Introduction: Most people's problems are the few people's opportunities; this Spring Festival is worth fighting for!

This article is from the live broadcast series "The Delayed Spring Festival Peak Season: A Practical Discussion on Distributors' Stocking and Grabbing Business" by Li Feng, growth mentor of [Li Feng New Distribution], featuring content shared by Li Wei, head of Mengniu Modern Dairy's Henan-Shanxi region, published with authorization.

Epidemic Trends:

  1. With the full relaxation of epidemic controls on December 8, the post-epidemic era officially began.
  2. After the cancellation of nucleic acid tests and travel codes, the boundary between colds and COVID-19 has blurred.
  3. The epidemic shows a three-level, three-stage infection pattern [Peak: first- and second-tier cities December 25 / third- and fourth-tier cities January 10 / counties, towns, and villages January 15], with infections completing by February 25.
  4. Within half a month of the relaxation, there was a brief period with even lower crowd density than during lockdowns. As infection rates rose, residents adopted a resigned attitude, treating it like a cold. After the first wave of "Yang Kang" (recovered) period, New Year's Day briefly resembled pre-epidemic scenes.
  5. The domestic dominant strain and the US XBB dominant strain have cross-protection, making the risk of large-scale local transmission very low.

Spring Festival Trends: During the 2020 Spring Festival, the first year of the epidemic, the epidemic was controlled; consumers could move, but distributors and terminal store owners stocked cautiously, leading to shortages in the gift market. In 2021, with epidemic outbreaks and excessive prevention measures, consumers couldn't return home, causing severe sluggish sales in the Spring Festival gift market. The Mid-Autumn Festival was also in a high-incidence period with limited mobility, even worse than the Dragon Boat Festival. In 2022, after policy relaxation, factors like unemployment, home-buying policies, and the rural infection peak requiring people to return to care for the elderly and children combined to create the largest return-home wave in three years. Prediction for this Spring Festival: It is likely to be the most prosperous in the past three years, at least much better than last year, though there will be differences among cities with varying infection rates and product categories. Cities with high infection rates will see the best market in three years, with high-unit-price gift items slightly lower than previous years.

Market Changes:

  1. After the epidemic is lifted, the economy will bottom out and rebound. China's GDP is expected to grow by 5% in 2023, affected by factors like Fed rate hikes and geopolitical crises; "warm in the cold" is an economic label for 2023. The first two quarters will be a repair period, with strong recovery in Q3 and Q4, but returning to pre-epidemic market indices will take at least 3-5 years.
  2. In the post-epidemic era, health concepts upgrade. The future consumer market is guided by "Three Loves, Three Fears, Three Shortages": Love beauty, love play, love health; fear aging, fear death, fear loneliness; lack love, lack mood, lack stimulation. If your category relates to these, you've chosen the right future; this can serve as a reference for distributors' future product selection.
  3. With the M-shaped economy, this year's gift-giving focuses on price points, especially in rural markets where spending 200 yuan for two or three items is common, making gift SKUs around 100 yuan the first choice.
  4. As the new generation becomes the main consumer force, Generation Z will show category upgrades and price downgrades during economic downturns—meaning they want high quality but don't want to pay high prices. This is the internet buzzword "wishful thinking" phenomenon: quality upgrades, price downgrades. For example, we've entered the air conditioning era; we won't go back to fans or hand fans just because income drops, at most we reduce usage frequency, because people's aspiration for a better life hasn't changed. Also, this Spring Festival, demand for high-priced cigarettes, alcohol, and tea will relatively decrease, partly due to weakened spending power and partly because after recent infections, the "gift of health" is more fitting. These are several market changes.

Channel Changes: Over the past three years, channels have changed significantly. Home delivery, community e-commerce, and online consumption have been cultivated. The entire channel shows "four-ization": fragmentation, diversification, proximity, and online-ization. Therefore, in the post-epidemic era, channels must combine online and offline; a single offline channel will be paralyzed in a black swan event. For example, with a second wave of infections in May-June, single offline stores may face major bottlenecks. Also, although Spring Festival mobility is unrestricted, the last wave of infections in rural areas coincides with the festival, leading to "express delivery gift-giving." To explain: After three years without returning home, you need to visit relatives, friends, and in-laws. Rural areas are in the infection period, so you may skip meals but gifts must arrive. This "delivery-style" gift-giving will definitely occur in counties, towns, and villages. Additionally, convenience stores at community entrances, local small chain supermarkets, fresh fruit stores, and township flagship stores are this year's hot channels, with holiday stalls being the top sales point, no exception. Before March 2023, household consumption will be strong; due to scar effect and lipstick effect, consumer average order value rises but frequency decreases. Distributors can refer to these channel changes.

This Year's Spring Festival: "Crisis" and "Opportunity" This year's Spring Festival has both crisis and opportunity.

Current "Crisis" What is the current crisis? The stocking period overlaps with the infection peak. In December, distributors and terminal owners delayed stocking, leading to concentrated orders and shipments, causing capacity and supply chain disruptions before the festival, resulting in stockouts or post-festival arrivals. Second, due to the scar effect, consumer expectations decline, weakening high-unit-price categories, and cities with low infection rates will be relatively affected.

Current "Opportunity" Over the past three years, distributors haven't made money, and this Spring Festival's order payments haven't been collected. Distributors lack funds to stock, and all distributors and store owners are cautious, ordering less and stocking late. Everyone's caution leads to a large market gap. With mobility unrestricted and demand increasing, shortages are inevitable. So the stocking window is shortened, and different cities have different outbreak timings and windows. Whoever completes stocking in the shortest window will make a steady profit this Spring Festival.

Four Suggestions for Distributors:

  1. Plan Stocking: Stock according to outlets and quality, measuring channels. Stock at 1.2 to 1.5 times last Spring Festival. Stock more basic items, and for hot items and high-priced items, stock at core outlets, within your means.
  2. Plan Work: Have clear plans for stocking, hoarding, clearing old stock, and sales promotion. The amount stocked must be the result of backward deduction from actions.
  3. Lock Key Stores: This year, order payments are low; store owners will sell whatever they stock, not pushing specific brands. Core large stores need tiered rewards to tie sales; stabilizing large accounts ensures sales.
  4. Control Date Recovery Nodes: From the first to the fifth day of the first lunar month, conduct date adjustments at terminals to reduce old stock return rates.

How to Make the Profit Model Work? In a poor environment, it's crucial to make the profit model work and achieve profitability. Distributors have had a hard time these two years; surviving is growth. Here are views from three angles: CNY core actions, rhythm, and product strategy.

1. CNY Core Actions Launch Meeting: Set goals, break them down, set strategies, match incentives, hold a launch meeting to sign responsibility statements, so everyone has goals, methods, and passion. Collect Payments: Second, collect payments. The harder it is to collect, the more worth collecting; stay firm. Difficulty in collecting is the effect; find the cause and solve it. Causes: store owners worry about the epidemic, worry about service after slow sales, worry about capital tie-up. Solutions: share post-epidemic prosperity in groups, issue stamped service commitments, and provide rewards for pickup time nodes. For core large accounts, distributor owners must personally participate in collection. Open Outlets: Outlets are support points. You can't sell large volumes without outlets. Before the festival, cast the net; after, harvest. Meaning: If you can open 1,000 outlets before the festival, you'll have room to optimize after. Opening outlets is like hiring employees: hire 10, keep 5, optimize 5, then hire another 10, keep 5 more, and your available people grow. Similarly, over time, your outlet quantity and quality improve. Transfer Inventory: What is inventory transfer? When short on funds, you might use financing, high-interest loans, or private lending to bring goods in, but don't keep them in the warehouse. Clear the warehouse by the 19th, even if it means selling on credit, get goods to the market. Drive Sales: Stocking is just the first step; sales are key. Set reward mechanisms for core large accounts, new products with gifts, turnover box stickers with rebates, and follow up with sales actions. Stall outlets, outdoor displays, internal sales, and holiday group buying are core points to boost sales. Clear Old Stock: Use community store groups, mom group leaders, express pickup points, employee groups, employee social circles, core outlet price adjustments, and outdoor activities to clear old stock during the sales peak. Otherwise, after the Lantern Festival, you'll face a red ocean and price wars.

2. CNY Rhythm Stocking Rhythm: Place orders by the 10th, or goods won't arrive before the festival; orders and shipments are concentrated now, making arrival difficult. Payment and Inventory Transfer Rhythm: Between the 5th and 10th, stalls must be fully stocked; by the 19th, warehouse clearance must be complete. Old Stock Clearance and Date Adjustment Rhythm: First press large accounts, then small accounts, then stall outlets; date refresh should start a month ahead. Promotion and In-store Activity Rhythm: There must be time intervals between promotions and in-store activities, and change items, do combination promotions. Especially for items with old stock issues, do it by store, system, and item, not all at once. Internal Sales and Group Buying Rhythm: Hold internal sales before January 10; too early is ineffective, too late affects pricing. Also, set up micro group buying before January 20 and submit to supermarket group buying desks. Develop group buying policies and incentives, mobilize everyone to find social resources for group buying. Supermarket and Circulation Outdoor Rhythm: The outdoor rhythm for supermarkets and circulation is critical. Suggestion: Only half a day off on New Year's Eve; from the first to the fifth day, everyone does outdoor sales, even warehouse and clerical staff. Sales during this period can equal half a month's normal sales. Compensate with leave after the festival. Use this window. For hypermarkets, there's a pain point: limited display space, high fees, and tight warehouse space, making it hard for distributors to find locations, stock, and afford positions. Solution: Do outdoor activities at the supermarket checkout line entrance. Benefits: 1. Solves stocking difficulty; 2. Flexible control of items, dates, and promotion intensity; 3. Outdoor sales are better than indoor; 4. No fees; if some systems charge, negotiate with sales guarantees. Remember to do outdoor at the junction of checkout entrance and exit, not just entrance or exit.

3. Product Strategy Views Distributors must have "Four Products": First, Big Single Product: During Spring Festival, cultivate a profit big single product. What is a profit big single? Buying at 20 yuan, selling at 50 yuan, selling 20 boxes a month is not a profit big single; at best it's an image product. Buying at 20, selling at 28, selling 20,000 boxes a month is a profit big single. Why do it? Because profit comes from one hole, using a point to drive the surface. Analogously, if you have 10 strengths but none outstanding, you'll be mediocre. Distributors don't earn from price differences but from turnover rate; hope this resonates. Second, Three-in-One: Compare a distributor to a mom-and-pop store: if you sell only brands, the store can't survive; if you sell only generic brands, consumers won't come in. The correct posture: Use brand products at low prices to attract traffic, and promote third- and fourth-tier products to balance profits. For example, a fresh supermarket uses fresh fruits, eggs, pork at a loss to attract customers; once in, the first things they see are high-margin items like cosmetics, groceries, plastic products, electronics. Distributors should treat every terminal store as their own, and stock must be three-in-one. What is three-in-one? One basic product must be paired with two profit products [the 'three' is a virtual number; typically three items for a small store]. With the three-in-one combination standard, you have both volume and profit. Third, Strategic Products: What are strategic products? In an era of oversupply and product segmentation, every brand's SKU matrix is bloated. Selecting a few for strategic purposes: 1. Increase sales; 2. Increase profit; 3. Avoid competition. First, make them promotion items: select a few for KA store promotions, new dates can be used. Second, make them online-exclusive items: separate online and offline single items to avoid mutual impact. Third, make them exclusive distribution items: for example, in each township, find one store to sell this item exclusively, no returns, no exchanges, no adjustments. If one store sells 200 boxes, and you sign 10 stores, that's 2,000 boxes of pure profit. Fourth, two terminals with two sets of products: If neighbor Wang and neighbor Zhang sell the same items, they'll undercut each other. Distributors can give Wang four items and Zhang another four, with two sets including high and low prices, basic and profit items, preventing price chaos and encouraging promotion. This is called two terminals, two sets. Fourth, New Products: The New Year is the best time to cultivate new products; sales during the festival are better than usual. Plan to cultivate new products at core outlets during the holiday. The Spring Festival market is like a stomach: if you eat 10 bowls during the festival, it stretches; after, you can still eat 3. These are the four product views distributors should have.

2023 Business Directions First, Big-Small Combination: Combine big brands with small brands, i.e., brand with generic. Second, High-Low Combination: Low margin with high margin, low price with high price. Third, New-Old Combination: Old products with new products, old dates with new dates. Here's a psychological tip: When selling milk to clear old stock with a buy-one-get-one-free, if you buy October and get October, consumers worry about not finishing before expiry. Buy October and get September, consumers think you're cheating. But buy September and get October, the result is different. Yes, buy September and get October. Tell consumers it's originally buy September get September, but September is sold out, only October left, limited stock. Consumers feel they got a bargain. Actually, consumers don't buy cheap; they buy the feeling of getting a bargain. Fourth, Up-Down Combination: Combine online and offline channels. Community store groups, fresh fruit store groups, delivery apps, and local platforms must be utilized. Channel changes must be embraced; you can't avoid them. Fifth, Make Business Light: Convert fixed costs to variable costs. Employee salaries must shift from high base low commission to zero base full commission [can be transitioned with a 3-month guarantee]. Sixth, Three Basics of Trading Business: First, basic product: must have a profit big single. Second, basic plate: how many outlets, display carriers, core selling points; without these supports, there's no base volume. Third, basic skills: many distributors don't calculate accounts, don't do budgets, and have chaotic processes. So, distributors must master budgeting, mechanisms, and processes. Finally, I wish all distributor friends a prosperous Spring Festival and great success!

Li Wei, currently head of Mengniu Modern Dairy's Henan-Shanxi region. Previously held purchasing and general manager positions at Lianhua System and Makro System, and planned the successful opening and operation of 73 supermarkets in Yunnan, Guizhou, and Guangxi. Also served as regional manager for Jin-Jin at New Hope Blue Sea Dairy. Has extensive practical experience in FMCG purchasing and sales.

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