Unveiling the Distinctions Between China’s and America’s Hardware Markets
The hardware markets in China and the United States, particularly the United States, have distinct operational channels and consumer dynamics. Home Depot, a renowned brand, was founded on the DIY concept, offering a vast range of home improvement and construction products. From building materials to indoor and outdoor lighting, kitchen and bathroom fixtures, hardware and electrical products, and home hardware accessories, Home Depot is a one-stop-shop for all things related to housing. It has grown to become the world’s largest home improvement retailer, known as the “Home Improvement Warehouse” in the US.
In essence, Home Depot covers every aspect of housing in the basic needs of clothing, food, housing, and transportation. For an average American home, from the wooden frame to the finished decoration, all required items, including materials, tools, consumables, home appliances, and gardening supplies, can be found at Home Depot, in any of its stores. Impressively, it not only sells items needed for building and decorating homes but also those required for home maintenance, much like the ongoing care needed for a vehicle after purchase.
Home Depot’s warehouse-style supermarkets are designed to achieve a one-stop shopping experience. This is one of Home Depot’s core competencies, as it can meet these shopping needs in a single visit, eliminating the need to travel from store to store. Additionally, customers may find it convenient to purchase other items, such as laundry detergent or toilet paper, while they are there.
To achieve this one-stop shopping experience, the store sizes are staggering, with each location spanning over 10,000 square meters, complete with parking lots. Adjacent to the large stores are greenhouses for selling plants, and outside are piles of mulch, fertilizers, and other gardening supplies.
In China, numerous manufacturers produce OEM products for Home Depot, contributing significantly to China’s foreign trade, one of the three pillars of its economy. It is not an exaggeration to say that many factories, business owners, and families in China are dependent on this retail giant, not just in the US.
What about China’s hardware market? The Chinese home improvement market is relatively opaque in pricing, with many mystifying concepts and a more detailed division of labor. Each professional construction team typically has its own supply channels, often with kickbacks involved. Consumers may spend the same amount of money but end up with vastly different products, depending on the construction team they hire.
Not only are super-sized home improvement supermarkets like Home Depot rare in China, but it is also challenging for large chain supermarkets in the hardware industry to form. They not only export brands but also models and talent. However, compared to the vast Chinese hardware market, they have not yet made a significant impact.
Traditional stall and rental operations remain the mainstream in China’s hardware retail channels. Most of the hardware market in China adopts a stall and rental business model, making it difficult for chain operations to gain a price and service advantage in competition. Starting from recent years, the general consensus in the industry is that home sales have entered an era of stock competition, and industry consolidation will become a new trend in the development of the home industry.
From an international perspective, when the home building materials industry grows to a certain stage, it will inevitably take the path of industry consolidation. Home appliance companies often have revenues and market values in the tens of billions. Currently, China’s entire home/building materials/hardware market is relatively small and fragmented. From this perspective, the industry will definitely move towards integration, but the question is who and how they will integrate. For example, everyone can leverage their strengths to form an alliance-like model, which is very much in line with current trends. It’s like a war where everyone achieves good cooperation and makes contact without firing a single shot.
Optimistically, compared to international home building materials industry giants in terms of high revenue, high profit, and high market value, China’s hardware market still has a vast room for improvement and growth.