As the market demand in first- and second-tier cities has become saturated, more and more ceramic brands are beginning to look beyond this field and vigorously deploy in third-, fourth-tier and even lower-tier cities. The sinking market has become a hot topic in the eyes of many ceramic brands. Zhongtaojun learned that ceramic companies such as Mona Lisa, Dongpeng, and Eagle Brand have vigorously developed the sinking market and achieved certain results.
When the real estate industry enters the era of incremental market, and the new properties in first- and second-tier cities are mainly finely decorated houses, the market demand for ceramic tiles will inevitably be affected. Many ceramic tile brands have therefore realized the importance of sinking the market, and some people in the industry even believe that it is easier to make money selling bricks in third- and fourth-tier cities and rural cities.
How important is the sinking market to ceramic companies? Is the sinking market really so easy to do? During the visit to the brand headquarters of China Ceramics Network's 2022 "Tao Xing China" national ceramic tile and slate market survey, more than a dozen industry professionals from manufacturers gave their own answers.
The sinking market is called a "gold rush"
Consumption volume exceeds 1 billion
Sinking markets are mostly defined as markets in cities, counties, towns and rural areas below the third tier. According to statistics from the Ministry of Civil Affairs, as of the end of 2021, there were 333 prefecture-level administrative division units, 2,843 county-level administrative division units, and 38,558 township-level administrative division units across the country. According to data from the National Bureau of Statistics in 2020, the sinking market has a permanent population of 800 million, contributing about 40% of the country's GDP and accounting for about 60% of the total social retail scale.
As the demographic dividend of first- and second-tier cities reaches its peak, the development potential of the sinking market has become increasingly prominent. On November 29, Jixia Think Tank released a list of the top 100 comprehensively competitive counties (cities, districts) in the country. Related data showed that the number of counties (cities) with a GDP exceeding 100 billion increased to 42, distributed in 11 provinces. .
Experts believe that between 2020 and 2025, the growth rate of per capita disposable income and personal consumption expenditure in low-tier cities and rural areas will exceed that of high-tier cities. It is expected that by 2025, ChinaThe total amount of the sinking retail market will exceed 20 trillion yuan from the current 15 trillion yuan.
In addition, data released by Oseis shows that in 2021, the demand for new commercial housing will account for 32.88% of the national ceramic tile demand, the demand for old renovation will account for 21.65%, the demand for secondary decoration will account for 5.27%, rental affordable housing will account for 1.67%, and self-built housing will account for 1.67%. Housing demand is 38.62%. The sinking market, which has a large demand for self-built houses, also ranks first in demand for ceramic tiles.
From the above data, we can see the great consumption potential of the sinking market. It is no exaggeration to say that whoever can dominate the sinking market can successfully break through the fierce industry competition. Third- and fourth-tier cities and counties have also become battlegrounds for many ceramic companies, and the battle for the lower-tier market is intensifying.
According to Zhang Zhen, deputy general manager of sales at Qianghui, the sales ratio in the sinking market can reach 70%, while the top ten ceramic brands in the industry actually account for less than 30% in the sinking market. A large number of products District brands, private polishing factory brands, and small business brands are flooding the sinking market. This is determined by the attributes of the ceramic industry. Even the leading brands do not account for a high proportion in the sinking market, and there are still many blank areas in the sinking market.
Wang Baohua, deputy general manager of Romario Tile Sales, believes that China has a very large number of towns and villages, with units of tens of thousands. For a well-made ceramic brand, its sales online store can sink to the town-level market, but currently The outlets of most ceramic brands are only down to the county level, and currently no ceramic brand has more than 10,000 outlets. From this we can see the huge gap in the sinking market.
Leading brands are rushing to seize the sinking market< /p>
Is it really a dimensionality reduction attack?
Market competition in first- and second-tier cities is intensifying. Coupled with the impact of the epidemic and weak consumer demand, the sinking market has become a "good medicine" for ceramic companies to solve these problems. Even many leading brands have rushed to seize the sinking market. . But is this a "dimensionality reduction attack" or will it be "acclimated to the local environment"?
"Sinking Markets" and Other MarketsThe same, with its own consumption logic and differentiated characteristics. Relevant data shows that at the end of 2020, the total registered population in 1,495 counties (excluding county-level cities) was 641 million. The registered population is about 130 million more than the permanent population, that is, 20% of the registered population flows out of nearly 1,500 counties across the country, which means that one out of every five people goes out of the county. Therefore, the local population structure of middle-aged and elderly people occupy the mainstream. For ceramic brands, terminal stores need to adapt to local conditions when selling products. If they copy the preferences of consumers in first- and second-tier cities, it may not work in lower-tier markets.
Secondly, the "acquaintance economy" prevails in the sinking market, which means that the customer acquisition model in the sinking market is based on acquaintances, thereby fissioning more customers to expand business. Some industry insiders said that when doing business in towns and villages, it is not necessary to emphasize refined management. The most important thing is to be good at customer service. And if you want to get along in the local area, you must rely on your own network resources. This is why there are often situations where it is difficult for a "powerful dragon" to defeat a "local snake".
In sinking markets, consumers are more price-sensitive and tend to choose cost-effective products without paying much attention to brands. Wang Tinglong, general manager of Shunhui Tile and Slate Operation Center, believes that although there are still many gaps in the sinking market, these blank markets will eventually be occupied by products from other production areas, because the cost advantage of Guangdong production areas is not as good as Outer production areas. You Jun, general manager of Haosheng Enterprise Brand Management Center, also mentioned that if the cost of a brand is high, it will be very difficult to develop in the sinking market.
In view of the various differences between the sinking market and the first- and second-tier markets, many industry insiders believe that when leading brands focusing on first- and second-tier cities enter the "sinking market", they may be able to rely on their strong sense of freshness for a short period of time at the beginning. It attracts attention, but may end badly. Liang Xueqing, general manager of Ouwen Lai Brand Marketing Center, holds a different opinion. He said that it is precisely because the market competition in first- and second-tier cities is more intense that many leading brands have accumulated experience and formed mature operating models, so that they can directly These experiences are applied in third- and fourth-tier cities.
The market sinking has become a trend
How do ceramic companies find breakthroughs?
For leading brands with a full range of products, the difficulty of sinking into the market is much lower than that of other brands, because they have rich categories, mature production and supply chains, and have high-end products , there are also cost-effective products that can meet the needs of consumers at different levels in different regions. In recent years, ceramic companies such as Mona Lisa, Dongpeng, and Eagle Brand have continued to expand in depth, from first- and second-tier cities to third- and fourth-tier cities, and gradually radiated to the township and village first-level markets.
Monalisa quickly penetrated into the township-level market through the strategy of sinking distribution channels, accelerated store construction, store upgrades and network layout, driving the distribution business to achieve rapid growth. Mona Lisa's financial report for the third quarter of 2022 shows that by exploring blank markets, sales revenue from distribution business was 2.656 billion yuan, a year-on-year increase of 6.88%. It is reported that in 2021, Mona Lisa has signed a total of 1,540 dealers, and it has as many as 4,620 specialty stores and sales outlets.
Dongpeng Ceramics' mature distribution system has covered most of the country and prefecture-level cities. As of 2021, Dongpeng Ceramics has nearly 7,000 ceramic tile stores and has established shared warehouses in various places, allowing small and medium-sized dealers to further improve their operational capabilities.
Eagle Pai Ceramics has deployed Eagle Pai stores, with one head service provider driving the development of other N "Eagle Pai stores". At the same time, it has deployed central warehouses across the country, focusing on new retail, and comprehensively promoting channel sinking. .
The Champion Tile proposed to benchmark the top 100 counties and cities to promote the sinking of the channel.
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Peng Changhua, vice president of Shuncheng Ceramics Group and general manager of Shunhui Tiles and Stone Slabs, said that market sinking and "brand concentration" are complementary to each other. In the process of "brand concentration", it will inevitably experience market decline. The market sinking will further accelerate the concentration of brands. In other words, as some strong brands sink in the market, some weak brands will inevitably be "concentrated."
But this does not mean that ceramic companies will swarm into the sinking market. Liang Xueqing, general manager of Ouwenlai Brand Marketing Center, said that the market levels of brands are different, depending on its product structure and brand characteristics. If the products of the ceramic brand itself are aimed at high-end people, there is actually no way to sink the market, and different regions and townsConsumer preferences in the market are different. If the product categories are not rich enough and cannot be sold in a quality and effective manner, the phenomenon of "acclimatization" will occur.
