Industry Special Report: Can “Whole-Home Customization” Solve the Concentration Challenge?

　　1. Is the fragmented structure of the home furnishings and interior design industry an intractable challenge?

　　The home furnishings and home‑improvement industries have long grappled with a fragmented competitive landscape that resists consolidation. The home‑improvement sector is particularly characterized by pronounced regional disparities: according to data from iResearch and Fastdata, in 2020, chain‑operated firms accounted for only 10% of the national market, while companies with revenues exceeding RMB 100 million held a mere 18.6% share; the vast majority of players remain small‑scale, long‑tail operators. A similar pattern holds in the broader home‑furnishings space: calculations reveal that, among the three major subcategories, concentration ranks as follows—soft beds and mattresses > sofas > cabinetry. Even in the mattress segment, which exhibits relatively higher concentration, the CR4 stood at just 16.9% in 2020. Although overall concentration across home‑furnishings categories has edged up in recent years, it remains broadly low.

　　To examine the reasons behind the fragmented landscape of the home‑goods and home‑improvement industries, we can analyze both supply and demand. On the demand side, two objective factors stand out: first, home‑goods and home‑improvement products and services are highly personalized rather than standardized, heavily influenced by consumers’ subjective preferences, leading to significant variation in purchasing choices; second, the low frequency of such purchases makes it challenging for brands to achieve broad recognition.

　　However, setting aside the objective demand-side factors and looking at the supply side, the market generally attributes the fragmented industry structure to two key issues: on the one hand, the non‑standardized nature of products prevents economies of scale from materializing; on the other, channel fragmentation makes it difficult to consolidate customer acquisition. Yet we contend that these factors merely set an upper limit on concentration, rather than constituting the core drivers of the trend toward consolidation. The real determinant of this trend may lie in whether leading firms can genuinely address consumers’ pain points. According to current research, consumers still face numerous specific challenges in the home‑furnishing and home‑improvement sectors, yet no supplier has managed to comprehensively resolve these issues—many are even being overlooked. Broadly speaking, these consumer pain points can be categorized into “old” and “new” types. The “old” pains stem from poor industry transparency, which leads to information asymmetry, as well as low standardization, resulting in installation errors and inconsistent service quality. The “new” pains, meanwhile, arise largely from the younger demographic, who often lack time, energy, and patience—and worry about both inconvenience and overspending—when engaging in home‑furnishing and renovation activities. From the supply side, some of these pain points—such as a lack of transparency, high time consumption, and excessive effort—can indeed be addressed through companies’ own capability improvements. If a firm can take the lead in fully or partially alleviating these issues, its market share is bound to expand. Today, whether they are traditional home‑furnishing brands, conventional interior‑design firms, or online home‑improvement platforms, all are rolling out integrated‑package solutions—steps that, to a certain extent, reflect a shift toward addressing consumers’ pain points. Even if these bundled offerings do not yet fully resolve those issues, the very orientation toward tackling consumer concerns remains the key to breaking the industry’s fragmented structure in the future. (Source: Future Think Tank)

　　2. From multiple perspectives, can “whole-home customization” become a trend?

　　“Whole‑home customization” is a new business model launched by home‑furnishing companies that, lacking in‑house hard‑fit capabilities, have integrated soft‑furnishings supply chains. As home‑decoration firms and internet giants alike move toward fully turnkey solutions, this approach serves as a transitional step for many players on the path to full‑service renovation. Yet, with industrialization of home‑decoration still proving elusive, “whole‑home customization” remains one of the most readily implementable models—and one that is unlikely to undergo significant further evolution in the near to medium term. From the consumer perspective, with post‑80s and post‑90s generations accounting for over 90% of home‑furnishing buyers, this model has begun to address the specific needs of this emerging demographic, alleviating some of their key pain points. Meanwhile, from the standpoint of distributors and brands, amid sluggish growth in organic traffic, “whole‑home customization” effectively meets core demands: expanding product categories, increasing average order value, capturing greater market share, and reclaiming critical customer‑acquisition channels. Overall, the “whole‑home customization” model aligns with the interests of multiple stakeholders and, given the current lack of foundational drivers for rapid iteration, its sustainability appears promising in the medium term.

　　2.1 Major players have all entered the whole‑home renovation market—so what exactly is “whole‑home customization”?

　　In recent years, traditional home‑decoration firms, online home‑decoration platforms, and even e‑commerce giants and major furniture retailers have all moved into the whole‑home‑fit‑out space—yet most home‑furnishings companies have not directly entered this segment. Riding the wave of whole‑home fit‑out, leading players in the industry have pioneered the “whole‑home customization” concept. At its core, “whole‑home fit‑out” seeks to integrate the entire home‑decoration value chain and streamline end‑to‑end services, while “whole‑home customization” goes a step further by consolidating not only furniture and fixtures but also the broader soft‑decor supply chain. Put simply, whole‑home customization plus basic fit‑out equals whole‑home fit‑out. If the ultimate goal for home‑furnishings companies is indeed whole‑home fit‑out, then “whole‑home customization” can be seen as a transitional model on the path toward that vision. However, given that many home‑furnishings firms lack the capabilities to handle hard‑finishing work, and that the industry currently lacks scalable, industrialized solutions for construction, installation, and handover, “whole‑home customization” remains both the most readily implementable approach today and one that will be difficult to fully replace in the medium to short term.

　　2.2 From multiple perspectives, can “whole-home customization” meet the needs of all stakeholders?

　　2.2.1 From the Consumer Perspective: “Whole-Home Customization” Has Already Begun to Address Some Pain Points

　　What changes are taking place in furniture consumption trends? As the consumer base evolves, the demand for one-stop, all‑in‑one solutions—backed by quality assurance—is becoming increasingly pronounced. In China, the primary demographic driving home‑furnishings purchases is steadily shifting to those born in the 1980s and 1990s; according to Tencent Home’s white paper, this cohort now accounts for more than 92% of consumers. With selecting and installing home furnishings traditionally being time‑consuming and labor‑intensive, the growing share of younger buyers has heightened their desire for convenience and efficiency. Moreover, the new generation places greater emphasis on brand reputation, product quality, and value for money. This shift has given rise to a key industry challenge: how to deliver high‑quality, cost‑effective, one‑stop solutions that meet consumers’ needs while ensuring seamless satisfaction.

　　“Whole‑home customization” aligns with consumer needs and addresses several key pain points: Today’s emerging consumer segments seek brand reputation, quality, value for money, and one‑stop solutions. “Whole‑home customization” strikes a balance across these dimensions, alleviating certain industry challenges—though it has yet to resolve every bottleneck in the home‑improvement process, it represents a significant breakthrough at this stage. The packages cover most essential home‑furnishing items, with clearly disclosed base prices and optional add‑ons, markedly boosting transparency across the industry. This enhances consumers’ confidence in their purchasing decisions. Moreover, by streamlining the supply chain, it delivers a seamless, one‑stop solution while offering exceptional cost‑effectiveness. For the post‑90s generation, whose budgets for home décor and furnishings are relatively modest, whole‑home customization combines custom‑made and ready‑to‑use pieces, delivering outstanding value. For example, Oppein’s 29,800‑yuan package and Sophia’s 39,800‑yuan package both offer savings compared to buying each category separately at retail prices.

　　From a consumer perspective, “whole‑home customization” has indeed begun to address some of the pain points that matter most to buyers, and its focus on better meeting consumer needs is spot on. Given that home‑furnishing and interior‑design companies are unlikely to achieve fully integrated, turnkey solutions in the near term, the sustainability of the “whole‑home customization” trend is certainly worth watching.

　　2.2.2 From the brand perspective: “Whole-home customization” not only aligns with the desire to expand product categories but also holds the potential to regain its role as a traffic‑driving entry point.

　　From the brand perspective: (1) Expanding product categories and increasing market share have become key to growth. From a macro standpoint, China’s new-home sales are currently slowing, and first- and second-tier cities are gradually transitioning into an existing‑home market. However, assuming a 15-year renovation cycle for new homes, our estimates suggest that, in the short term, new‑home renovations will remain the primary driver of demand. Even by 2025, demand from existing‑home renovations is expected to account for only 33% of total market demand. Moreover, furniture—due to its cumbersome assembly and disassembly—is increasingly aligned with the home‑renovation cycle. Downward pressure on foot traffic in the home‑furnishings sector has already begun to emerge. Consequently, brands are placing ever greater emphasis on category expansion and market‑share gains, which will serve as the critical engines of future growth.

　　(2) Whole‑home customization is poised to help brands regain control over traffic acquisition, strengthen their channel management, and consolidate pricing power. Over the past few years, whole‑home‑fitting companies have steadily eroded the customer‑flow share of traditional home‑furnishings dealers—primarily because they can engage consumers at an earlier stage in the buying journey. As younger consumers increasingly demand one‑stop solutions, these companies offer comprehensive packages at more competitive price points, naturally siphoning off traffic from traditional dealers. However, for custom‑furniture brands, this channel has relatively weak control, with limited collaborative stickiness with fit‑out firms. If this trend persists, it could undermine brands’ pricing authority. By contrast, the introduction of “whole‑home customization,” while not directly entering the whole‑home‑fitting space, already addresses many consumers’ basic needs in the pre‑finished‑home market. This approach enables brands to partially reclaim their role as a traffic gateway, while still allowing them to retain control over channel resources and bolster their pricing power.