The home appliance industry has faced a slowdown in consumer spending, driven by rapid market expansion. In 2013, Xiao Yanhong and her husband had been working in the cabinet business near Beiyuan Street for eight years. During 2008 and 2009, their store was doing exceptionally well. “Sometimes we didn’t even need to approach customers because we were worried that if we took too many orders, the factory wouldn’t be able to keep up,†said Xiao Dajie. After experiencing such success, the couple opened two additional branches.
However, starting from the end of 2011, their business began to decline. By March of this year, one of the stores’ leases were set to expire again, leaving Xiao Dajie uncertain whether to continue or close it. “The business is poor, and it's hard to make ends meet,†she said. The investment in the branch exceeded 100,000 yuan, but only about 60,000 yuan had been returned so far.
This situation reflects a broader trend. Stores around Beiyuan Street are now largely empty. Many have idle spaces, and even promotional activities struggle to attract attention. A reporter visiting a children’s furniture store observed that sales staff spent more time chatting on their phones than engaging with customers. One employee mentioned that despite frequent promotions—some as deep as 40% off during the New Year—there were still very few customers.
Jinan experienced a boom in home furnishing stores following the National Games in 2009. Major brands like Eurasia Home North Garden Branch, Daming Home Baihe Branch, Ginza Home Center, and Red Star Meikailong World Expo Home Plaza established themselves in the area. By now, there are over 40 home markets around Beiyuan Street, covering more than 1.5 million square meters. According to members of the Shandong Furniture Association, the market suffers from oversupply. For instance, East Asia’s home business area is about 100,000 square meters, yet its annual turnover is less than 1 billion yuan. Based on industry standards, this is clearly overcapacity.
Many businesses believe that intense competition and the rise of e-commerce are key challenges facing the industry. “There are thousands of flooring companies in Jinan, and the market share keeps shrinking,†said Mr. Wang, who runs a flooring brand. “Price cuts and profit-sharing have become the main way to compete, but this has led to quality issues, especially among smaller brands.â€
E-commerce has also impacted traditional brick-and-mortar stores. A customer named Li Meng was seen taking photos of items while shopping. He explained he wasn’t ready to buy immediately but planned to compare prices online before making a decision. Sales staff admitted that online retailers often offer products 20-30% cheaper due to lower overheads, which significantly affects in-store sales.
The downturn has forced operators to rethink their strategies. Guo Enzheng, general manager of a Jinan store, said, “The crisis has shown us our weaknesses. We used to focus on ‘Seeds,’ but now we need more motion. This year, we will increase community marketing and bring better services to people.†Qin Xiuju of Daming Home added, “Homogeneity is a big issue. Community marketing will be a new battleground. Brands must differentiate themselves through unique marketing and segmentation.â€
In 2012, affiliate marketing became popular. Xu Zhimin, general manager of Red Star Meikailong Jinan Mall, noted, “Affiliate campaigns can cost much less than traditional events. They help integrate resources and create greater value.†However, he emphasized that future alliances must include design, focusing on personalized services based on consumer needs. “Businesses can’t just sit inside—they need to go out and understand what customers want.â€
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