Why is the price of furniture not high profit?

“180 million yuan of mahogany furniture appeared in Foshan, refreshing the record of the world's most expensive mahogany furniture”, “138,000 yuan of high-priced mattress called 'Obama is sleeping this'”... In recent years, the news of high-priced furniture in the newspapers is not uncommon. Five-digit furniture is everywhere in the terminal furniture market. Consumers can't help but doubt the price/performance ratio of furniture products. They think they have bought expensive furniture, and most of them ran to the factory pockets. The furniture industry has established a connection with the less friendly "profiteering". On the other hand, furniture companies and dealers have been playing the bitter card of "micro-profit", complaining that they hardly make money, and they are not profitable at all. This seems to be a very strange contradiction.

According to industry sources, the furniture industry did have a glorious period of relatively high profits about 10 years ago, but since 2011, the furniture industry has shown a high gross profit and low net interest rate, and the industry is facing a severe test. The industry generally believes that the furniture industry is in great need of transition to high-tech industries.

The price of the furniture market is strange: the market price is 4 to 6 times the ex-factory price, but the transaction price is mostly half of the price.

As prices continue to rise, the prices of large items such as furniture are also rising. Most of the furniture, from manufacturers to consumers, will always experience the "manufacturer-distributor-store-consumer" link, and this process is accompanied by rising furniture prices. At present, in the furniture market, a set of leather sofas, the price is more than 15,000 yuan, the big brand of solid wood bed, the price is also over 10,000. According to industry sources, most of the ex-factory prices of the two are not more than 4,000 yuan.

The price difference between furniture products and factory cost is up to 4 times. Does this represent the huge profits of the furniture industry? Industry insiders point out that in reality, the retail industry is characterized by a large discount on the terminal, and many furniture prices are very high, but after After discounts such as promotions and group purchases, the price tag is far from the transaction price. The final transaction price is usually only half or even lower. “The era of profiteering in the furniture industry has long since ended. Consumers are more rational and smarter than they were a decade ago. At least 3 to 5 brands will be bought for a sofa. The price war between brands of the same grade will make the final sales of the products sharp. Shrinking," industry insiders said that today manufacturers are also aware of the price increase caused by sales and circulation, "factory direct sales", "factory profit" and other methods, gradually adopted by more enterprises, by pulling consumers directly Look at the factory warehouse to see the goods, giving a more exciting "affordable price."

Data Secret: Furniture profits are much lower than other industries

A person in charge of a solid wood furniture company said that the high profit of the furniture industry has become a history. In recent years, as solid wood furniture has become the mainstream of consumption, the cost control of the furniture industry has increased two uncontrollable burden factors: on the one hand, wood shortage The industry has to import a large amount of timber from Southeast Asian countries such as Myanmar and Vietnam, and the cost of raw materials has risen. On the other hand, the increase in processing labor and the labor costs required have also increased significantly, both of which ultimately lead to a substantial increase in costs. He said that the current gross profit margin of the furniture industry is indeed as high as 30% to 50%, but after removing various costs, the current industry's net profit margin is about 10% to 20%.

According to the statistics of the State Administration of Taxation's corporate income tax source report, six provinces and cities with different economic development levels, such as Shanxi, Shandong, Guangdong, Heilongjiang, Chongqing and Gansu, were selected to measure the average profit rate of each industry, among which the entertainment industry had the highest profit. From the perspective of furniture brand companies, 30% to 50% of gross profit is relatively normal in the industry. However, Maori high does not mean that the profits are lucrative. The average profit margin of the furniture industry is only 4%. The status quo is worrying.

Inquiry: Why is there no high profit for furniture?

One of the reasons why furniture is expensive but not profitable is that furniture is a durable product and has a long life cycle. After the family buys furniture, it can be used for decades. Therefore, there are few opportunities for repurchase, and it is not like the clothing industry or It is the so-called “returning customer” in other industries. Second, the hypermarket sales model makes the rental cost high. The 2013 annual building materials furniture boom index data shows that the cumulative sales of furniture and building materials stores above designated size in 2013 was 1,248.1 billion yuan, up 0.11% year-on-year. However, the profit has not increased, and even declined. It is because other channels have weakened the influence of the store, and the profit growth rate is not large enough. At the same time, the surplus of building materials and furniture stores has greatly increased the cost of the furniture industry.

In addition, the continued increase in operating expenses of pan-home businesses has also increased the burden on the furniture industry. The marketing costs of pan-home enterprises include logistics costs, store rental costs, labor costs, advertising promotion fees, and so on. Due to the existence of inflation rate, the marketing costs of Chinese pan-home enterprises are increasing. Among them, the continuous increase in store rents has caused dealers' profits to be compressed. In particular, some high-end stores have high rents, which has discouraged many dealers. On the other hand, high housing prices have also largely squeezed the growth space of the furniture industry. In 2014, the transaction volume of new and second-hand housing in the multi-city real estate market declined. As a result, the home market is gradually becoming “cold” – the demand for household consumption has narrowed, the competition in the furniture market has become more intense, and the feeling of home improvement building materials is particularly evident. .

Industry: The traditional marketing model of the furniture industry in the era of low profit needs to be improved

Zhang Chengzhi, secretary-general of the Guangdong Furniture Association, pointed out that the traditional industry of furniture has two characteristics: the first is profiteering, from the factory to the final consumer, it is likely to increase the price several times; the second is small profits, in recent years, due to internal worries Due to multiple factors, the net profit margin of furniture factories and dealers has been greatly reduced. From the perspective of production costs, furniture is not expensive, but the various costs such as rents are high, thus deviating the price from value. This phenomenon reflects the great drawbacks of the traditional furniture marketing model. How to solve this problem is worthy of deep reflection from the Chinese furniture industry.

Industry analysts pointed out that with the shortage of global resources, the price of raw materials has increased substantially, and the cost of furniture as a resource product will inevitably increase. However, the increase in the digestive power of the entire furniture market is no match for the growth rate of raw material prices, and sales are facing difficulties. In the "2011-2016 China Furniture Industry Analysis In-depth Research Report", Shangpu Consulting mentioned that the increase in the digestive power of the entire furniture market is not soaring the growth rate of raw material prices, and the market sales performance is bleak. Brand integration, capital operation, and corporate alliances will become more active. This is one of the most notable features of the furniture industry this year. Each brand has entered the stage of brand connotation construction. The relevant enterprises should also co-exist in cooperation and innovate the marketing model to achieve mutual benefit.

The insiders pointed out that the furniture meager profit will make the furniture industry face a huge test. The furniture enterprises that survived must rely on perfect internal management to improve the quality and reduce the cost and regain the opportunity of development. Facing the impact of e-commerce, the traditional distribution of the furniture industry The marketing model of quotient + store must also be improved, and the experiential consumption of experiential consumption also points out a new direction.

Editor of Suzhou Furniture Network, the article comes from the Internet.

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