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A large number of small household appliance companies are seeking multi-category expansion, and have been expanding and increasing their capacity from the initial household appliances to cleaning appliances, cooking appliances, personal care appliances, cooking utensils, tableware, etc.

Text/Daily Financial Report Lv Mingxia

On the evening of July 17, Bear Electric Appliances (002959.SZ) announced that it agreed to acquire 61.78% of the equity of Guangdong Roman Intelligent Technology Co., Ltd. (hereinafter referred to as Roman Intelligent) for 154 million yuan. At present, the industrial and commercial registration procedures such as equity transfer have been completed, and Roman Intelligent has become a holding subsidiary of Bear Electric Appliances and included in the scope of consolidated financial statements.

Previously, Bear Electric Appliances has always regarded kitchen appliances as its mainstay business, with personal care appliances accounting for a relatively small share and mainly relying on OEM production. Now this popular small appliance brand has decided to increase its investment in the personal care appliance track.

What is the purpose of this acquisition? Bear Electric is one of the representative companies in the small household appliance industry. What kind of signal does this move send?

The downward trend continues

The purpose of Bear Electric's "speeding up" is obvious.

It is understood that during the 2020 epidemic, stimulated by the "stay-at-home economy" and "lazy economy", the small home appliance industry ushered in a big boom, sales of kitchen and personal care small appliances increased significantly, and the stock prices of A-share small home appliance listed companies also rose.

Since 2021, kitchen cooking appliances have continued to be under pressure in the small household appliance field. This is because the market cycle of the small kitchen appliance industry itself is approaching maturity. In addition, under the stimulation of the "stay-at-home economy" for three years, the growth dividend of the small kitchen appliance industry has been quickly pre-drawn, and negative growth has become inevitable.

Xiaoxiong Electric Appliances is one of the representative companies in the small household appliance industry. In the first quarter of 2024, Xiaoxiong Electric Appliances achieved revenue of 1.194 billion yuan, a year-on-year decrease of 4.58%, and net profit attributable to the parent company of 150 million yuan, a year-on-year decrease of 8.53%. Some small household appliance manufacturers were under pressure in their first quarter reports. Liren Technology, which started out as an electric baking pan, had a net profit attributable to the parent company of 12.43 million yuan in the first quarter, a year-on-year decrease of 28.09%.

Data from AVC shows that during the "6.18" promotion period in 2024, the retail sales of all categories of small kitchen appliances through online channels (traditional e-commerce + Douyin) was 3.28 billion yuan, a year-on-year decrease of 10.3%.

The Daily Financial Report noted that the threshold of the small household appliance industry is relatively low, the product homogeneity is serious, and the large number of players entering the market has led to increased competition in the industry. In addition, on social platforms, some small household appliances are used less frequently and are often complained by consumers as "useless".

The market has entered a stage of stock competition, and industry competition is intensifying. This has put some pressure on Bear Electric Appliances, which focuses on small kitchen appliances.

Small kitchen appliances are not popular, but small personal care appliances are heating up. According to AVC's online data, hair dryers will sell for 9.06 billion yuan in 2023, up 29.9% year-on-year; electric shavers will sell for 9.37 billion yuan, up 11.2% year-on-year.

Therefore, seeking new business growth points has become an urgent need for Bear Electric Appliances, and Roman Intelligence has become an important target in the eyes of Bear Electric Appliances.

The next hotspot is hard to find

In fact, it is not just Bear Electric Appliances. Earlier, leading companies in the small appliance industry such as Joyoung, Supor, and Midea had already started a round of expansion strategy using capital mergers and acquisitions as a means.

At the same time, a large number of small home appliance companies are seeking multi-category expansion, and have been expanding and increasing their capacity from the initial household appliances to cleaning appliances, cooking appliances, personal care appliances, cooking utensils, tableware, etc.

According to official data, Bear Electric Appliances currently has more than 80 product categories and more than 900 models, and its products are suitable for different life and work scenarios of infants, young people, and middle-aged and elderly people.

Similarly, Supor's official website seems to have only five major categories, including cooking robots, kitchen pots, rice cooker series, wall breakers, vacuum and mop machines, etc. However, on platforms such as JD.com and Tmall, Supor also has kitchen appliances such as range hoods and stoves, water purifiers, air purifiers, hanging irons, maternal and child products, drinking utensils, ice makers, and baby products. There are as many as 29 major categories and thousands of product SKUs.

The benefit of doing this is that it reduces the risk of setbacks in a single category to the overall business, while enhancing category diversification and giving consumers more choices.

However, the expansion of small household appliances has not ushered in a "spring". Most companies adopt the "red ocean strategy" of products, doing everything but not being good at anything.

This has resulted in a situation where a large amount of company resources are consumed, operating costs are gradually rising, operating efficiency is low, and operating difficulties are increasing. It is very easy to fall into a dilemma of "stretching the table" and being unable to make ends meet. As a result, while the operating income of many small home appliance companies seems to be rising, their profit levels are actually showing a downward trend, which is worrying.

Is the story of small household appliances coming to an end?

Although the current small home appliance market has cooled down significantly, this does not mean that the small home appliance industry has entered a cold winter. As consumers' demands for health, wellness, quality and intelligence continue to increase, high-end, quality, intelligent and technological small home appliances may bring new growth to the market.

Small home appliance companies are also actively seeking transformation. Companies in the industry such as Joyoung, Supor, and Bear Electric Appliances have all emphasized in their financial reports that they will focus on investing in technology research and development in the future to advance the process of high-end product development.

However, in the current market environment, small appliance companies urgently need to have a deep insight into consumers' core demands and instead pursue an innovative and differentiated product strategy that goes beyond the traditional framework, avoiding relying solely on pile-up improvements in materials or technologies.

It can be seen that small household appliance companies are currently encountering problems and difficulties, but this does not mean that the current exploration and efforts are in vain.

On the contrary, it calls for deeper innovation and change, prompting the industry to think about how to maintain product competitiveness and market vitality while meeting the increasingly sophisticated needs of consumers. The future small home appliance market may witness a new competition between value and price, quality and innovation.