On July 18, the China Furniture Association Market Committee was officially established. During the meeting, Wang Xuanqing, deputy director of the Department of Circulation Development at the Ministry of Commerce, highlighted the challenges facing the building materials and home industry. He pointed out that the overall performance in the first half of the year did not meet expectations. In June alone, sales from large-scale building materials home stores reached 102.8 billion yuan, a 2.71% decline compared to the previous month, while total sales from January to June amounted to 519.6 billion yuan, representing a 6.19% year-on-year decrease.
Looking ahead to the second half of the year, Wang noted that the industry is expected to enter a seasonal peak for home decoration, which could lead to some improvement in performance. However, he emphasized that expectations remain low. The industry is expected to continue facing a tough environment, with strong players gradually gaining more market share while weaker ones struggle to survive. This trend suggests that transformation and upgrading are no longer optional but essential for long-term survival.
Industry experts have identified four major challenges currently impacting the sector. According to data released by the Ministry of Commerce and the China Building Materials Distribution Association, the national building materials boom index (BHI) fell to 108.10 in June, down 1.01 points from the previous month and 11.51 points year-on-year. While real estate sales continued to grow, the BHI did not follow suit, partly due to the saturation of "rigid demand" in the housing market. Additionally, local weather conditions, such as the rainy season, affected renovation activities, while some real estate investment activity may have contributed to price increases.
As China's economy continues to develop, people’s living standards have improved, leading to higher demands for quality of life. This has brought increased attention to the building materials industry, which holds a unique dual role—both as a production-related sector and as a provider of lifestyle information. Its importance in the national economy is growing.
Wang Xuanqing highlighted that the current situation for building materials home stores is quite challenging. First, the ongoing tightening of real estate policies has led potential buyers to hold off on purchases, reducing actual purchasing power and making it difficult to sustain sales growth. Second, there is a surplus of stores, leading to intense competition. Many stores, especially those relying solely on land leases, are struggling to stay afloat. Some urban areas now have more than half of their building materials stores operating below capacity, making the business model unsustainable.
Third, existing store formats are not well-suited to modern needs such as urbanization, affordable housing development, and the rise of refined home design. Most stores still operate on a lease-based model, offering "one-stop shopping" for personal and informal renovation teams. However, new homes are increasingly being built with "precise" or "fully renovated" finishes, reducing the need for traditional "one-stop" shopping models. Instead, customers are turning to "supplemental purchasing," "fine decoration," or "full decoration" options, often through tenders or direct procurement.
Fourth, the rapid rise of e-commerce and digital platforms is disrupting traditional retail models. With advancements in technology and logistics, online shopping is becoming an attractive alternative for consumers, putting pressure on physical stores. Moreover, group buying and other new transaction models are further intensifying competition.
In response to these challenges, Wang emphasized that transformation and upgrading are urgent. Companies must focus on innovation and service improvements. One key area is the development of e-commerce, while another is rethinking supplier relationships and profit-sharing models. On the service side, stores should enhance their offerings to both merchants and customers, shift from rent-seeking to proactive marketing, and launch more promotions to attract a broader customer base.
Overall, the building materials home industry is entering a phase of stable but slow growth, mirroring the broader economic trends. Only those who adapt and innovate will be able to thrive in this evolving landscape.
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