21st Century Business Herald reporter Ye Bihua intern Zhao Jingxuan reported from Guangzhou
On April 9, Bear Electric (002959.SZ) released its 2021 annual report. The annual report shows that last year, Xiaoxiong Electric achieved operating income of 3.606 billion yuan, a year-on-year decrease of 1.46%; net profit attributable to the parent was 283 million yuan, a year-on-year decrease of 33.81%. This is the first time since 2017 that Bear Electric has seen a double drop in profit.
The bear’s negative growth is not an exception. According to the total data of Aowei Cloud (AVC) omni-channel push, in 2021, small kitchen appliances (rice cooker, induction cooker, electric pressure cooker, soy milk maker, wall breaker, blender, juicer, electric kettle, frying machine, health pot , electric steaming stew pot, desktop single-function oven) 12 categories showed an overall trend of double reduction in volume, with a total retail sales of 51.4 billion yuan, a year-on-year decrease of 14.1%; retail sales of 237.44 million units, a year-on-year decrease of 13.5%; of which online sales Market retail sales were 35.64 billion yuan, down 9.7% year-on-year; offline market retail sales were 15.72 billion yuan, down 22.7% year-on-year.
Since last year, the “home economy” spawned by the epidemic is gradually fading. Coupled with the repeated epidemics, soaring prices of bulk raw materials, soaring international logistics costs, and blocked supply chains, the small household appliance market has stepped on the “sudden brakes” and the trend is sluggish.
The analysis believes that in the post-epidemic era, consumers’ purchasing psychology has gradually returned to rationality. Under the trend of consumption upgrading, through consumer research and continuous innovation, it is possible to accurately match the high-end, personalized, fashionable, healthy and intelligent of the segmented population. Demand will become the main driving force for the growth of consumption in the small household appliance industry.
Small appliances collectively encounter cold
In August 2019, Xiaoxiong Electric, which has the halo of “the first share of creative small home appliances”, landed on the Shenzhen Stock Exchange with an issue price of 34.25 yuan. With its layout on e-commerce platforms such as Taobao, Xiaoxiong Electric has been rapidly promoted in the small kitchen appliance market with its simple innovation, rich product matrix and high cost performance. After its listing in 2019, its revenue has maintained an increase of more than 30% for two consecutive years. , and net profit growth remained above 40%. However, according to the latest annual report disclosed by Xiaoxiong Electric, in 2021, Xiaoxiong will see a double drop in revenue and net profit for the first time, and its net profit will drop by more than 30% year-on-year. In terms of categories, the performance of small electric kitchen appliances declined significantly, down 31.03% year-on-year to 597 million yuan.
Joyoung shares (002242.SZ), which is also the head brand of small household appliances, is also facing a situation of double decline in profit. According to its latest annual report, Joyoung’s revenue in 2021 is 10.54 billion yuan, down 6.09% year-on-year; net profit attributable to the parent is 746 million yuan, down 20.69% year-on-year; gross profit margin is 27.79%, the first time it has fallen below 30% since 2017.
Joyoung explained in its annual report that this is mainly due to “international bulk commodity prices continue to rise compared with last year, the small kitchen appliance industry is in a mature stage of development, the offline market recovery is slow, online market changes are accelerated, and channel traffic fragmentation has become a problem. Trend.” Xiaoxiong Electric also mentioned in the announcement that “in 2021, the ‘home economy’ caused by the epidemic will gradually subside, the price of raw materials will continue to rise, and there will be pressures such as chip shortages.”
It is not difficult to see that the small household appliance industry will be constrained by rising raw material costs and sluggish industry demand as a whole in 2021. The raw materials of small household appliances mainly include iron, stainless steel, aluminum, copper, plastic, etc. According to data from China National Financial Securities, in the first quarter of 2022, the cost of household appliances in aluminum, copper, plastic, and steel rose by 54%, 17%, and 8% year-on-year, respectively. , 5%.
In response to cost pressures, the home appliance industry ushered in a wave of price hikes in March this year, with Haier, Midea, Gree, and Oaks announcing price increases one after another. However, compared with the large home appliance industry, which has an enterprise volume of hundreds of billions of dollars, the overall volume of small home appliance enterprises in my country is relatively small. Leading enterprises such as Supor, Joyoung, and Xinbao are currently only tens of billions of dollars in scale. With billions in volume, the bargaining space for products is still relatively limited, and it is not easy to raise prices.
Marketing has hidden dangers
In addition to the ebb in demand and rising raw material prices, the cost of traffic is also rising sharply. The homogenized competition problem of “emphasizing marketing and ignoring R&D” is an inherent worry in the small household appliance industry. According to Tianyancha data, as of the third quarter of 2020, 58% of my country’s 1.02 million small home appliance-related companies were located in the wholesale and retail industries, and brand operation and marketing companies accounted for the majority, reflecting the industry’s problems.
Taking Xiaoxiong as an example, it stated in its annual report that in order to cope with the pressure, the company “has greatly increased its sales expenses. On the basis of strengthening the original traditional e-commerce channels, it has actively expanded new communication channels such as Douyin and Kuaishou.” The reporter noted that, In the company’s 553 million yuan sales expenses last year, the expenses for brand promotion and marketing (total called promotion expenses or marketing expenses) amounted to 351 million yuan, while the research and development expenses were only 91 million yuan after deducting depreciation and amortization. Yuan, the marketing fee is 3.8 times the R&D fee. As of the end of last year, the number of R&D personnel of Xiaoxiong Electric has decreased by 47 compared with the beginning of the year, a decrease of 14.73%, and the number of sales personnel is 893, an increase of 14.34%.
Even for Supor, whose revenue and profit both increased last year, the research and development expenses in 2021 will remain in place, while the promotional expenses will reach 1.361 billion yuan, an increase of 342 million yuan compared with the previous year’s 1.019 billion yuan, a year-on-year increase of 33.56%. It is higher than the growth rate of operating income of 16.07% and the growth rate of net profit of 5.29%.
Lack of innovation is also one of the main problems faced by the small household appliance industry. According to the company’s data, Xiaoxiong Electric has a total of 1,516 authorized patents, including 840 utility model patents and 638 appearance patents. The proportion of invention patents that can truly reflect creativity and technology is very small.
Industry analysts believe that the high growth of the small household appliance industry determines that it needs to be driven by technological innovation. With the fragmentation of traffic and the increasing difficulty of obtaining traffic resources, platform costs have risen, and to maintain brand popularity and create popular models, companies have to continue to invest in marketing expenses. However, the traffic potential that this investment can bring and whether the traffic can be converted into sales is still unknown.
The Rise of the Creative Small Appliance Market
According to the Capital Securities Research Report, as a symbol of high quality of life, smart small home appliances are gradually becoming the internal driving force for the growth of the small home appliance industry. The Shanghai Securities Research Report also pointed out that due to the good growth of the small household appliances sector, the prosperity of clean electrical appliances remained at a high level due to factors such as product technology innovation and structural upgrading. Smart cleaning small appliances will become one of the hottest tracks in 2021. According to the “White Paper on the Development of the Robot Vacuum Market in 2021”, in 2020, the online market Cobos will take the first place with a market share of 43.8%, and the second The third place is Xiaomi and Stone, with sales accounting for 14.1% and 11.2% respectively; the sales of Ecovacs in the offline market accounted for 78.2%, which is the largest.
In the face of the decline in profit margins, other small household appliance companies are also actively seeking to break through, developing new categories and enhancing the added value of products are the main paths. At present, small home appliance companies including Supor, Joyoung, and Xiaoxiong Electric have gradually expanded from the original field of small kitchen appliances to the field of small household appliances, seeking more growth points.
Under such a market background, creative small home appliances, as an upgraded product that creates consumer demand, have a large market space. Creative small household appliances refer to small household appliances with low power, hand-held and easy to move with their own characteristics, which are based on the practicality of products, have breakthroughs in use or integrate fashion and personalization in appearance design, such as air fryers. Pot, skewer machine, electric stew pot, electric egg beater, electric lunch box, toaster and humidifier, etc.
Prospective Industry Research Institute pointed out that such small household appliances can meet people’s pursuit of quality of life, and are gradually accepted by people in China at this stage. Taking the air fryer as an example, the concept of zero oil, low fat, and ease of use made it once a net red player. According to the total data pushed by Aowei Cloud (AVC), in 2021, the air fryer omni-channel market size will reach 15.04 million units and the retail sales will be 4.38 billion yuan. From January to February 2022, the cumulative air fryer omni-channel retail sales will reach 1.20 billion yuan , an increase of 148.7% over the same period in 2021. From the changes in the Baidu search index before and after the Spring Festival, we can see that the popularity of air fryers has been unabated since January, and peaks have occurred during the Spring Festival, which has become the talk of consumers after dinner during the Chinese New Year.
On February 18 this year, Zhejiang Biyi Electric Co., Ltd. was officially listed on the Shanghai Stock Exchange, known as the “first share of air fryer”. The emergence of “the first air fryer” has once again ignited the enthusiasm of the industry. It is undeniable that smart, healthy and multi-functional small household appliances have become a consumption trend under the epidemic; The proportion of technical and high-end products is an extremely important step.
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