Huaxing released the home improvement industry report, the market changed from business model to industrial technology revolution

On October 12, at the fourth “Hua Xing·湃” forum, Huaxing Capital focused on the “home improvement” industry and released a research report on the home improvement industry, which evolved from market size and major players, industry structure, home improvement market and listing. Start with multiple dimensions such as the situation of start-ups and provide professional insights for investors and entrepreneurs.

The industry pattern of concentrated concentration in the home improvement industry is due to the difference in regional and urban demand. The more important reason is that the management and production radius of the original business model and production mode are very short, and the project control and turnover ability. Both are very limited, the brand premium is difficult, and the scale of the faucet is significant. In summary, the root causes of low concentration in the home improvement industry are:

In order to break through the current industry landscape, the overall industry needs to make at least three levels of change:

First, business model change to achieve product standardization

The original opaque and non-standard, through the difference between the profit model of the difference and the increase in fees, only standardized products and pricing have the possibility of replication. At the same time, the profit acquisition methods that are scattered in the hands of designers and construction teams and are not standard and uncertain will be turned into centralized large-scale procurement, and the intermediate links will be removed to make the profit model more standard and controllable. The Internet home improvement that started in 2013 and 2014 is solving this problem. The emergence of a large number of new standardized home improvement products has changed the traditional business model, and also demonstrated the ability of faster scale growth. Many new ventures within one or two years All of them have broken through the scale bottleneck of 2 billion, which is the level that traditional home improvement enterprises have achieved in 10 years.

Second, industrialization of production processes based on product standardization

This level of change will make the home improvement product from the first level only the standardization of the marketing level, and industrialization at the actual production level. The modular disassembly and assembly of the decoration process by technical means enables the diversification of demand to be satisfied under the premise of maintaining standardization efficiency. This requires the use of technology to comprehensively improve the supply chain system and management system. This will transform the home improvement company from the past manpower and craft drive to the technological transformation drive. Companies with strong supply chain systems will have the ability to integrate upstream and downstream of the industry chain with a more complete product delivery capability.

Finally, the construction machinery brought about by the industrial technology revolution

The construction machinery brought about by the industrial technology revolution will completely fill the industry's labor shortage, and the last short board of unstable craft quality will make the accumulation of word-of-mouth more likely. As a result, the premium of the brand becomes more valuable, and the industry concentrates on large companies and big brands.

The improvement of the concentration of the home improvement industry requires three levels of change.

Source: Huajing Securities Research Institute

I. Business model change: standardized products

Since 2014, the Internet of home improvement industry has been surging, and a large number of startups have entered the home improvement market with the Internet as the entry point. The traditional home improvement industry has also developed its Internet business, making the traditional industry of decoration a new cusp. . At present, the biggest change of the Internet to the industry is the standardization and transparency of the front-end products, which makes the customer order conversion rate in the marketing stage increase and reduces the cost of obtaining customers. In the traditional mode, the customer-to-store order conversion rate is between 15% and 30%, and the single-customer cost is about 30% of the contract amount. The customer's cost is about 100,000. 30000. In the Internet mode, due to the standard package and price transparency of the products, the store order conversion rate increased to 40%-60%, and the customer cost was reduced to 700 yuan/single.

Internet home improvement VS traditional home improvement

Source: "Internet home improvement practice", Huajing Securities Research Institute

Second, the transformation of production mode: internal industrialization

That is, the interior is installed by means of industrial production. The mature system in developed countries is to integrate the traditional on-site construction modules into the factory through intelligent, mechanized and systematic production. After further grinding, the finished products are moved to the site for assembly. The proportion of assembly and renovation in new residential buildings in Sweden has reached 80%. Japan is also a big country with mature assembly and decoration technology. In China, the bottleneck encountered in the industrialization of decoration is that the degree of assembly is not high, and the proportion of housing decoration is not high. The proportion of the two new houses is less than 20%. At present, although the assembly and decoration has been encouraged and supported by the policy level due to obvious advantages in environmental protection and production efficiency, the actual operation level is still only piloted in some areas such as public rental housing and office buildings.

Third, the construction technology revolution: the future of the special period

Foreign industrial robots have few development and decoration fields

After the industrialization of the production process in the home improvement industry, the overall quality of the industry can be greatly improved. On the basis of industrialization, construction machinery can improve the process quality again. For home improvement, such as the rising labor costs and the low standardization of manual technology, the industrialization and machineization of the production process will be the ultimate weapon to change the competitive landscape of the industry. From the current development of industrial robots in the world, industrial robots are mainly used in the fields of automobiles and electronics. The leading products of the four major industrial robot companies in Europe and Japan are also mostly distributed in the automotive, medical and metal processing industries. The leading overseas industrial robot company has not seen a strong layout in the decoration field. The main reason is that the industrialization and assembly of foreign countries in the production stage are very mature, the efficiency of intensive decoration is very high, and the demand for standard machine in the construction stage is weak. The development of robots that led to construction has been slow due to lack of demand.

Global robot sales industry share

Source: IFR, Huajing Securities Research Institute

The policy supports the development of domestic industrial robots, and the home improvement faucet accelerates the layout of the future.

As China's demographic dividend subsides, the proportion of labor force continues to decrease, while labor wages appear to exceed the growth rate of GDP growth. As a manufacturing power, China's manpower advantage is gradually fading. Therefore, the development of domestic industrial robots to improve labor productivity has also been upgraded to an important strategic level. The state has introduced a number of policies to encourage the development of domestic industrial robots. In April 2016, the Ministry of Industry and Information Technology, the National Development and Reform Commission and the Ministry of Finance jointly launched the China Robot Industry Development Plan (2016-2020). The target is to produce domestic industrial robots by 2020. It reached 100,000 units and the compound growth rate was about 29%.

Due to market differences in the domestic home improvement field, the international giants have insufficient investment in the development of decoration robots, which has become a favorable breakthrough for enterprises. The remarkable advantages of decoration robots in construction quality and economic benefits have attracted the attention of domestic leading companies in the home improvement industry. Quanzhu and Guangtian have begun to adopt various methods to develop home improvement robots and lay out the future of the industry. With the capital investment of the industry giants and the support of national policies, the future development of the decoration robot is worth looking forward to.

Renovation robots have significant economic benefits

At present, the development and application of domestic decoration robots is concentrated on wall painting. Changsha Wangong Robotics Co., Ltd. developed the first wall construction robot in 2016, which can realize the spraying and modeling of the wall surface. In addition to the significant advantages in the standardization of operation, the large-scale use of robots instead of labor can also save manpower and save costs.

In overseas the home improvement market, with two of our outstanding differences:

The proportion of new home decoration is high: the proportion of fine decoration of new houses in Europe and the United States is over 80%, and China is currently less than 20%.

High labor costs: Most families have a high participation rate during the second renovation.

These two characteristics make the renovation business in the overseas market mostly merged into the construction company as a department. The large listed companies in the decoration industry in the capital market are all in the form of home and building materials stores, but not independent. Decoration company. Companies in the home improvement sector in the US startup market are mainly web-based, not vertical, and the company has Houzz and Porch. In the Japanese market, builders and developers are leading the decoration field. The large group has multiple businesses coexisting, covering the entire industrial chain. The decoration is only one of its sub-businesses. The home improvement business of Dahe Fangjian and Sekisui Building accounted for 2.8% respectively. And 6.6%.

American home improvement business startups

Source: Company website, Huajing Securities Research Institute

Editor in charge: Liu Bing