Is the spring of protecting small household appliances about to come?

In the past few years, the rise of the "homestead economy" and live streaming sales has stimulated consumers' demand for small home appliances, causing market demand to be overdrawn in advance. Nowadays, as the dividend fades, the small home appliance market is noticeably cooling down. According to AVC data, from January to June 2023, the overall retail sales of kitchen small appliances amounted to 27.55 billion yuan, a year-on-year decrease of 8.5%, and the retail volume was 13.101 million units, a year-on-year increase of 0.8%.

In the overall low prosperity of the kitchen small home appliance industry, personal care small home appliances represented by the three major categories of hair dryers, electric toothbrushes, and electric shavers have achieved stable growth with high demand. According to the total online promotion data of AVC, the retail sales of hair dryers in the first half of 2022 reached 3.92 billion yuan, a year-on-year increase of 26.3%, the retail sales of electric toothbrushes reached 2.86 billion yuan, a year-on-year increase of 8.3%, and the retail sales of electric shavers reached 4.85 billion yuan, a year-on-year increase of 22.7%.

Consistent with the industry environment, we have seen that listed companies with a focus on personal protective small household appliances have generally performed well in the first half of this year.

Taking Feike, a leading enterprise in small household appliances for personal care, as an example, according to the 2023 semi annual report released on August 24th, it achieved a revenue of 2.674 billion yuan in the first half of the year, a year-on-year increase of 17.3%; The net profit attributable to shareholders of the listed company was 608 million yuan, a year-on-year increase of 33.43%, setting its best semi annual report performance since its listing.

From a product perspective, the company's revenue from shavers in 2023H1 was 1.876 billion yuan, accounting for 70%, with a year-on-year increase of 15%; The revenue from hair dryers reached 331 million, a year-on-year increase of 37%; The revenue from electric toothbrushes was 112 million yuan, a year-on-year increase of 79%.

On the track of personal care small appliances, in addition to the three major categories of "washing, cutting, and blowing", some health care small appliances have also been sought after by consumers in recent years, such as fascia guns, eye massage machines, neck massage machines, and so on. According to relevant data from e-commerce platforms, from January to July 2023, the sales of massage machines on JD platform reached nearly 5 million, with an average increase of about 18% compared to the same period last month; The sales revenue was over 1.9 billion yuan, an increase of about 22% month on month and about 29% year-on-year.

The popularity of the massage machine market has driven significant growth in the performance of related listed companies in the first half of the year. Taking the first share of massage small household appliances, as an example, according to the semi annual report, the company achieved a revenue of 599 million yuan in the first half of this year, a year-on-year increase of 30.7%; The net profit loss was 25.35 million yuan, significantly narrowing year-on-year; Q2 revenue of 371 million, the best second quarter performance since its listing.

Does it mean that the spring of the industry is coming, as individual household appliances are growing against the trend and related listed companies are performing well?

From the perspective of industry development trends, the growth tone of personal care small household appliances in 2023 has been determined. According to Magic Mirror data, in August 2023, the overall sales volume, sales volume, and average price of the personal care small electricity industry (Taobao+JD platform) were+11.49%/+5.82%/+5.37% year-on-year, respectively. The simultaneous increase in volume and price has driven the growth of the industry scale. In the second half of the year, with the launch of the Double One and Ten Major Promotions, the industry is expected to usher in a new wave of growth. But it's too early to say that spring has arrived.

Firstly, the high growth of personal care small household appliances in the first half of 2023 is based on a low base in the same period last year. According to the total online promotion data of AVC (AVC) (only traditional e-commerce channels), in the first half of 2022, the retail sales of three categories of small household appliances (hair dryers, electric toothbrushes, and electric shavers) totaled 8.59 billion yuan, a year-on-year decrease of 11.5%.

Secondly, driven by the increasing demand for personal satisfaction and health awareness, the personal care small home appliance industry is in an upward development cycle, which has also attracted a group of emerging personal care small home appliance enterprises and traditional small home appliance enterprises to enter the market. For example, Jiuyang invested in Lexiu Technology in 2021 to increase its holdings in the personal care new track, and has also launched high-speed hair dryers in recent years to make efforts to clean up the new track of home appliances. The influx of a large number of new and old players has led to intensified industry competition and increased product homogenization.

On the other hand, due to the relatively low entry threshold for the personal care small home appliance industry, there are many brands in the market, and the quality of products is uneven. Overall, most enterprises lack independent innovation capabilities, and there are relatively few enterprises with differentiated, high-end product design, research and development, and production capabilities. In terms of core technology, there is still a significant gap between domestic brands and internationally renowned brands such as Dyson, and the overall level of the industry still needs to be improved.

In addition, like kitchen appliances, there is a clear phenomenon of "emphasizing marketing over research and development" in the personal care appliance industry, with sales expenses far exceeding research and development expenses. According to the 2023 semi annual report of Feike Electric, the company's research and development expenses in the first half of 2023 were 51.52 million yuan, a year-on-year increase of 16.27%. Looking at sales expenses, they increased by 37% year-on-year to 730 million yuan, with advertising, promotion, and promotion expenses reaching 595 million yuan, a significant increase from 425 million yuan in the same period last year. This sales expense has surpassed and ranked among the top three in the small home appliance industry, second only to Subor.

Personal protective small appliances are a typical "self pleasing" consumption, reflected in the pursuit of "small and tangible happiness" in the "small and fortunate" culture. Nowadays, "Yueji Consumption" has become one of the core keywords of Chinese consumption. Behind this, in addition to the personality of Generation Z and the consumption motivation of "daring to earn and spend", there is also an increasingly large phenomenon level consumption trend - the "single economy".

Driven by the two major consumption trends of Yueji consumption and single economy, the personal care small home appliance market undoubtedly holds enormous market potential. But if the enterprise continues to develop in a model that emphasizes marketing over research and development, it will not only pose hidden dangers in quality control, but also be detrimental to the improvement of the enterprise's core competitiveness and the long-term development of the industry.