Furniture companies have already entered the era of meager profit

Most of the furniture, from the manufacturer to the consumer, will always experience the "manufacturer-distributor-store-consumer" link, and this process is accompanied by rising furniture prices. However, after discounts such as promotion and group purchase, the final transaction price is often 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, many furniture companies report to reporters that the gross profit margin of furniture companies is now only 10%.

Especially in the adjustment period from 2014 to the present, the backlog of finished goods in most furniture enterprises is still very serious. In order to maintain business, furniture companies have called back the prices of finished furniture, and most of the raw materials of these furniture were purchased at high prices. After deducting the annual increase in labor, materials, and renting, the profit margin of the merchants has dropped to a new low.

Raw material cost control dominates

In the manufacturing industry, raw materials account for 50% to 70% of the total cost of products, so the purchase price, quantity and quality of raw materials are related to the cost of a product. Under the situation that the gross profit rate of the furniture industry is decreasing, the control of raw material costs is receiving more and more attention from enterprises.

Many professionals said that "it is not enough to control the cost of furniture only from raw materials and production links." They believe that, in general, 70% to 80% of product costs have been identified during the design phase, and most mahogany furniture companies now lack awareness of cost control at this stage. One-sided pursuit of cost control in the production process, control methods mostly rely on reducing the consumption of raw materials, is very single. However, China's furniture enterprises are still the mainstream of small and medium-sized furniture companies. In the absence of awareness, funding, talent, etc., the most direct and effective cost control is only to make a fuss about raw materials. The most direct manifestation of this situation in the market is that in recent years, low-end wood-based panels are shipped much faster than high-end panels, and the higher-cost wood sales are significantly higher than the higher-priced materials with similar materials.

Since the second half of 2014, furniture manufacturers have become more interested in materials with higher cost performance. This also caused some of the price of timber that had climbed up to 10 points in 2013 to fall back to a low point. As the adjustment period of the furniture industry is far from over, furniture companies have invested more in cost control than in the past, which will determine that the price of raw materials will remain weak in the short term.

Classical furniture enterprises seek change in the predicament

In recent years, the operating costs of furniture companies have grown rapidly, and this situation is particularly prominent in classical furniture. First, the cost of raw materials fluctuates greatly. In particular, during the period of 2013-2014, the skyrocketing of mahogany and other hardwoods has greatly increased the operating costs of classical furniture companies. The second is the rapid increase in labor costs. According to statistics, the total wages of ordinary furniture manufacturing enterprises account for 12% of corporate expenditures, while for classical furniture companies, generally more than 15%. Third, the utilization rate of funds is low. Due to the long production cycle of mahogany furniture, it takes 3 to 5 months for a set of furniture to be purchased from raw materials to finished products. Some companies that pursue quality products are even more than one year old, so the backlog of capital costs is quite scary. Fourth, the risk factor is high. Since the pros and cons of many mahogany raw materials cannot be judged on the surface, these risks can only be passed on to the cost.

In the context of the central anti-corruption high pressure and the shortage of redwood resources, classical furniture companies are also seeking to change. The Xianyou classical furniture enterprise, known for its craftsmanship, began to use a large number of A. sinensis (white rosewood) and Bali red sandalwood (flower branches) to produce furniture. The traditional Siamese rosewood is still only a small number of high-end enterprises still insisting; As the main product, Xianghua Pear is a fist product with Hedgehog rosewood furniture. The market is being further subdivided, and the ultimate goal is to approach the more cost-effective materials.

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