiting the showroom by invitationonly may make our sales process lean and precise,” said Hong Wei, a salesman with an Italian kitchenware brand.
Visitors take photos of products displayed at the Appliance World Expo held in Shanghai on March 21.