Core Viewpoint - The home furnishing and decoration industry is undergoing a significant reshuffle, with many companies, including the once-prominent "home decoration unicorn" Zhu Fan Er, facing severe operational challenges and financial distress due to a combination of low demand, high costs, and aggressive expansion strategies [1][2][5]. Industry Overview - The home furnishing and decoration sector has entered a "reshuffle period," with a notable decline in new housing sales, which dropped from a peak of 13.58 billion square meters in 2021 to an estimated 9.74 billion square meters in 2024 [2]. - The overall contraction in housing sales has directly impacted downstream demand for home furnishing and decoration services, leading to a significant number of bankruptcies among decoration companies, with 48, 75, and over 100 companies going bankrupt in 2022, 2023, and 2024 respectively [2]. Company-Specific Challenges - Zhu Fan Er, once thriving with substantial capital and market presence, has faced a rapid decline due to aggressive expansion and high operational costs, leading to a precarious financial situation [4]. - Other major players, such as Alibaba's home furnishing brand homearch and Gome's internet decoration company, have also ceased operations, highlighting the industry's struggles [3]. - Dongyi Risheng, once a leader in the industry, reported a staggering 55.8% year-on-year revenue decline in 2024, with revenues shrinking from 42.91 billion yuan in 2021 to 12.96 billion yuan [3][4]. Market Dynamics - The industry is characterized by a "new normal" of low temperature, low growth, low profit, and high operational costs, which has fundamentally altered the growth logic of the sector [5]. - The aggressive expansion strategies that fueled growth during the industry's boom have now become burdensome, leading to financial instability as the market contracts [5]. - The cyclical nature of the industry suggests that while current challenges are significant, there is potential for recovery as companies that adapt through innovation and focus on user value may emerge stronger in the future [5].