Initially, some home textile companies began to enter the tier-3 and tier-4 markets, seizing market share. At the time, some home textile companies also put forward the slogan of advancing into the tier-3 and tier-4 markets, creating a booming and widespread phenomenon.
　　After the listing of Luolai and Fu'anna, many other brands were eager to follow suit. Some brands that had previously lagged behind suddenly saw a glimmer of hope and began scrambling to join the path to listing and financing.
　　Thus, we see a phenomenon: in China, no industry has developed as rapidly as the home textile industry. There are thousands of branded companies nationwide, and tens of thousands of companies with brands. In Nantong alone, there are over 3,000 home textile companies with brands. In addition, a considerable number of home textile manufacturers who produce private label products have also embarked on their own branding journeys. More brands are following Luolai's example by relocating their marketing operations to Shanghai. By 2009, there were at least twenty, if not far more, Shanghai-based branded home textile companies.
　　At the same time, more clothing companies are entering or testing the home textile market. This does not refer to brands such as Ekexxx and Aixxx that have already entered the market; due to confidentiality reasons, their names will not be mentioned.
　　For a time, the home textile industry became a sought-after sector in traditional industries, with everyone wanting a piece of the pie.
　　Because of this, many companies have set up benchmarks and role models for themselves. To my knowledge, Fu'anna is a benchmark and model for many companies. Former employees of Fu'anna are now scattered throughout numerous home textile companies, playing pivotal roles. However, many companies are doing things haphazardly. Imitation can never lead to success or surpass the original; only innovation can create one's own success. The Fu'anna model, or rather, the spirit of Fu'anna, cannot simply be learned through imitation. I once spoke with an employee of a company in Foshan. This employee said that Fu'anna's culture is excellent, and they are constantly learning from it. When I asked what Fu'anna's culture is and what makes it so good, the employee couldn't explain, only mentioning the four words "artistic textiles," leaving me somewhat speechless. With such imitation and learning, how can success be achieved?
　　Just how large is the home textile market? A simple figure can illustrate this. Currently, the top three companies, Fu'anna, Luolai, and Mengjie, each only hold a market share of a few tenths of a percent.
　　Consequently, numerous companies began to aggressively expand their market share. Once the tier-1 and tier-2 markets became saturated, they moved on to the tier-3 and tier-4 markets. But were the tier-1 and tier-2 markets truly saturated? No, they were far from reaching the so-called equilibrium. In terms of product structure, most brands positioned themselves in the mid-range. Brands in shopping malls and department stores all wore the hat of mid-to-high-end and refused to lower their prices, while brands in supermarkets positioned themselves as low-end consumers. Despite continuous promotions by home textile companies, there is still a gap in consumer demand.
　　Tier-1 and tier-2 cities have a large number of migrant workers, with over 80% belonging to the low-income group. Most of them can only dream of high-priced bedding, while many are unwilling to compromise on low-end products. Therefore, upon entering a store, they immediately ask about discounts and promotions. In tier-3 and tier-4 cities, the bedding consumption awareness of most people has not yet been fully developed. A small number of newly affluent people can selectively purchase some brands; at the same time, people returning from big cities to start businesses or live there are not interested in unknown brands, and many people still prefer to sew their own bedding for its affordability and durability.
　　Therefore, tier-1 and tier-2 cities need mid-range brands, brands suitable for most ordinary workers. This market is huge, even larger than those other market capacities. Although some companies have previously developed some younger brands, their design, style, and price are almost identical to the original brands, without achieving significant success. Tier-3 and tier-4 cities need more mid-to-low-end, high-quality products to supplement the market. At the same time, market cultivation needs further improvement.
　　However, many home textile companies are unwilling to do this. Why? Because of profit. The direct operating profit margin of home textile companies is generally around 60%, and some franchise profits are around 30%, which has created some inconsistencies within home textile companies. As a result, various promotions have emerged. It's a constant cycle of promotions, one after another. To my knowledge, in some places, it's often the case that as soon as brand A finishes its promotion, brand B immediately follows. Especially in Shenzhen's Maoye Plaza in a certain year, six home textile companies held off-site promotions in just two months.
　　As a home textile industry consultant, I have visited many home textile markets, and a brand I recently saw in Guangdong left me deeply impressed.
　　Changing Perceptions of Home Textile Supermarkets in Tier-3 and Tier-4 Markets
　　Recently, I saw a home textile store in a certain area of Guangdong. There were no eye-catching promotional signs, and the in-store displays were not very professional from a professional perspective. A sales associate was constantly introducing products to customers, and another sales associate was carrying a bedding set out for a customer. Several other people were gathered around a woman, seemingly discussing something. I then looked at the storefront: Laio Home Textiles. I had no impression of it.
　　Out of curiosity, I observed the store for a long time. In about two hours, six people left carrying large bedding sets. This further piqued my curiosity. I have worked in bedding marketing for over six years, and such a situation is relatively rare. First, the store's location is not ideal, at least 100 meters from the main street; there are residential areas nearby, but they are quite old. Second, the store did not have large-scale promotions. There are several factories nearby. Why was this store doing so well? With curiosity, I entered the store again. A quilt cost 99 yuan, and a small four-piece set cost 199 yuan... This surprised me. All the bedding prices were not particularly high. According to the large brands I previously served, the product profit margin should not be high.
　　What surprised me even more was that the sales associate who had been introducing products to customers recognized me. She was a distributor for a large home textile brand, and I had previously interacted with her. Her name is Mei Jie. Seeing me, she greeted me cheerfully, "Manager Fan, what brings you here?" While warmly inviting me to sit down, she poured me tea.
　　After a brief exchange of pleasantries, I directly asked Sister Mei why she stopped working with her original brand. Sister Mei said that it's difficult to operate now, and it's hard to break into the third- and fourth-tier markets. The annual turnover is limited because the consumer group has limited spending power. I quickly asked, "Sister Mei, I haven't heard much about your current brand, but your business seems quite good. Are the profits good?" Sister Mei avoided the question about profits, and asked Manager Fan, who has been following this, what he thought. LeAo Home Textiles has been around for about ten years. The owner originally focused on wool textiles, and hasn't been in the bedding business for very long. However, I admire the owner's business philosophy. The current home textile market is uneven, lacking brands suitable for ordinary white-collar workers and ordinary workers. LeAo Home Textiles has filled this gap well, meeting market demand. The owner even proposed the concept of a "home textile supermarket," aiming to better cultivate and develop the market, making home textiles more affordable and desirable for more people. I raised the issue of profit again, and Sister Mei smiled and said to Manager Fan, "I'm in business; if the profits weren't good, would I be doing this?" I felt a little embarrassed, thankfully Sister Mei didn't continue to press the issue. Manager Fan, what do you do now? I told her that I mainly work on home textile consulting projects. Then I asked Sister Mei, "What are your thoughts on the third- and fourth-tier markets?"
　　Manager Fan tested me," Sister Mei laughed, "In my eyes, there's no distinction between cities in the third- and fourth-tier markets, only differences in consumption levels and concepts."
　　I was stunned; this idea is so novel. The idea that there's no distinction between cities in the third- and fourth-tier markets, only differences in consumption levels and concepts, is unique.
　　Sister Mei continued, "These are all the concepts of Mr. Yan, the owner of LeAo Home Textiles. If you're curious, I can take you to chat with him. I'm sure you're eager to meet him now, right?"
　　Third- and fourth-tier markets are not simply a matter of city classification
　　Mr. Yan, a legendary figure and a big name in China's wool blanket industry. Unexpectedly, he was very gentle, not at all overbearing, like a kind elder.
　　People from Chaoshan love Kung Fu tea, and Mr. Yan is no exception. After a few cups of tea, I couldn't contain my curiosity and kept asking for his advice. After all, for someone like me in the industry, LeAo's philosophy is incredibly intriguing.
　　Mr. Yan was polite, saying that Manager Fan is a veteran in the bedding industry, and that we should learn a lot from her. LeAo hasn't been in the bedding business for long. Originally, LeAo focused on wool textiles and blankets. The reason for entering the bedding industry is that the current bedding market is severely polarized, with a gap in the middle consumer segment. LeAo's entry aims to fill this market gap and provide a new choice for ordinary white-collar workers and ordinary people. Our concept of a "home textile supermarket" in our business philosophy also serves this new choice. LeAo's products offer excellent value and are tailored to consumers. At this point, Mr. Yan laughed, saying that "tailored" might be an overstatement. Currently, most people have fast-paced work and lives, and rarely have time to shop. LeAo's goal is to eliminate the need for extensive comparisons. LeAo products are reliable in quality and affordable in price. Choosing LeAo saves you time to rest and adjust your lifestyle. Currently, people simply classify cities as first- and second-tier or third- and fourth-tier to distinguish consumers. I personally believe this is incorrect. City classification is merely an administrative distinction. From a market perspective, any market has three basic consumption patterns: high, medium, and low. Because of this, LeAo's classification of first- and second-tier and third- and fourth-tier markets is based on consumption levels. We aim to serve the middle-level consumer group, providing young people striving in cities with high-quality home textile products at a good price…
　　Mr. Yan's words made me reflect and were quite impactful, because there are so few home textile brands that focus on serving the middle class. Perhaps such brands exist, and they may also propose a concept of serving middle-class consumers, but they set high prices, clinging tightly to profits.
　　When I passed by the LeAo Home Textiles store earlier, I saw several clerks sitting together drinking tea. I was even more surprised, because in the past, we had a rule prohibiting clerks from sitting in the store, let alone drinking tea and chatting. Mr. Yan explained to me, "I know many home textile companies have such rules. But any rule must be suitable for the local market, otherwise it will backfire. We also have similar rules, but with one caveat: all rules are subject to local market demands." I also feel this way. When customers arrive, the clerks immediately and enthusiastically invite them to have tea, like family. It seems that rules are rigid, but suitability is key.
　　I then asked several more questions: What are LeAo's main channels? What model do they use? What are the profit margins for direct sales and franchises?
　　Mr. Yan didn't feel embarrassed by my questions about profit, but politely continued. LeAo mainly uses specialty stores, supplemented by counters. In terms of operating model, we mainly develop agents and franchises, with direct sales as a supplement. We strongly support agents and franchisees, and we also strictly require our staff to implement relevant work and wholeheartedly serve agents and franchisees, ensuring their profits while increasing their sales. As for profit? You know Sister Mei; you should know why she chose LeAo instead of her previous brand.
　　…
　　Home textile market, have you found your place?
　　It's not about encircling cities from the countryside, but about serving only one level. Specialization is the path to marketing success. This is a quote from Mr. Yan that left a deep impression on me. I'm also deeply reflecting on how domestic companies can achieve longevity and success. What is the path to specialization and branding?
　　Many people understand this principle, but few can put it into practice. Many companies target 25-45-year-old women with economic power, but in practice, this often backfires. There was a real case; I used to work in marketing for a sportswear brand. The brand targeted young people aged 15-30, but after several promotions, I saw students buying clothes in stores, saying that the clothes would be better suited for their fathers. I was stunned; this was a complete mismatch in consumption, causing significant losses to the brand.
　　The home textile industry faces similar challenges. This is something many home textile companies need to reflect on. How to find their positioning, how to maintain their positioning—this is what many home textile companies need to do. Blindly following the crowd only puts oneself in a passive position; blindly pursuing high profits will only lead to a predicament.
　　In my opinion, to succeed in the market, one must first have their own unique characteristics. Whether it's a philosophy, a viewpoint, or a concept, it must be distinctive. Secondly, one must adhere to their own positioning, avoiding blind imitation or following trends. What works for others is their success; finding what suits oneself is key. Many follow when others hire celebrities for advertising. One might ask, what is the connection between these celebrities and the brand? How many consumers associate the celebrity with the brand? I've told several home textile business owners to not worry about what others are doing, but to focus on how they can do better. Third, one must be adept at understanding consumer psychology, exploring their needs, and providing suitable products. Fourth, one must understand and learn from the market. This understanding and learning is not about imitation, but about discovering patterns and identifying market trends.
　　From 2009 onwards, the next 5-10 years will be a period of rapid growth for the home textile market, but also a time of fierce competition. With major brands going public, a reshuffling of the home textile industry is expected, though the exact timing remains unpredictable.
　　For other home textile companies still on their journey, are you truly prepared? If you are still blindly following trends and hesitating, take a look at Leo; perhaps you will gain some new inspiration and ideas.