Almost overnight, Home Depot, the second largest retail giant in the United States and the world's largest home building materials supermarket, closed all seven of its large stores in China.
"Please believe that this is a difficult decision. In theory, there is no ideal implementation time point. This decision was made after comprehensive consideration and evaluation by the management of the US and China." September 21, Home Depot Chinese spokesperson Xiao Xiaofei said in an interview with reporters.
In fact, the closure of Home Depot is not a case. “The layout of China's home furnishing stores is adjusting in shock.†On September 21, Li Junming, who was elected president of the China Furniture Sellers Association, told reporters that monopolistic brands have emerged at this stage, who have found new models or The new breakthrough, the entire pattern will be completely broken.
In China for 10 years, the world's top 500 companies and the nation's second largest retailer, Depot, just drew a circle and returned to the original point.
Yan Xiaofei confirmed to reporters that Jiadebao Company officially closed the remaining seven large-scale home building materials retail stores in the mainland China market on the 14th. The seven stores include four stores in Tianjin, two stores in Xi'an, and one store in Zhengzhou.
At this point, Home Depot China closed all 12 stores in China.
But the Chinese market is only a special case of Home Depot's global business. As the second largest retailer in the US after Wal-Mart, Home Depot's attempts in other markets have been quite successful. The replication of the Canadian and Mexican models has resulted in more than 2,248 Home Depot stores worldwide. In FY11, Home Depot's sales reached $70.4 billion and earnings reached $3.9 billion.
For this "closed store, transformation", Home Depot's explanation is that it is trapped in the self-developed mode and DIY consumption concept, which does not match the Chinese market and has long been in a loss-making state.
In 2006, Home Depot acquired the Tianjin home world at a price of more than 100 million US dollars, thus allowing the curve to enter the Chinese market. After that, it quickly opened branches in Beijing, Tianjin, Xi'an, Zhengzhou, Shenyang, Qingdao and other cities, and the local building materials supermarket Oriental Home was almost in the bag.
“Opening the store in the form of acquisitions four years after entering the Chinese market, it shows that Home Depot has always been cautious, but this has not made its Chinese business smooth, and Home Depot has not found a 'feel' in the Chinese market.†Li Junming told Reporter, Jia Debao replaced the three presidents of China in the short term as evidence.
On September 14th, Home Depot made the decision to close the store. Zhou Leimeng, the third president of Home Depot in China, took office only two years later. In Li Junming's view, the biennial presidential change shows that the Chinese leader of Home Depot did not give satisfactory answers to the US headquarters, so that after simply cleaning up the store and reducing staff, the homework is almost exhausted. There is no solution in the market.
“Home Depot’s traditional business model in the United States is based on the consumer habits of American consumers’ DIY, and the consumption and purchasing habits of Chinese consumers are very different from those of American consumers, which has affected the development of Home Depot in the Chinese market.†According to Xiao Xiaofei, Home Depot is defeated by the business model.
However, Home Depot did not express its willingness to fully withdraw from the Chinese market. Frank Black, Chairman and CEO of Home Depot, said, “In the past six years, we have accumulated a lot of experience in the Chinese market, and we will apply our Chinese experience to new business areas.â€
In fact, the multinational giant "collective" collapsed, in fact, Home Depot is not the first foreign-owned home building materials giant to close in Huamen. As early as April 2005, Germany's largest home building materials, OBI, made a judgment on China's business and transferred it to B&Q, the UK's largest building materials supermarket.
B&Q, which is located in the concept of building warehouse building materials, was once considered by the industry to be the most promising foreign-owned home building materials giant in China. However, this British giant has been exposed to losses in the Chinese market for four consecutive years since 2009, and its parent company, Kingfisher Group, has shrunk its front line.
In the past two years, B&Q has closed more than 20 stores in China. 17 of the remaining 41 stores have transformed the “T Planâ€. However, according to the industry, B&Q’s “T Plan†has also been in a dilemma in the near future.
IKEA is still a little better, but the world's largest retailer of furniture and household goods, this year's foundry factory is not crushed and cracked, has been exposed to quality problems.
According to Wang Ke, president of the Guangdong Furniture Association, IKEA is basically doing low-income business abroad. Most of its location is in the suburbs, and the rent is low, so it can meet its low-price strategy. However, in the Chinese market, the location of IKEA is basically CBD. For example, in the CITIC Plaza area in Guangzhou, the rent is very high, and the operating cost is increased. At the same time, the low price strategy must be adhered to, so it is not difficult to understand IKEA low-cost foundry. Zero supply problem with high cost sales.
"If you simply lower the foundry price and maintain its low-price strategy, there will be more problems in future operations," Wang said.
“The lack of localized operation mode of foreign-funded supermarkets faces bottlenecks in the Chinese market.†Li Junming believes that the reason for the exit is related to the supermarket sales pattern of home building materials. In the domestic market, the supermarket sales format is contrary to the traditional household consumption pattern.
Although the legend of the home map changed to the home of Depot to close the Chinese region, the industry believes that the final decision to retreat should be the macro regulation of the domestic real estate industry.
According to the industry sentiment index released by China Building Materials Circulation Association recently, from January to June 2012, the sales value of enterprises above designated size in the national building materials industry was 2.5 trillion yuan, a year-on-year increase of 16%, and the growth rate dropped sharply by 25.2 percentage points. Among them, the sales of home building materials above designated size reached 553.93 billion yuan, down 7.66% year-on-year. This is the first time that the growth rate has declined in the past five years.
Data is easy to find footnotes in reality. Take Beijing as an example. In March of this year, the Bafanglong Lighting City, which has the reputation of “Big Eight Lighting Cityâ€, was transformed into a flower and bird market. Beijing’s home building materials industry began a wave of closures. In just half a year, Beijing’s home building materials store The number of closed downs has reached eight.
"This is an opportunity for the domestic home building materials sales industry." Li Junming told reporters that the home industry has experienced the pressure of property market regulation, raw material price increases, inflation, competition and other pressures, has ended the era of profiteering. In the transformation of the home industry, in order to find a breakthrough, many home furnishing enterprises began to actively seek innovative ways of management, and the establishment of diversified channels has become the consensus in the industry.
"Our advantage lies in understanding the needs of consumers." Cao Yuewei, Chairman of the Board of Directors of Heilongjiang Endurance Wood Group, told this newspaper.
Cao Yuewei has formed a large-scale home furnishing company called Jiayimei with more than a dozen IKEA predecessors. It plans to open 200 stores within three years, and its own e-commerce platform has been officially launched on September 16.
"After the full withdrawal of Home Depot, the layout of China's home furnishing stores will also produce some changes." In Li Junming's view, the Chinese home store brand has an absolute advantage, in addition to the multinational store brand has become the biggest winner of the Chinese home store, Red Star Macalline, actually The advantages of home and other Chinese home store brands will continue to expand, and the overall development is in a stable period. How to break the balance, the monopoly brand of home stores is not yet known.
"From the current point of view, each family has a chance, only to find new models or new breakthroughs, this pattern can be completely broken." Li Junming said.
"Please believe that this is a difficult decision. In theory, there is no ideal implementation time point. This decision was made after comprehensive consideration and evaluation by the management of the US and China." September 21, Home Depot Chinese spokesperson Xiao Xiaofei said in an interview with reporters.
In fact, the closure of Home Depot is not a case. “The layout of China's home furnishing stores is adjusting in shock.†On September 21, Li Junming, who was elected president of the China Furniture Sellers Association, told reporters that monopolistic brands have emerged at this stage, who have found new models or The new breakthrough, the entire pattern will be completely broken.
In China for 10 years, the world's top 500 companies and the nation's second largest retailer, Depot, just drew a circle and returned to the original point.
Yan Xiaofei confirmed to reporters that Jiadebao Company officially closed the remaining seven large-scale home building materials retail stores in the mainland China market on the 14th. The seven stores include four stores in Tianjin, two stores in Xi'an, and one store in Zhengzhou.
At this point, Home Depot China closed all 12 stores in China.
But the Chinese market is only a special case of Home Depot's global business. As the second largest retailer in the US after Wal-Mart, Home Depot's attempts in other markets have been quite successful. The replication of the Canadian and Mexican models has resulted in more than 2,248 Home Depot stores worldwide. In FY11, Home Depot's sales reached $70.4 billion and earnings reached $3.9 billion.
For this "closed store, transformation", Home Depot's explanation is that it is trapped in the self-developed mode and DIY consumption concept, which does not match the Chinese market and has long been in a loss-making state.
In 2006, Home Depot acquired the Tianjin home world at a price of more than 100 million US dollars, thus allowing the curve to enter the Chinese market. After that, it quickly opened branches in Beijing, Tianjin, Xi'an, Zhengzhou, Shenyang, Qingdao and other cities, and the local building materials supermarket Oriental Home was almost in the bag.
“Opening the store in the form of acquisitions four years after entering the Chinese market, it shows that Home Depot has always been cautious, but this has not made its Chinese business smooth, and Home Depot has not found a 'feel' in the Chinese market.†Li Junming told Reporter, Jia Debao replaced the three presidents of China in the short term as evidence.
On September 14th, Home Depot made the decision to close the store. Zhou Leimeng, the third president of Home Depot in China, took office only two years later. In Li Junming's view, the biennial presidential change shows that the Chinese leader of Home Depot did not give satisfactory answers to the US headquarters, so that after simply cleaning up the store and reducing staff, the homework is almost exhausted. There is no solution in the market.
“Home Depot’s traditional business model in the United States is based on the consumer habits of American consumers’ DIY, and the consumption and purchasing habits of Chinese consumers are very different from those of American consumers, which has affected the development of Home Depot in the Chinese market.†According to Xiao Xiaofei, Home Depot is defeated by the business model.
However, Home Depot did not express its willingness to fully withdraw from the Chinese market. Frank Black, Chairman and CEO of Home Depot, said, “In the past six years, we have accumulated a lot of experience in the Chinese market, and we will apply our Chinese experience to new business areas.â€
In fact, the multinational giant "collective" collapsed, in fact, Home Depot is not the first foreign-owned home building materials giant to close in Huamen. As early as April 2005, Germany's largest home building materials, OBI, made a judgment on China's business and transferred it to B&Q, the UK's largest building materials supermarket.
B&Q, which is located in the concept of building warehouse building materials, was once considered by the industry to be the most promising foreign-owned home building materials giant in China. However, this British giant has been exposed to losses in the Chinese market for four consecutive years since 2009, and its parent company, Kingfisher Group, has shrunk its front line.
In the past two years, B&Q has closed more than 20 stores in China. 17 of the remaining 41 stores have transformed the “T Planâ€. However, according to the industry, B&Q’s “T Plan†has also been in a dilemma in the near future.
IKEA is still a little better, but the world's largest retailer of furniture and household goods, this year's foundry factory is not crushed and cracked, has been exposed to quality problems.
According to Wang Ke, president of the Guangdong Furniture Association, IKEA is basically doing low-income business abroad. Most of its location is in the suburbs, and the rent is low, so it can meet its low-price strategy. However, in the Chinese market, the location of IKEA is basically CBD. For example, in the CITIC Plaza area in Guangzhou, the rent is very high, and the operating cost is increased. At the same time, the low price strategy must be adhered to, so it is not difficult to understand IKEA low-cost foundry. Zero supply problem with high cost sales.
"If you simply lower the foundry price and maintain its low-price strategy, there will be more problems in future operations," Wang said.
“The lack of localized operation mode of foreign-funded supermarkets faces bottlenecks in the Chinese market.†Li Junming believes that the reason for the exit is related to the supermarket sales pattern of home building materials. In the domestic market, the supermarket sales format is contrary to the traditional household consumption pattern.
Although the legend of the home map changed to the home of Depot to close the Chinese region, the industry believes that the final decision to retreat should be the macro regulation of the domestic real estate industry.
According to the industry sentiment index released by China Building Materials Circulation Association recently, from January to June 2012, the sales value of enterprises above designated size in the national building materials industry was 2.5 trillion yuan, a year-on-year increase of 16%, and the growth rate dropped sharply by 25.2 percentage points. Among them, the sales of home building materials above designated size reached 553.93 billion yuan, down 7.66% year-on-year. This is the first time that the growth rate has declined in the past five years.
Data is easy to find footnotes in reality. Take Beijing as an example. In March of this year, the Bafanglong Lighting City, which has the reputation of “Big Eight Lighting Cityâ€, was transformed into a flower and bird market. Beijing’s home building materials industry began a wave of closures. In just half a year, Beijing’s home building materials store The number of closed downs has reached eight.
"This is an opportunity for the domestic home building materials sales industry." Li Junming told reporters that the home industry has experienced the pressure of property market regulation, raw material price increases, inflation, competition and other pressures, has ended the era of profiteering. In the transformation of the home industry, in order to find a breakthrough, many home furnishing enterprises began to actively seek innovative ways of management, and the establishment of diversified channels has become the consensus in the industry.
"Our advantage lies in understanding the needs of consumers." Cao Yuewei, Chairman of the Board of Directors of Heilongjiang Endurance Wood Group, told this newspaper.
Cao Yuewei has formed a large-scale home furnishing company called Jiayimei with more than a dozen IKEA predecessors. It plans to open 200 stores within three years, and its own e-commerce platform has been officially launched on September 16.
"After the full withdrawal of Home Depot, the layout of China's home furnishing stores will also produce some changes." In Li Junming's view, the Chinese home store brand has an absolute advantage, in addition to the multinational store brand has become the biggest winner of the Chinese home store, Red Star Macalline, actually The advantages of home and other Chinese home store brands will continue to expand, and the overall development is in a stable period. How to break the balance, the monopoly brand of home stores is not yet known.
"From the current point of view, each family has a chance, only to find new models or new breakthroughs, this pattern can be completely broken." Li Junming said.
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