In the past year, the domestic building materials and home furnishings sector faced significant challenges. According to data released by the China Building Materials Circulation Association, sales in this industry declined by 2.46% annually, with a notable drop in December 2012. The National Building Materials Index (BHI) for that month stood at 106.48, reflecting a 3.32% decrease from the previous period and a 0.72% decline compared to the same time the previous year. Monthly sales of large-scale building materials stores dropped by 5.92%, totaling 100.6 billion yuan.
Qin Zhanxue, Executive Vice President of the China Building Materials Circulation Association, explained that the market had entered its seasonal slowdown, particularly during winter. Retailers used holiday promotions as a standard strategy to cope with lower demand. At the start of the year, many stores launched aggressive discounts aimed at boosting sales rather than maximizing profits. These efforts were designed to build customer relationships and prepare for a stronger performance in the coming year.
Over the past few years, the real estate market remained strong, prompting home furnishing retailers to expand rapidly across major cities. This "land grab" approach led to intense competition and overexpansion, which now has consequences. Qin pointed out that the current market downturn is partly due to the real estate sector's cooling down, but also because of the negative effects of excessive store growth. Many large retail centers are now struggling with reduced occupancy rates, difficulty in attracting investors, frequent management changes, and challenges in collecting rent.
To overcome these issues, Qin emphasized the need for transformation and innovation within the industry. Companies should focus on understanding the evolving needs of urbanization and adapt their strategies accordingly. By investing in research and improving operational efficiency, the sector can better position itself for future growth and stability.
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