home decor market in China

The home decor market in China: catering to a new generation of home owners

A growing number of families in China have been designing their homes to their own special tastes since China launched its market-oriented housing reform in 1998, ending its long-practiced welfare housing distribution system. To most Chinese families, decorating their houses means spending thousands or tens of thousands of RMB. However, many people love to pay that much for a snug and a more comfortable home. The development of real estate also spurs growth in the home decor market in China in recent years.

Industry overview of the home decor market in China

Size of home decor market in China

[Data source: qianzhan.com, “Size of home decor market in China”]

The home decor market in China shows a steady upward trend and is gradually entering  a more mature stage. The size of the Chinese home decor market has exceeded 2 trillion yuan. It is predicted that the market size will reach 2.59 trillion yuan by 2020, maintaining a compound annual growth rate of about 7%. Since the reform in 1998, the Chinese home decor market has experienced the stages of concept initiation, policy reform, and standard-setting. The State Council of China released “the Guiding Opinions on Actively Promoting the ‘Internet Plus’ Action Plan” in July 2015. The home decor industry vigorously responded to the policy on “Internet Plus” transform and upgrade. Currently, the home decor market in China is still mainly driven by new apartment owners. However, with the continuous development of China’s urbanization process, the demand for renovating old homes is increasing in recent years, especially in first-tier cities.

Consumer demographics of the Chinese home decor marketChinese home decor’s primary customers consist of men and women born in the 80s (33%) and 90s (27%). 87% of customers born in the 80s are married and have children, while 65% of customers born in the 90s are unmarried. According to a survey, customers born in the 70s and 80s prefer practical and eco-friendly decorated homes while the younger pay more attention to smart home and personalized trendy decorations. For all age distribution of customers, a simple, clean and practical home is at the top of the list.

Information customers care about while decorating their home

Budget, decoration style, experience from others, environmental indicators, furniture style and brand are the top 5 elements that people most concern in the process of home decoration. For overall style, around a quarter of customers like modern minimalist or ‘Nordic simplicity’ style, known as beiou fengge (北欧风格) in Chinese . At the same time, over 20% of people don’t have a specific pursuit of style. People lay great emphasis on healthy and eco-friendly home decor products, and this is reflected in that they will seek information about environmental indicators, considering the safety of decoration materials and ensuring the health and environmental protection during construction. In addition, more and more people pay attention to smart home and high-tech elements of electrical appliances. 

Customized home decoration products are increasingly welcomed

In a wave of consumption upgrade, customized home decoration products are more and more welcomed in the Chinese home decor market. As shown in a survey, over 70% of people will choose customized productions during the whole process of home decoration. 55% of researched consumers state that they want partially customized home furniture, while 17% of them choose a whole-house customized solution. Besides the advantage of saving time and cohesive style, a whole-house solution can make the home look more high-end and custom-made. Although still at an early stage of development, such a solution is more prevalent in people born in the 70s and people who lived in first-tier cities. 

Elements of choosing home decoration companies in China

Reputation, customer services, the quality of materials, and price-performance ratio are the core elements that consumers will take account of when selecting home decoration companies in China. Customers in the Chinese home decor market are more rational, and people will also consider the various aspects of home improvement companies like whether the products are eco-friendly, whether the designs are reasonable, etc.   However, there is a lot of negative feedback toward home decoration companies in China. According to a survey, consumers are unsatisfied or concern with the home improvement companies in the following contents: the quality of materials and work, extra charge, hidden contract traps, construction delay.  

The rise of the Chinese e-commerce home-decorating market

The type of decoration company used in the process of home decoration

[Data Source: 2019 Tencent market research and industry analysis, “The type of decoration company used in the process of home decoration”]

Although the traditional home-decorating is still the mainstream, the Chinese e-commerce home-decorating market is booming. Among the total consumers surveyed, 77% of them choose the traditional home decoration, while 9% of them choose e-commerce home decoration, and the rest of them adopt two types of decoration more or less evenly. Nevertheless, it seems that e-commerce home decoration is more favored by people born in the 90s and people who live in first-tier cites.    Consumers list convenient purchasing experience, high price-performance ratio, many varieties, discounts and home delivery as top 5 advantages of Chinese e-commerce home-decorating. And the primary cons are poor information transparency, bad after-sale service and non-guaranteed quality of materials.

High acceptance of advertisements for home decoration

Due to the demand for information, home improvement advertisements are generally accepted by Chinese consumers. In a survey question about the response of online ads for home improvement, around half of people who are in demand of decorating home state that they will read the ads and look through the introduction of products, while over 30% of them will click the link and favorite the ads page. For the online advertising channels, ads on digital social medial are most popular, and over 30% of people can accept ads in WeChat moments, WeChat public accounts, news APPs like Tencent News and Toutiao (TopBuzz) and short-video APPs like Tencent Video and Tiktok. So, in order to reach their target customers, merchants can take advantage of multiple channels to advertise.  

Promotion strategy of home decoration companies in China

With the trend that millennials are becoming the primary consumers, home decoration companies and suppliers should know and understand the needs of these customers to win the market. Tips for marketing to millennial home-owners First, based on consumer insight, build segmentation strategies targeted at different customer groups. Those with family may be more concerned about safety, while those in high-tier cities may be more concerned with appearance. Second, monitor and optimize the outcome of ad serving by leveraging the power of digital platforms.Third, integrate online and offline channels to promote effectively. Most millenials are avid users of social media platforms like WeChat.  Last, focus on new core demand like decoration style, eco-protection, smart home and price-performance ratio to satisfy the needs of different customer segmentation.

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