Recently, at the "2012 Beijing Home Furnishing Market Status Seminar" sponsored by the National Chamber of Commerce and Industry Furniture and Decoration Chamber of Commerce, the issue of store rent has once again become the focus of discussion among the heads of major stores and brands. In the situation where the property market has not yet picked up and the profits of home furnishing companies are getting thinner, merchants in the store are calling for rent reductions one after another. Has rent really become a burden for brands and dealers, as some businesses claim, as the stronger home furnishing market between the two parties, how should the brand respond to the "rent call" of the brand?
Rents lower business happiness
The home furnishing store has been the most mainstream sales channel for Chinese home furnishing brands for many years. In the process of following the store's national horse racing enclave, the rent of the store has caused the cost of manufacturers and distributors to continue to rise. According to Liu Yongkang, the president of Hong Kong Kang Sheng (Conaden) Group and the chairman of the Supervisory Board of the China Household Brand Alliance, home dealers have a happiness index, which means that when rent accounts for 10% of sales, merchants can make a lot of money, accounting for At 15%, there are still four to five points of profit, at 20%, the capital is guaranteed, and more than 20% of the dealers are about to cry.
Judging from the data released by brand enterprises and distributors, the happiness of most businesses seems to be weakening. According to Wang Dawei, chairman of Klass Furniture, whether the rent of a store is 200 yuan or 500 yuan per square meter, when the rent accounts for 20% of the sales, it will no longer make money, or even lose a little. However, a considerable number of brands in the industry currently spend 50% to 80% of their sales on rent, and even one month of sales is not enough to pay rent. High rents have overwhelmed home furnishing companies, and rent reduction has become the unanimous appeal of some manufacturers and distributors.
Some stores may reduce rents
It is not difficult to see from the crying of a large number of home furnishing enterprises that not rent reduction will make it difficult for merchants to continue. Some enterprises even suggested that the home furnishing store should follow the rent payment model of the electrical appliance store and sell more and pay more, and sell less and pay less. In front of the call for rent reduction, Yin Bo, general manager of Dajing Temple Lan Jinglijia, and Liu Changhe, general manager of Chengwai Home Furnishing Plaza, also publicly stated that they would adjust the rent in a timely manner to ease the pressure on merchants in the store.
Industry insiders pointed out that when the market is booming, sales are good, and rent is not a problem, and when the market is weak or even sluggish, rent becomes a boulder. The merchants and household stores in the lease and leased relationship are a pair of contradictions, and the contradiction becomes acute when the macro environment deteriorates. Excessive rents in stores will cause some merchants to pass the cost on to consumers, raise product prices, or irresponsibly reduce production costs, thereby discounting product quality.
Enterprises should adjust their own operations
The increase in store operating costs is the reason why store rents remain high. Yin Yuxin, deputy general manager of Oriental Home Furnishing Plaza, pointed out that the store needs to pay for labor management costs, advertising marketing costs, basic operating costs and other costs, and these costs are also rising with the soaring social costs, so the store naturally needs to be achieved through rent collection profit.
Jim Jiang, President of Jimei Home Furnishing, said that the rent of the store is determined by the purchasing power of the store and the relationship between supply and demand. Whether the rent is too high cannot be generalized. Merchants all hope to plunge into a store with strong sales and hard to find, and their rent is naturally relatively high. He pointed out that at present about 20% to 30% of the merchants do feel the rent pressure is too great, while another part of the brand sees the overall lack of emotions and then screams and lowers the rent. "A truly sold company will not complain about high rents." .
Yan Peijin, Chairman of Oudian Flooring, said that simply rent reductions in stores cannot fundamentally solve the problem, and home furnishing companies should also look for the reasons themselves. When the market situation is good, the merchants do not control the development speed, blindly expand the store, the stalls are spread too fast and too large, resulting in high rental costs. In addition, home furnishing companies failed to open up revenue-generating channels outside the stores in a timely manner, which also caused the rental problem to intensify. Wen Shiquan, chairman of Yifeng Furniture, also said that when everyone complained about excessive rents, Yifeng had reduced the operating area of ​​six stores in Beijing before the end of 2011, thereby alleviating the operating pressure. "Slimming and fitness can only be light. Forward".
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