The cooling down of the small home appliance market exposes risks and machine innovation has become a consensus among enterprises

Small household appliances have always been a popular category among consumers during e-commerce promotions, and this year's "618" shopping festival is no exception. Driven by emerging consumer concepts and demands, small home appliances are popular among consumers, especially young people, due to their advantages such as low power, full functionality, low price, and exquisite and personalized appearance. However, in recent years, the small home appliance consumer market has also experienced ups and downs. How can small home appliances develop healthier and more sustainable?

With over half a month to go before "618", major e-commerce platforms have already begun to fully prepare for the promotion of small appliances, such as "free trial of millions of household appliances", "super low prices", and "Super membership subsidies". According to data from JD.com, the pre-sale orders for small household appliances such as 2-piece hanging air conditioners and ultra-thin refrigerators increased by more than five times year-on-year four hours before the opening of the "618" pre-sale this year. As young people with emerging consumer concepts gradually become the main force of consumption, small appliances with trendy features and exquisite appearance often make a name for themselves on the sales charts of e-commerce platforms. Why are consumers willing to pay for small appliances? How was the user experience? What is the key to the future development of the industry? With these questions in mind, the Economic Daily reporter launched an investigation.

Pay for convenience and creativity

In the early morning, the smart speaker on the bedside table received instructions as scheduled: the bedroom lights lit up, the curtains slowly opened, and soft music flowed from the speaker. As a result, 25-year-old Chen Jiaying began her day of vacation. After waking up, she went to the kitchen to put the prepared miscellaneous grains into the electric cooker, cut a few fruits, and threw them into the juicer. Then, she activated the living room's sweeping robot to clean the entire room, and then walked into the bathroom to use a small beauty instrument to clean her face

Nowadays, in the eyes of many young people, various small household appliances have become essential for improving household efficiency and quality of life. Multi functional cooking pots, air purifiers, electric mops... a wide range of small household appliances have emerged in various life scenarios, reflecting the transformation of young consumers' attitudes and consumption concepts. Convenience and the ability to free my hands are the primary factors for me to choose small household appliances, "said Chen Jiaying.

The 2022 Small Home Appliance Market Trend Insight Report released by the 36 Krypton Research Institute shows that due to the need to focus on the workplace and profession, young people are more inclined to efficiently utilize their leisure time and do as much as possible to please themselves during their limited rest time. Research data shows that over 90% of young people have used "lazy people" services such as takeout, running errands, and housekeeping. Compared to this, "lazy people" products have more room for growth.

In addition to practicality and convenience, the endless creativity is also an important reason for young consumers to pay for small appliances. Air fryers have gained popularity due to their innovative functions and focus on low oil cooking concepts. Compared to traditional ovens, air fryers are not only smaller in size and shorter in cooking time, but also produce crispy appearance and taste through the flow of hot air, which has fewer calories than fried food. In recent years, they have become a trend around young people.

I enjoyed the process of cooking and found some food bloggers using air fryers to cook various dishes online. After placing an order, the user experience exceeded expectations. "Li Wei, born in 1995, lived in Beijing for 10 years and after several physically and mentally exhausted moves, compact and convenient became his key demand for home appliances. The small kitchen appliances such as air fryers, juicers, and health kettles designed specifically for "one person eating" perfectly meet his desire to pursue a quality of life under limited conditions.

At the same time, small appliances, with their creative exterior design, have also attracted many young consumers. In Chen Jiaying's view, small household appliances are not only a practical tool, but also a type of decoration and decoration that should be coordinated with the overall style of the house and have a certain degree of ornamental value. Under the same conditions, I would choose a more attractive product, and it doesn't matter if it's a bit expensive, "said Chen Jiaying.

However, relatively cheap prices remain a major advantage for small appliances. During the "618" warm-up period this year, not only did some e-commerce platforms launch full discount coupons, but some merchants also provided certain discounts and insurance services. Taking a product on the Tmall platform's air fryer hot list as an example, the original price is 309 yuan, and after adding discounts, it only costs 99 yuan.

Traditional household appliances mainly meet the public needs of households, such as televisions, air conditioners, refrigerators, etc., while small household appliances mainly meet personalized and diversified needs, which in turn will accelerate the category innovation of small household appliances. "said Zhang Jianfeng, Secretary General of the China Household Electrical Appliances Business Association.

Market cooling reveals risks and opportunities

The small home appliance market experienced a boom in 2020. At that time, affected by the COVID-19, people spent more time at home, and the demand for small appliances such as cooking and cleaning also increased significantly. With the help of online channels such as live broadcast e-commerce, the formation and development of the "housing economy" was accelerated.

The "Report on China's Home Appliance Market for the First Half of 2020" released by the China Institute of Electronic Information Industry Development shows that under the impact of the epidemic, the retail sales of China's home appliance market decreased by 14.13% year-on-year in the first half of 2020. However, the small home appliance category has shown strong "pressure resistance" ability, and the online sales growth rate of multiple emerging kitchen small home appliance categories has further increased. Among them, the sales volume of frying and grilling machines increased by over 70% year-on-year, and the sales volume increased by over 80% year-on-year. Among the top kitchen appliances enterprises, in 2020, Jiuyang's operating revenue increased by 20.02% year-on-year, and its net profit increased by 14.07% year-on-year; Xiaoxiong Electric's operating revenue increased by 36.16% year-on-year, and its net profit increased by 59.64% year-on-year.

However, the market situation for small household appliances has not been consistently high. Starting from 2021, the market has suddenly cooled down. Relevant data shows that in 2021, the retail sales of 12 types of small kitchen appliances, including soybean milk machines and wall breaking machines, totaled 51.4 billion yuan, down 14.1% year on year. Entering 2022, the retail sales of 13 types of kitchen appliances, including air fryers, totaled 52.03 billion yuan, a year-on-year decrease of 6.7%, and the market cooling trend has not improved.

Looking back now, the good performance in 2020 has to some extent overspent consumer demand for a period of time in the future. The good market situation in 2020 has attracted many enterprises to enter, and industry competition has become more intense. In addition, the significant and continuous increase in raw material prices has led to a decline in revenue. However, we believe this is a phased process and we still have high expectations for the future, "said a person in charge of Xiaoxiong Electric.

Behind the decline in revenue data, small home appliance enterprises are facing a situation where both crisis and opportunity coexist. The crisis is mainly due to insufficient market demand. After a period of concentrated purchasing, the market tends to become saturated, and the consumption rate naturally decreases. In addition, the product's lifecycle determines the slow speed of updating and upgrading small household appliances, "said Zhang Jianfeng.

In the "2022 Small Home Appliance Market Summary" released by Ovi Cloud, it is mentioned that consumers have added numerous small home appliances driven by the "home economy", but there has been a phenomenon of shelving in the future. This phenomenon also makes consumers more vigilant when purchasing kitchen appliances in the future. This vigilance has been demonstrated in 2022, and most of the best-selling products in the market are multifunctional products with strong practicality, which are easy to store and save space. The reporter saw on the Tmall Hot Pot Hot Selling List that the first one is an electric hot pot that integrates steaming, boiling, frying, and frying functions, with monthly sales exceeding 2000 copies. Other electric hotpots positioned as "one person to eat" and "multifunctional" are also at the top of the list, with considerable sales.

Where there is market demand, there are business opportunities. In the 2021 Small Home Appliance Market Summary, it is mentioned that even in weak demand, products with technology, selling points, multifunctional features, and solutions to the pain points of "lazy people" are still selling well, which indirectly reflects the current situation of the industry where there is no shortage of demand and innovation in the market. Under the overall downward trend, small household appliances such as air fryers and cleaning products have maintained a relatively high growth rate, reflecting people's greater concern for health and convenient operation, "said a person in charge of Jiuyang, Although there may be some periodic disturbances, the demand for the entire industry continues to grow. Currently, the popularity of small household appliances is high in first and second tier cities, and there is great room for demand release in sinking markets such as third and fourth tier cities. The entire industry is in a healthy and upward stage

Innovation has become a consensus among enterprises

Chen Jiaying once thought of completely entrusting the floor cleaning work to the sweeping robot, but an accidental experience dispelled her idea. Once, my cat knocked over an ink bottle and was detected by a sweeping robot before it started cleaning automatically. The mess in that area was very frustrating, "Chen Jiaying told reporters. Although the sweeping robot can automatically detect garbage, it cannot distinguish between dry and wet garbage and make effective treatment; Sometimes, it adds a lot of trouble to clean up the sweeping robot.

When small household appliances enter consumers' lives through corporate marketing, the labels such as "novel functionality", "interesting creativity", and "technological support" attached to them also begin to divide their reputation. There are many who approve, and there are also many who are disappointed and opposed. The reason why some consumers do not buy is mostly because they find that the functions of small household appliances do not match their own needs after impulsive and trendy consumption.

In the view of Lu Fei, a researcher at JD Consumer Research Institute, to improve this situation, on the one hand, consumers need to establish a rational and healthy consumption concept; On the other hand, it depends on the optimization and innovation of products by enterprises. Taking the sweeping robot as an example, its algorithm is very complex. For the same household type, different brands of machines calculate different routes and have their own functional priorities. However, for enterprises, basic algorithms and cleaning capabilities need to be continuously optimized and improved, and different products need to be launched for different markets, "said Lu Fei.

Innovation has also become a consensus among enterprises. In the past year, Subor and Jiuyang, which are at the forefront of small household appliances, have launched multiple new products in the fields of kitchen appliances and cleaning. Little Bear Electric has launched over 100 new products, with an average of one new product every 3 days. However, consumers also have their own views on this. When purchasing small household appliances, one still needs to consider whether the product functions match their own needs. I wouldn't consider purchasing small household appliances such as electric steamers, which have strong substitutability, "said Li Wei.

Ultimately, product innovation should be based on user needs and experience. In addition, continuous innovation can lead to a long product line, which is not conducive to the long-term development of the enterprise, "said Lu Fei. Zhang Jianfeng believes that "the leading effect in the home appliance market is obvious. We must first do our main business well, consolidate the existing market, and also cannot give up on innovation in emerging categories.

In terms of innovation and development direction of small household appliances, Lu Fei believes that home consumption scenarios have great imagination space in the future. For example, the living room now serves the 'N in 1' function, and young people use it as a space for socializing, fitness, entertainment, and other activities, greatly stimulating the demand for different home appliances. With the continuous emergence of various new technologies, products will be optimized and iterated in the future, which will further promote the popularization of various types of home appliance products, "said Lu Fei.