Currently Chinese floor industry is struggling: the increased prices of wood, freight, labor cost……The profits of floor industry is decreasing gradually. What’ more, except increased cost, the sales link also manage to share the profits. How can floor enterprises survive in such fierce competition?
What causes profit decline?
1、Increased price of wood. As the implement of the Natural Forest Conservation Program, wood theft and deforestation are strictly forbidden. Restriction of logging was put in the forest in Northeast China. Jilin, Yunnan, Guangxi and some other provinces all report dramatic decline of wood. Meanwhile, America, Russia, Malaysia and some other countries have rolled out policies to reduce wood export. These all result in high wood prices, and the upward momentum will not be reduced soon.
2、Increased cost of freight. Recently, Department of Transportation launched a huge crackdown on overloading of vehicles. The freight cost has increased by 33.6%, and at least 35% when including relevant tax.
3、Increased cost of labor. Labor cost has increased by 10%-15%. The massive loss of floor installer and the workforce gap are key reasons. Experienced installers’ payment rose slightly by 15% and even larger.
4、The model of floor enterprise. Some floor enterprises have limited control force over market, lacking reasonable product system and the ability to explore new market. They are struggling the fierce competition but never launch a high-profit product.
How to gain market share in such fierce competition?
1、Price/performance ratio. Buying flooring with the highest cost performance is the consensus of consumers. Many floor enterprise has put this as a core in brand building. It should be a reasonable sales method to explore bigger floor market by taking the advantage of high cost performance.
2、Individualization
Floor enterprises should keep pace with the development in today’s gigantic changing period. Setting product individualization as a starting point can lead to greater payoff. To meet personalized demand of different customers on the basis of quality can help enterprise to gain market share.
3、 Technology Innovation
Floor, as an indispensable part in home decoration, asks for more than “practicality”. A floor product with advanced function or great design taste will be more popular. Floor enterprises should actively advance individualization and innovation in each sales link to seize market share.
