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Economist Keynes said a hundred years ago that when social and economic development reaches a certain level, the "benefit" of consumption will replace "usefulness".

The prophecy "came true". In the consumption trend of the past two years, consumers are more concerned about the actual experience, the product, and the service, rather than the various marketing and overly homogenized products. Pang Donglai, a supermarket brand from Henan, has become the "ceiling of supermarkets", winning the favor of customers with its thoughtful service; tourist cities represented by Zibo and Harbin have repeatedly been on the hot search list with their enthusiastic service... The hot consumption phenomenon means that the focus of consumption has shifted from "things" to "people", and the new business growth point lies in how to better serve people.

When "service" becomes a new driving force for all industries in society, it means that the upgrade of consumer experience will be spread across all aspects, not only in shops of all sizes on the streets, but also at home. Since the establishment of its brand, De Rucci, which has been deeply involved in the field of healthy sleep, has established a "service-oriented" business model. Over the past 20 years, De Rucci has continued to refine its service system in the direction of detail, specialization and humanization. In 2015, De Rucci officially launched the "Golden Butler Service" brand. Today, De Rucci's Golden Butler Service has covered more than 500 cities across the country, providing customers with more than 4.3 million dust and mite removal deep care services. In 2024, the De Rucci brand won the top spot in the China Customer Recommendation Index (C-NPS) ranking.

At present, the home furnishing market has entered the stock era, and the sleep economy track may become a beachhead for home furnishing brands. So, is De Rucci's use of "service" to retain customers still effective? What kind of business philosophy is there under the huge service system? Will the business logic of "focusing on service" be a new way out for the home furnishing industry?

The sleep economy is booming, and selling products alone is not enough

Dongguan, which has a "world-class furniture industry cluster", has always been a hotbed for R&D and production in China's furniture industry, incubating thousands of private furniture brands. Under the market transformation and change, the once glorious traditional home furnishing brands and today's new power brands are struggling to change. But De Rucci, which was also born in Dongguan, has explored a different path as early as its inception.

De Rucci Group Headquarters Factory

From the perspective of the main products, the core category of the De Rucci brand - mattresses, its market was born to adapt to the rigid demand derived from the rapid development of urbanization in recent decades. The "White Paper on Chinese Residents' Sleep in 2023" released by the China Sleep Research Society shows that the overall sleep quality of Chinese residents is poor. On average, they fall asleep after midnight, and the length of sleep at night is generally short, with an average sleep time of 6.75 hours and an average number of awakenings of 1.4 times. As an important product for improving sleep quality, the soft mattress category has become the golden track of the Chinese home furnishing industry under the blessing of the sleep economy, and domestic and foreign bedding brands are further increasing their investment in the domestic market.

But at the same time, mattress products are also facing serious homogeneity problems. The domestic mattress industry has a mature upstream, midstream and downstream industrial chain, which can basically achieve large-scale production of mattresses made of different materials such as springs, latex, memory foam, and palm, covering common zero-pressure, antibacterial and other different product needs. This makes the difference between affordable mattress products, and some small and medium-sized manufacturers turn to price wars, while high-end mattresses are also trying to break through from the differentiation track.

The widespread homogeneity problem also means that the traditional advantages of the once leading brands are no longer "iron rice bowls". Enterprises need to take action and actively find ways to break through. As Sony founder and entrepreneur Akio Morita said, "Success or failure lies in how to maximize the technology you have. If you only indulge in your current advantages, you will be in danger of falling behind in an instant."

Product innovation is not limited to the innovation of the product itself. Innovation in usage scenarios, marketing strategies, experience services, etc. are all paths that can be tried.

With the corporate mission of "making people sleep better", De Rucci has long focused on "service". At the beginning of the brand's establishment, Wang Bingkun, the founder of De Rucci, proposed that De Rucci is a company that provides customers with a healthy sleep system. It not only redefines bedding, but also makes more people re-understand sleep, and advocates people to pay attention to the concept of healthy living. To this end, De Rucci began targeted exploration in China: in 2013, De Rucci imported the first set of special bedding deep care equipment from Germany, which was still a "new thing" in the Chinese market at that time. At that time, there was a lack of popular science related to mattress care in China, and there was a lack of professional cleaning tools and personnel, and the popularity of mattress deep care was low. In order to let customers understand and accept the concept of bedding care, the De Rucci service department decided to start with active door-to-door and free service to promote the deep care of mattresses to people. It was initially piloted in Dongguan, and later went to the whole country, covering hundreds of cities, laying a solid foundation for a more comprehensive service system in the future.

In De Rucci's view, in front of old customers, everyone is a service provider, from the chairman to the grassroots employees, from the national terminals to the group headquarters. For example, every year on June 18, World Mite Removal Day, De Rucci's executives and employees will become Golden Butler Ambassadors and personally go to customers' homes to remove mites and dust. In addition, De Rucci will also send professional deep care service technicians to provide deep mite removal and cleaning services for bedding for their old customers in a 2V1 (2 nurses serve 1 user) door-to-door service model, using high-end imported equipment and a standardized 16-step fine service process.

De Rucci COO Yu Jia visits customers to remove mites

Not only that, You Jia, COO of De Rucci Group, also said in an interview with the media that in the future, De Rucci will continue to implement the concept of ultimate service and shape it into core competitiveness. "First, we will continue to optimize the customer service model with the original service brand "Golden Butler Service" as the core to maintain the leading innovative position in the industry; second, De Rucci headquarters will work with dealers to promote the service model and implement the "Golden Butler" service together with dealers," You Jia said.

Customer feedback also proves that the De Rucci model is effective. To date, De Rucci's customer satisfaction rate has reached over 99.6%, sales service satisfaction rate is 99.7%, and delivery and installation satisfaction rate is 99.73%, effectively building user reputation.

When transformation becomes a common challenge faced by the sleep industry, it is particularly urgent to find a suitable direction for transformation. Deepening product development or focusing on marketing are both options for companies, and the same is true for ultimate service. So, what is the original driving force behind De Rucci's business model of maintaining an original service system? Is it a path that bedding brands can learn from?

As the sleep economy is on the rise, what else can bedding brands do?

Looking at the entire industry, China's sleep industry has reached a turning point.

The so-called "sleep economy" refers to the demand economy created by people with poor sleep quality or insomnia, and is an industrial economy centered on residents' sleep. The Shanghai Securities 2024 report pointed out that the scale of China's sleep economy market in 2023 will reach 495.58 billion yuan. It is expected that in 2027, this figure is expected to further increase to 658.68 billion yuan, and will quickly exceed one trillion yuan. As the market scale soars and competition intensifies, whoever seizes more subdivided tracks first may lead the next development of the industry.

But the dilemma that lies ahead is that a large part of the sleep economy relies on the current home stock market. In order to leverage the stock, the traditional sales ideas are no longer a panacea. This requires furniture brands to rethink and seek new growth curves. Analyzing the current situation, due to the particularity of the product, mattress products have some natural shortcomings in their pre-sales and after-sales services. Due to cost issues, some traditional mattress brands rarely improve their services. Due to the long experience cycle of mattress products, large differences in online and offline product lines, high transportation costs, and cumbersome return and exchange procedures, consumers often encounter difficulties in consultation, purchase, trial and after-sales. According to a survey report released by the China Consumers Association in 2023, when asked what performance of business operators they are most concerned about, consumers care most about "after-sales guarantee", accounting for 38.0%. In 2023, the number of complaints about furniture products reached 27,963, an increase of 6.13% over the previous year. According to a special report by the China Times on March 15, some large and small brands in the industry have repeatedly appeared on complaint platforms due to product warranty issues. The warranty service of home furnishings has become a key area of ​​concern for consumers.

With old problems in urgent need of resolution and new difficulties emerging, what is the way out for mattress brands? At the beginning of brand establishment, De Rucci realized that the sale of physical products does not mean the completion of delivery. The continuous service every year is also an important and indispensable part of the product. Only by continuously providing services to users can the users' all-round needs for sleep be met. Therefore, De Rucci also found the key to resolve the difficulties early, which is to transition from product strength to service strength and truly build a complete system of "product + service".

To build this system, De Rucci has continuously upgraded and renewed the "Golden Butler Service" after it was launched. The system is built around the entire life cycle of customers from knowing De Rucci, becoming interested, making decisions, to purchasing, using, and sharing. It focuses on the touchpoints of services in each stage, and then determines the corresponding service touchpoints to complete the design of service content. Since its launch, De Rucci has also continuously adjusted its service content based on consumption trends and market changes. Just last September, while integrating the original services, De Rucci also increased the "De Rucci Fans' Rights" to ten major rights, covering a wider range of life scenarios. It can be said that from pre-sales, sales to after-sales, De Rucci is providing consumers with meticulous service.

2023 De Rucci Gold Butler Upgrade Release Site

Whether the service can be provided to the extreme is a test of the brand's insight into details. De Rucci keenly captures the many details that consumers care about: paying attention to the pain points of transportation and installation of large bedding, it has expanded the distribution and installation service team and strengthened standardized training. At present, De Rucci has more than 2,000 distribution and installation service personnel nationwide, and follows the 18-step service standard throughout the distribution and installation process. In addition, De Rucci noticed that there are uneven service levels of dealers across the country in the industry, so it has achieved unified service standards through multi-channel and multi-form training and assessment, construction of standardized processes, certification inspections and inspections of city services by a dedicated team, and improvement of policies and assessments.

From a long-term perspective, De Rucci not only considers the service experience during the shopping process, but also the derived needs of users in the actual use of products. Considering the needs of consumers for the post-cleaning and care of mattresses, De Rucci has incorporated "free mite removal" into the De Rucci Gold Butler service system since 2016, providing mite removal services to 650,000 to 800,000 households each year. In the past eight years, it has provided more than 4.3 million free mite removal services to more than one million De Rucci old users.

Relying on many years of bedding manufacturing experience and high standards and strict requirements, De Rucci's service-first, product-later system can operate sustainably under the long-term recognition of users and the industry. In the past few years, De Rucci has won major awards such as the "China Home Furnishing Industry Quality Reputation Award", "China Furniture Industry Quality Leading Brand", and "China Home Furnishing Industry Innovation Design Award" for its products. According to the De Rucci Group's 2023 semi-annual report, during the reporting period, the coverage rate of the Golden Butler service reached 84.8%, a year-on-year increase of 32.83%; the number of value-added service households accumulated to more than 370,000, a year-on-year increase of 16.31%. These awards and data prove the leading position of De Rucci mattresses in the industry, and also reflect the high recognition of De Rucci mattresses by consumers and the market. It also means that De Rucci's "service-oriented" development strategy has become a business logic that can stand the test of the market.

The sleep philosophy of focusing on service points to the future of the industry

For the entire sleep industry, if the service-oriented business model is seen as a transfer and replication of companies such as Pangdonglai and Haidilao, it deviates from the essence of the service model.

In fact, whether it is increasing investment in product research and development and design, or turning to extreme services, the core of its operations has always been consumers. The new business model shows that in addition to making people fall asleep, bedding brands must also provide high-quality sleep, and these considerations are based on consumer choices and concerns. Only companies that understand consumers better can understand services better. According to the survey data of iMedia Consulting, 80.9% of consumers with insomnia problems are aged 22-40, and the main consumers of the sleep economy are showing a trend of getting younger. Changes in consumer groups indicate that consumer demand will shift towards diversification and personalization. Only by relying on comprehensive and meticulous services can we better grasp the diverse and complex needs.

iiMedia Research: "2023-2024 China Sleep Economy Industry Development and Consumer Demand Research Report"

At present, home furnishing retail demand mainly includes three sectors: demand for new houses, demand for second-hand houses and demand for housing renovation. The current home furnishing industry has entered the stock market, and the renovation of old houses has become the largest source of demand for home furnishing retail. In order to further tap the stock market and grasp the new customer groups pouring into the sleep market, the leading brands have also begun to take frequent actions in deepening services. Brands such as CBD and Meiya MPE all provide warranty periods ranging from 15 to 25 years or lifetime maintenance. Yalan Mattress announced the launch of "Lan Guanjia", providing value-added services such as dust removal and mite removal, leather care, and whole-house disinfection. This year, Red Star Macalline and several leading soft brands jointly announced the launch of the "old for new" initiative, with 1 billion yuan of new consumer coupons, focusing on free collection of old and not limited to brands and years. However, under the trend of economic recovery, the sleep economy has just risen, and major leading brands have just entered the game, trying to use services as a new growth point, and the specific results are still not obvious.

Compared with traditional mattress brands that "came to the fore late", De Rucci has adhered to the "service-oriented" business model since its inception. With advanced layout and continuous upgrading, it has established a huge service system. De Rucci currently has a healthy sleep industry base covering an area of ​​320 acres, and has achieved digital transformation such as "transparent control of production site", "integrated intelligent planning control", "quality traceability of the entire production process", and "supply chain collaborative management". While significantly reducing the production costs of products such as mattresses, it can also greatly improve the production efficiency and quality of products.

Now it seems that focusing on service content, introducing imported care equipment, piloting "door-to-door mite removal" services, vigorously popularizing the concept of deep care, etc., these "risky moves" that seemed very bold in the sleep economy market ten years ago, looking back from a long-term perspective, each step is full of forward-looking insights into the industry.

Conclusion:

At present, the sleep industry is entering a new development cycle with both market and policy support. From the perspective of market performance, the recently released "Release the Huge Potential of Service Consumption-2024 China Consumption Research Report" shows that in 2023, final consumer expenditure will contribute 82.5% to economic growth, an increase of 32.3 percentage points from 2013, becoming the first driving force for economic growth. By 2030, the proportion of service consumption expenditure of urban and rural residents in my country's consumption expenditure level is expected to increase from 45% in 2023 to more than 50%. This shows that my country's service consumption is showing a rapid growth trend, and there will be huge growth potential and upgrading space in the future.

At the same time, relevant policies that are beneficial to the home furnishing industry continue to be introduced. The policies set a positive tone for promoting the development of the home furnishing industry and releasing existing consumption. The existing market will also become the decisive scene for major brands. Both leading companies and new forces must grasp their existing advantages and be innovative at the same time.

In the era of rising service consumption, brands that win with service can build trust and long-term relationships with consumers, thus seizing more business growth opportunities. In the future, the industry's business focus will be on extending the concept of "service power", forging its sleep philosophy with a mature business model, focusing on younger and more diversified lifestyles, forming a broad social effect, and promoting the sustainable development of the industry. How De Rucci, a "pioneer" that breaks traditional concepts, can seize market and policy opportunities and become a "Chinese business card" in the sleep industry and a demonstrative force in the furniture manufacturing industry? Its pace and changes are worth looking forward to.