With the rapid changing development of China's overall economy, the number of employees in various industries has increased significantly, the number of enterprises has risen sharply, technology has been continuously improved, equipment has been rapidly updated, and service and quality have been rapidly enhanced. The furniture industry has also entered a new round of rapid development. However, the competitive situation in the domestic furniture market has entered a heated state of hyper-competition. After a dynamic economy promotes the all-round development of society, what follows is a bottleneck in development amid fierce competition — product homogenization. In fact, not only the furniture industry, but all other industries share a common trend: the homogenization phenomenon is becoming more and more obvious, and the degree of product differentiation and the duration of differentiation are becoming more and more limited. The products produced and sold by different furniture enterprises are very similar in style, design and color, and some enterprises even have image packaging that is just like identical twins; in the past, when an enterprise developed a new product or new technology, the new product could sell well in the market for quite a few years. Nowadays, once a certain enterprise's new product sells well in the market, a large number of follower competitors will swarm in within a few months, followed by round after round of price wars. As the saying goes, the era of "copycat furniture" is growing increasingly intense.
What factors have led to this awkward situation? The author believes the main reasons are as follows:
Rising overall costs and increasing risks
With the continuous rise of costs in all links including raw materials, production and sales, the overall comprehensive cost keeps increasing. Moreover, market entry thresholds are getting higher and higher, the break-even point and critical value for enterprises operating in regional markets are getting higher, so risks are also getting greater. This in turn leads to the continuous improvement of enterprises' risk awareness. Since developing a new series of products requires a large amount of capital investment in the early stage, and the entire cycle from R&D to market launch is relatively long, and there is no guarantee that the new product will succeed after launch, which also involves certain risks. Small and medium-sized furniture enterprises neither dare to nor have the capital to take this risk. They would rather follow and imitate the best-selling new products of large enterprises (as shown in Figure 1), making whatever profit they can, which in turn has formed the severe market homogenization phenomenon.
Too low entry barriers for the furniture industry and chaotic market conditions
Another main reason is that the entry threshold for the furniture industry is too low: in terms of startup capital, some people only need more than 100,000 yuan to open a furniture factory. If the startup capital for building a factory can reach millions of yuan, the enterprise can basically obtain the qualification to be a branded foundry for some large factories. Meanwhile, from a technical perspective, enterprises have relatively low requirements for employees' technical skills. For products such as sofas, swivel chairs and glass coffee tables, small enterprises only need a few workers working in a space of dozens of square meters to process and produce products. In addition, the industry has not yet formed a standard to measure whether an enterprise is qualified to enter the industry in terms of capital, scale, quality, facilities and other aspects. Therefore, low entry barriers have become an important factor for industry homogenization. A few years ago, the domestic furniture industry was in a period of rapid development and prosperity. Driven by market demand and soaring prices, large and small furniture enterprises sprang up like mushrooms after rain. However, many newly established small enterprises do not have the capabilities in independent R&D, design, marketing, service, reputation and other links at all. Instead, they rely on blindly copying and following trends to get a share of the profit, which has led to the increasingly intensified homogenization of the entire furniture industry.
"Butterfly Transformation" — Seeking differentiation to break through the homogenization situation
In the era of homogenization, not only products are homogenized in China's furniture industry, but technological equipment, marketing management, service strategies and other aspects have also entered the era of homogenized competition. When homogenized competition occurs in products and markets, competition between enterprises often evolves into "price wars". The outcome of a price war is very cruel, and it can even lead to a reshuffle of the entire industry. However, how can our furniture enterprises achieve "butterfly transformation" from the mire of "homogenization"? This is a major issue related to the future and destiny of the industry, which deserves the joint efforts and deep reflection of every industry practitioner. Time waits for no one, we urgently need to find a breakthrough — we can get out of the homogenization dilemma by seeking differentiation.
Today, when products, marketing, channels and markets are highly homogenized, if we do not find a breakthrough for differentiation from the shadow of homogenization, eliminate homogenization in various channels and formulate "differentiation" strategic policies, so as to embark on the road of differentiated brand building, otherwise our enterprises are very likely to be eliminated in the wave of industry reshuffle. Only by improving product quality and service, winning with excellence, and adhering to its own mid-to-high end brand route can furniture enterprises break out of the cocoon from the homogenization situation.
In the early stage of design and R&D, enterprises need to continuously improve their own brand influence, enhance the originality and novelty of their products, strengthen the value of products and extend the product life cycle. This requires enterprises to increase investment in design and R&D. They can form their own professional design team, or adopt the mode of cooperation with university research institutions and professional design institutions, so as to avoid homogenization in product design and form a novel and differentiated product route for the enterprise. For example, the L.D series product, jointly launched in 2008 by Bosen Furniture, a representative enterprise in southern China, and Top furniture design company, has been very popular since its launch, and has become a model for many small and medium-sized enterprises to imitate and follow (as shown in Figure 2). At the same time, enterprises and designers can also develop R&D thinking. Many designers engaged in front-line design work in enterprises should deeply understand that the traditional single linear design thinking can no longer meet the product innovation needs under the new market environment. We need to break through the restrictions of traditional thinking and institutional space, expand the scope of design, grasp design value from a strategic level, establish design thinking methods for service innovation, so as to form systematic cognition in the awareness and methods of service value and service demand, and build a new systematic method system — service innovation design. That is, R&D and design should not only focus on products, but also pay more attention to users, truly achieve design innovation from the perspective of service, break through tradition, and stand out from the crowd.
In the production and processing stage, enterprises can improve product quality through multiple procedures such as introducing professional technical talents, updating processing equipment, improving the quality of raw materials, and strengthening product testing, so as to form a high-quality image in the mind of the market and consumers, leave a good reputation, lay a solid foundation for the survival and development of the enterprise, and provide reliable guarantee for the later sales and service. In addition, in the marketing link, enterprises can also help dealers follow the brand route by strengthening store design, sales management, personnel training, promotion and other aspects.
However, the foundation of differentiation is the core competitiveness of the enterprise, that is, what kind of products the enterprise is good at producing. In fact, differentiation is not equivalent to original capabilities. What matters for the manufacturing industry is to make products well and exquisitely. Therefore, furniture enterprises must have an accurate positioning on the road of differentiation, and must not abandon the fundamental for trivial matters. For example, if one enterprise's product sells well, it does not mean that another enterprise producing the same product with the same quality and design will definitely sell well, and it does not mean that the product will sell well when placed in another enterprise's store. This shows that it is probably because the other enterprise's differentiation strategies such as business philosophy, corporate culture, credibility and service functions on the differentiation route are superior to others.
As we all know, there must be many commonalities in the same industry. Homogenization exists in product design, marketing methods, operating procedures and other aspects. However, today with high homogenization, especially when the furniture industry is facing severe tests and challenges, every enterprise should establish its own core culture, core products and core connotation. Others can only imitate the form of products and methods, but the internal quality and deep cultural connotation cannot be imitated at all. These are the core competitiveness for furniture enterprises to seek differentiation and achieve a real "butterfly transformation" out of homogenization.