Winning or losing doesn't matter. "Chain" and "expansion" – two buzzwords that once inspired many home furnishing companies to dream big. However, after enterprises rapidly pushed the entire home furnishings market into chaos and blind growth, it was only a matter of time before they faced the consequences. Their own "irrational" journey turned from myth to nightmare.
Wuhan Ouyada Home Furnishing Group's tragic "flying wings" in Hangzhou were not the first nor the last. When Hangzhou Binjiang Ouyada Furniture Co., Ltd. and Zhejiang Zhongnan Nanjian Construction Group Co., Ltd. hastily evacuated two years ago, Hangzhou Juran’s Home Investment Holdings Group Co., Ltd. remained, silently swallowing the bitter aftermath of a "marriage that ended abruptly" with Hangzhou Tianxinglong Building Materials Decoration Exhibition Management Co., Ltd.
The same unforeseen downfall, the same rapid decline – the home distribution industry in Hangzhou reflected the confusion and pain of this stage in China's furniture sector.
**Ouyada Riverside Store has stopped cash register this week.**
**Zhongnan transforms self-operated shopping mall into shopping mall.**
On July 16, Ouyada Hangzhou Binjiang Store officially notified merchants and announced: “The Furniture Pavilion will be closed on July 31, 2013, and will no longer operate outside.†Xia, General Manager of Wuhan Ouyada Group Marketing Center, said due to the large number of merchants needing negotiation, the closing date might be extended to August 15. But this week, Ouyada Hangzhou Binjiang Store has already stopped cash register.
According to the notice, Ouyada Hangzhou Binjiang Store and the mall owner, Zhejiang Zhongnan Group, terminated the lease contract and reached an agreement on merchant withdrawal. According to the plan, Zhongnan Group will do its best to protect merchants during their exit, ensuring normal property facilities and services, and actively supporting the orderly departure of Binjiang Store merchants. The goal is to clear inventory as soon as possible to minimize losses.
The reporter contacted Wu Jianrong, chairman of Zhejiang Zhongnan Group. Wu said that for stability, Zhongnan Group had indeed reached a preliminary settlement with Wuhan Ouyada Group, making a "concession" by reducing late payment penalties and interest incurred by Ouyada’s breach of contract, giving Ou Yada and its dealers more time to manage the aftermath.
According to Wu, the "Ouyada Hangzhou Binjiang Store" being liquidated will be fully owned by the group. It will focus on business transformation, introducing popular items like cinemas, supermarkets, clothing, cosmetics, catering, and **leisure and entertainment**, aligning with the planned five-star hotel and Zhongnan Shopping Center, aiming to create a "Central South City" shopping mall of 250,000 square meters.
This means that the Zhongnan Group, which many merchants hoped would take over, failed to maintain operations. Many merchants are still searching for new shops this summer.
"The Group will prioritize withdrawal merchants who intend to enter Eurasian Qiutao and Tianyi stores, offering rent-free periods to reduce their losses," said the management. From July 16 to 21, different merchant groups were contacted to discuss store withdrawal, and deposits were returned accordingly.
Consumer concerns about the delivery, return, and exchange of home products sold by Ouyada Hangzhou Binjiang Store were addressed by Xia Xia, who responded on behalf of the group: "Ouyada will sign a 'post-sales commitment' with each withdrawing merchant, clearly requiring them to ensure product quality, quantity, timely delivery, and continued after-sales service."
**Actually, the Hangzhou store has been vacant for 2 years.**
**The lonely "market ruins" in the gold business district.**
An 18-year lease was broken in just one year, leaving Shenju Home Hangzhou (Fengqi Road Store) shocked. Standing at the intersection of Xintang Road and Fengqi East Road, the former Beijing Juran House (Hangzhou Branch) site now shows signs of neglect, with many holes left after demolition. Though the "Juran Fengqi Road Store" was removed, the building with 40,000 square meters still bears the heavy "actual trace" of its past.
According to the official statement during the "retreat" in July 2011, "Juranzhihang" claimed the Fengqi Road store was temporarily closed for adjustment, with management and after-sales teams remaining. However, the group later stated that it must change its business model, no longer operating as a furniture mall.
Two years later, will Juran come back? Why are commercial properties in prime locations always abandoned? What's the secret?
The reporter spoke to Xu Shuimu, chairman of the property lessor Hangzhou Tianxinglong. He revealed, "Temporary closure was just a statement. In fact, in August 2011, Beijing Juran had already unilaterally terminated the contract." According to the lease agreement, from January 1, 2010, Hangzhou Tianxinglong leased 41,003.7 square meters of commercial buildings for 18 years. But by July 2011, the contract was already terminated early.
Since then, the case has gone through multiple courts, leading to a prolonged legal battle that still hasn’t resolved the issue. This "diamond-grade" commercial property has become one of the most dazzling "market ruins" in Qiutao's home business district.
It is understood that the parties involved have not yet settled disputes over liquidated damages, compensation, and liability from the early termination. This unresolved litigation has forced the originally high-end commercial property to remain shut down.
"Looking back now, maybe Tianxinglong should have insisted on a differentiated high-end building materials mall, and the results could have been very different," said Hu Shiwei, general manager of the Starry Dragon Decoration Expo Center and current head of Tianxinglong Creative Design Plaza. "We lost over 10 million to the original building materials merchants at the time."
The long-believed Fengjialu store, actually home, now faces competition from East China Furniture and Ouyada Qiutao stores in the district. Operating mid-to-high-end furniture in a saturated market is seen as a risky decision with a high probability of failure.
**The chain model has been "dead" in Hangzhou.**
**The size and number of single fights are blowing big bubbles.**
"It can be said that the home furnishing chain has not formed a truly successful model in Hangzhou," said a well-known industry veteran who preferred to remain anonymous. The unconventional development speed led entrepreneurs to pursue dangerous expansion ambitions, while the Chinese-style rodeo movement further inflated the seemingly gorgeous store bubble.
"In reality, the home store chain is very fragile," he added.
Using local economic policies for low-cost enclosures and attracting well-known home furnishing brands for investment promotion became a favorite game among real estate developers. Promising generous returns and cutting retail store funds in advance made many small and medium-sized developers happy. This strategy fueled rapid store expansion in many home distribution companies, pushing for volume and scale.
Statistics from the China Furniture Association show that 20 million square meters of store area is sufficient for the current Chinese home furnishing market, but the total area has exceeded 40 million square meters, with 50% surplus.
Not long ago, the "home store" was even predicted by the media and economic community as a likely bankruptcy wave in one of China's seven major industries.
"At present, the main 'connection' for chain home furnishing enterprises is scale, the fight is the number of stores, and they want to overwhelm opponents through mass expansion. This model now appears weak and unsustainable," said Jiang Hongyuan, president of the Zhejiang Furniture Association.
He noted that in first- and second-tier cities where chain home furnishing expansion was most intense, problems are beginning to surface, including in Hangzhou and Ningbo.
Since the financial crisis, the export of the home furnishing industry has sharply declined, prompting many foreign-invested enterprises to turn to domestic sales. This has intensified competition in the domestic market, leading to declining sales per store and rising rents and operational costs. This has also caused resistance from manufacturers and distributors against traditional channel-based brand bundling strategies.
"This contradiction will become more intense in the future," Jiang said.
"How to make production enterprises, distributors, and consumers into a community of interests for home stores, and treat each other with sincerity for sustainable development, is an urgent proposition for home furnishing chain enterprises," he concluded.
In fact, the home furnishing chain model has been "frustrated" since it entered Hangzhou. From the earliest Meiting Home, a high-end furniture company under Shenzhen Hundred Years Home Furnishing, to national home circulation giants like Dragon, Ouyada, Actual Home, Yuexing Home Furnishing, and local strong players like New Era Home Life Plaza, all have faced their own challenges in the path of chain operations.
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