Source: CHEAA-run China Appliance Magazine (an article provided by All View Cloud)
Chinese refrigerator industry underwent ups and downs in the past 2018 under the influence of rising raw material prices, cooling real estate property market and changing international situations. In the first half of the year, the industry saw a wave of sales growth thanks to several rounds of promotions, which, unfortunately, left an overdraft market that suffered a sharp sales fall starting from the third quarter. As to different tiers of the market, first-tier and second-tier markets saw remarkably growing demands for sophisticated storage solutions while forth-tier and fifth-tier markets prioritized large-capacity and side-by-side models. What’s more, it’s worth noting that four-door refrigerators went ahead of the pack, entering into a stage where domestic and international brands competed at the same price level. These trends could stay in 2019, a year when refrigerator industry continue to forge ahead amid pressure.
Structural upgrading remained as a priority
Dipping slightly at the end of year, the raw material cost stayed high in general across 2018, resulting in an all-time high average refrigerator price at 4,800 Yuan as of the end of 2018, up from 4,500 Yuan same time 2017 and 3,800 Yuan 2016.
Keeping upgrading structurally, the industry maintained the pattern of “rising sales value and falling sale volume” with retail sales volume sliding by 3.1% year-on-year at 32.72 million units and sales value up by 2% at 95.8 billion Yuan, according to the monitoring data of all distribution channels from All View Cloud. Online markets remained as the main driver of market growth while in-store markets continued to slide in general, though the average in-store price rose markedly.
Ups and downs might be the word you’re looking for to describe the general performance of Chinese refrigerator industry in 2018, a year that saw drastically different market performance in January and February affected by Spring Festival, a strong growth of 5.7% in March thanks to rounds of promotions, a weak rise driven by online shopping festival in June and after that, a sharp fall starting from the third quarter that lasted to the fourth quarter when online shopping campaigns failed to stimulate consumers to loosen their purse strings. Offline market monitoring data from All View Cloud indicated a 20% plunge in December alone and 6.2% fall for the whole year. In this context, the pressure in the first half of 2019 is obvious, and it might continue if promotion campaigns fail to work.
Models with large-capacity and adjustable temperature compartments rose in popularity
The market demands mainly comes from replacements, first purchases from new homeowners and landlords in first-tier and second-tier cities. Consumers with replacement needs are more function-oriented. As to first-time purchasers, those from first-tier and second-tier cities particularly expensive neighborhoods are less likely to choose large-capacity models compared to those from third-tier and forth-tier cities. Purchases from real estate agencies and individual landlords tends to choose low-cost models with little concern in function or product service life, and they are part of the 40% online consumers who prefers direct-cooling top-freezer models, bottom-freezer models and French-doors.
The product mix in different markets differs: models with multiple adjustable temperature compartments are popular in first-tier and second-tier cities where side-by-side models shrink in market size, but for forth-tier and fifth-tier cities, large-capacity models are most preferred.
Price wise, two-door models (top-freezers and bottom-freezers) and French-doors hit bottom while multi-door models and side-by-side models maintain strong momentum, which, along with the upgrading of product mix, contribute to the 12.6% growth in average price.
China-made four-door models compete with international brands at the same price level
With Haier taking the lead and Siemens following behind, four-door refrigerator sector passed its fast growing period after three years of development, entering a steady development stage. This category is regarded as a key area of focus in high-end transformation.
Four-door products were mainly developed for mid-tier and low-tier markets back to 2016, with models priced under 6000 Yuan accounting for more than 40%, over 8000 Yuan less than 25% and over 15000 very few. After that came 2017, a watershed year that marked the high-end transformation of four-door refrigerators. With enterprises stepping up efforts in the development and unprecedented strong promotion of high-end products, the landscape of this sector changed, with products priced between 6,000-8,000 accounting for more than 30% and between 10,000-15,000 more than 20%. Those under 6,000, though came in diversified models, did not receive strong market response. After a prosperous 2017, industry players continued their high-end strategies in 2018 with remarkably increased number of new models priced over 6000 placed on the market, which signaled a steady development stage of four-door refrigerators.
Going high-end for two years, China-made four-doors start to take on international brands at the same price level. Its price disparity with international brands is drastically different than other models if you look at the top five brands on the market. Consumers are more product-oriented, placing less attention over brand or price. Plus, as basic technologies such as variable frequency, air-cooling and energy efficiency proliferate, glass-door models rise with growing popularity. There is also market for high-priced built-in four-door models. To sum up, consumers are more concerned with function and look, less sensitive to capacity and price when it comes to four-doors.
Functional and cost-effective models tap into market demands
Compared to high-end four-doors, side-by-side models have long been known for cost-efficiency. With Haier and Siemens dominating the offline market as two oligarchies, domestic brands throw shade at foreign brands at online markets, with Viomi, a company within Xiaomi’s ecosystem, breaking into the top 10. At Chinese refrigerator market, models with optimized functions, strong brand charism or high cost-efficiency all have their opportunity, whether it is a French-door model priced over 10,000 Yuan or a low-cost side-by-side priced under 3,000.
Refrigerator makers continuously tap into consumers’ habits to optimize the door design. After the emergence of a variety of door designs such as cross-door, T-door and F-door, French-door models and side-by-side models further spawn a series of products with an optimized design of doors and compartments, offering offer the consumers a broader range of options.
All View Cloud estimates that, the retail sales volume of Chinese refrigerator industry is expected to go down by 3.3% to reach 31.64 million units. The competition landscape will not change in short time, with Haier as the frontrunner, Midea, Siemens, Ronshen and Melng at the second tier. Down the road, more brands are gearing up to gain ground by keeping their eye on “small” needs of consumers.