The business model of chain home building materials encounters difficulties and the homeland collapses

The weather is getting warmer, but the Oriental home, once the largest home building chain supermarket in China, has frequently closed down.

On the 14th of the month, Fuzhou Oriental Homes, which was previously known as a good capital chain, was closed. On May 6th, Changsha Oriental Home Building Materials Supermarket, which has been in Changsha for 9 years, closed its doors because some merchants entered the market for less than one year, and they continued to lose money after entering the market. On the morning of the same day, dozens of merchants blocked. Stay in the supermarket door to discuss. Just after New Year's Day in 2013, Oriental Homes closed only five stores in Beijing, and the Oriental Home in Chengdu's Second Ring Road was also closed.

B&Q and Home Depot from abroad have already reported the huge losses in the Chinese market. What happened to the Chinese home building materials supermarket market? Is the decline of the Oriental homes an internal reason or an external reason? Please see the reporter's interview analysis:

Year is the most difficult year for China's building materials market. From a macroeconomic point of view, with the overall tightening of China's real estate market, the upstream and downstream industry chains associated with this are also in full swing. In this ecological circle, there are both cement steel bars, upstream industries that have been in crisis, and downstream industries such as decoration and building materials. The entire market is completely in a cold winter. The sluggish real economy in China has also led to a sharp decline in sales of the building materials industry and a tight capital chain, which has led to a sharp deterioration in the relationship between Oriental homes and suppliers. Oriental Headquarters' headquarters building in Beijing Minmetals Plaza has been surrounded by consumers and suppliers who have been reminded of arrears.

External worry is a superficial cause of premature aging in oriental homes. In fact, internal injuries are fatal.

Awkward equity and team internal consumption

Oriental Home is not always a loss-making company. According to the data released by Oriental Home in 2008, when Oriental Home introduced Riich Capital, the net profit was 70 million yuan. However, after the introduction of PE capital, the situation has turned sharply.

In the public shareholder list of Oriental Homes, the company has two largest shareholders, namely its parent company Oriental Group (600811, shares it) and Longbai Hongyi. According to the Eastern Group, Longbai Hongyi owns 65% of the shares of Oriental Home. Longbai Hongyi gave another saying: Oriental Homeland had already transferred the equity of Oriental Home to another company, and did not actually control the Oriental Home. Who is the Oriental Home? The equity is ambiguous and between the major shareholders. Are there any contradictions and conflicts, can the days of the Orient Home be better?

The conflict between major shareholders has led to the management team constantly changing frequently. From the public information, in less than a year in 2012, the Oriental Homeland has taken up the position of three presidents, the president of Wumei, Li Fengjiang, the vice president of China World, Liu Wei, who served as the Oriental Home in 2005. Cong Liang, vice president. With such frequent turnover, executives have no turbulence and internal friction. Without a stable team, it is almost impossible to determine the direction of development and to clarify future market strategies and sales.

Chain home building materials model has no way out

Is the chain of home building materials supermarket model able to meet the market demand of this era? The world's building materials supermarket giant B&Q, which is smooth in foreign countries, has been losing money for six years in China. The Home Depot Group closed all its stores nationwide overnight. Regardless of whether the foreign giants are not convinced by these factors in China, at least they have proved that the Oriental homes that study their building materials supermarket model are also facing difficulties.

What are the defects in the business model of chain home building materials supermarkets?

Tang Zhaoqun, CEO of the former Lejia Eslite (Beijing) Technology Co., Ltd., told I. He believes that there are several problems in the home building supermarket model like Oriental Home, which are not in line with Chinese consumption habits:

First of all, consumers of home building materials actually pay attention to pre-sales and after-sales experience. In pre-sales consultation, home building chain supermarkets such as Oriental Homes are difficult to be as professional as the manufacturer's specialty stores. After the sale, Oriental homes are more difficult to compete with the specialty stores. Oriental Homeland does not have ownership of the products, but only the sales channels. Many after-sales service problems must be solved by the dealers themselves. Oriental Homes has no ability to solve all after-sales problems, and can only hope to settle in the dealers or manufacturers. The service radius cannot be localized like a specialty store, which makes the Oriental Homeland lose first in the competition with the store.

Secondly, the furniture store manufacturers' stores can do one-stop service for consultation, installation and distribution. Due to the mode of the Oriental Home, it is impossible to provide a one-stop solution like a specialty store. Professional problems, sales can not be installed and delivered, after-sales service is not in place, the Oriental homes lost another game.

Third, the home building materials industry pays attention to the consumption radius. Users generally choose to spend within 5-10 km. The product distribution and user experience beyond this radius will have great problems. Oriental Home is a large-scale home building materials supermarket. Compared with specialty stores, it is impossible to lay out stores on a large scale. The store can rely on the small advantage of the store to arrange large-scale distribution, and the distribution radius is controlled within 5-10 kilometers. At this point, the Oriental home mode loses another game.

Fourth, household building materials such as high-intervention products, consumers value the brand and experience. Whether it is store decoration, pre-sales professionalism, store service process optimization, etc. are far beyond the Oriental home.

Fifth, the Oriental Homeland vigorously squeezed the upstream, allowing suppliers to gradually move away. The main income of Oriental Homeland comes from the entry fee, deduction point and supplier's account period of the home building materials manufacturer, which makes the supplier unprofitable in terms of capital and profit, which eventually leads to more and more excellent homes. Building materials brands are transferred to specialty stores or other distribution channels. Once the funds are pressed in the hands of the Oriental home for too long, there is a cash flow break, many dealers and manufacturers face huge risks, and there may be no return.

Of course, the supermarket model of the Oriental Home has a scale effect, and there is a price advantage in purchasing. Unfortunately, under the consumption habits of Chinese users, the price advantage is often overwhelmed by the above drawbacks.