Click 'Read Original' for details. Recently, an industry insider revealed to New Distribution that a well-known leading FMCG company in China is about to implement a new round of layoffs, cutting half of its workforce, which would affect tens of thousands of employees. This came as a shock to the author, who then asked several former colleagues now working at different FMCG companies, and they all indicated that companies in the industry have generally been trying various forms of staff reduction plans over the past two years. In terms of approach, mainstream companies have basically stopped recruiting new frontline employees and have adopted a strategy of natural attrition, where positions vacated by voluntary departures are not backfilled. Companies are gradually reducing costs through both voluntary and involuntary layoffs. 01 Layoffs Have Been the Main Work of FMCG HR in Recent Years First, look at a set of public data:

  1. A well-known food and beverage company: Employee numbers were reduced from 80,541 in 2013 to 56,995 by the 2017 fiscal year, a decrease of 23,546 over four years, averaging nearly 6,000 fewer employees per year. The number of sales offices also decreased from 566 to 369.
  2. Another well-known food and beverage company: At its peak performance in 2013, it had 38,916 employees. By 2017, that number had fallen to 29,081, an average decrease of 4,000 per year.
  3. A well-known snack food company: In 2016, the average number of employees was approximately 47,115; in 2015, it was about 52,100, a reduction of 4,985. Additionally, a daily chemical company recently reported that due to high inventory and chaotic pricing, hundreds of employees left in tears. Furthermore, starting July 1, international brands Mars and Wrigley began merging their business organizations, configuring sales representatives based on the number of outlets and performance standards, with excess staff being persuaded to leave... Layoffs can be said to be the main work of HR departments in the FMCG industry over the past two years, but the forms differ slightly. Generally, there are two types of layoffs in FMCG: direct layoffs, where employees are persuaded to resign, and "invisible layoffs," which have become more common in the past two years, where companies shift employment to distributors. For example, Yili, Nongfu Spring, and Mondelez, around 2016-2017, through business organization adjustments and fee subsidies, transferred frontline sales representatives to distributor personnel while retaining daily management authority. What causes so many companies to carry out different forms of layoffs? Is it merely due to declining sales and rising labor costs? 02 Why Are Layoffs Frequent in the FMCG Industry? Since 2013, there has been a general consensus in the industry: industry growth has peaked, various categories are gradually saturating, and the industry has entered an era of squeeze-style growth, commonly known as the FMCG winter. Many companies have faced varying degrees of sales decline. Looking at the financial reports of mainstream companies in recent years, both revenue and profits have declined to varying degrees. With declining sales, industry downturn, and rising labor costs, layoffs are a natural response. Companies tighten their belts to control costs and weather the winter. However, in 2018, Uni-President and Master Kong both announced good news. For the full year of 2017, Uni-President achieved growth in both revenue and profit, with revenue of 21.2965 billion yuan, up 1.5% year-on-year, and net profit of 878.2 million yuan, up 44.6% year-on-year. Master Kong's latest Q1 2018 financial report showed revenue of 15.037 billion yuan, up 5.91% year-on-year. In the eyes of most people, the good news from these two giants should boost industry confidence, suggesting that the FMCG industry has survived the winter and entered a beautiful spring. With the industry recovering, layoffs should logically end. But in fact, layoffs do not seem to have stopped despite the recovery. Why does the wave of layoffs continue? Consider four dimensions. First, labor costs continue to rise; Second, ROI (Return on Investment) continues to decline. During the construction phase of channel outlets, investment in personnel yields obvious results, but during the maintenance phase, continued investment in personnel yields diminishing returns; Third, the deep distribution model is failing: with today's excessive channel fragmentation, the past strategies of intensive channel management, fine-grained control, and human-wave tactics can no longer match the new retail scenarios derived from internet companies; Fourth, new distribution organizations are gradually replacing corporate sales representatives: platforms such as B2B platforms and social e-commerce (e.g., WeChat businesses) have, in a sense, taken over part of the distribution function for brand owners. They use new information technology, more advanced retail concepts, and higher efficiency to sell products directly to small shops and consumers. The reason the wave of layoffs continues is that business owners see the increasing penetration of the internet into offline channels, and restructuring distribution and optimizing efficiency has become an unavoidable action. Strictly speaking, this is a manifestation of human-wave tactics being replaced by more advanced productive forces. 03 As the Wave Approaches, Where Are the Opportunities for FMCG Professionals? Understanding the logic behind corporate layoffs, you can see that layoffs in the FMCG industry are not temporary but continuous and long-term. As FMCG professionals, you should see the situation clearly and not wait until the end to ask yourself: "I worked hard, but I had to give up." Don't be caught off guard, and never think that because you are "cheap," you won't be laid off! We have always talked about where the transformation path for distributors lies. But have you ever thought about where FMCG professionals can go when facing layoffs and unemployment? Especially for those in middle age, with family responsibilities, working at middle or grassroots levels, who work hard every day, have good performance and good customer relationships, but due to reasons such as lack of higher education or inability to relocate, they have not been promoted. What impact does this layoff notice have on them? However, business operations cannot stop the pace of reform because of employees' personal issues. For FMCG professionals who have been or will be laid off, facing the changes of this era and industry, it is better to proactively change yourself than to passively accept it. New Distribution interviewed several distributors and practitioners, and they had some suggestions for dealing with layoffs: First, change careers. One distributor reported that in the past two years, many of his friends who were laid off chose to change careers, generally into two types: high-income sales, such as real estate or finance, which have industry dividends and good income; or internet companies, such as Didi, Meituan Waimai, and FMCG B2B platform ground promotion staff, which are hard but offer better income than before. These are people who have left the FMCG circle. Second, change companies. This is the mainstream approach. If foreign companies are not good, go to domestic ones; if first-tier brands are not good, go to non-first-tier brands. Some domestic companies now offer salaries and benefits that are not worse than foreign companies. After all, having been trained in large companies for many years, you have professional skills. With good opportunities, you might also meet good bosses and earn better income. Third, start a business. Do what you want to do, but most FMCG professionals are familiar mainly with the FMCG industry, which means that when starting a business, they will prioritize agency sales of some products. However, the distribution industry has not been prosperous in the past two years, and there is a real risk of being replaced by the internet. Opportunities to succeed by merely representing a product are becoming fewer. How to avoid being laid off? This title can also be phrased another way: How to stay competitive in this era? New Distribution's answer is continuous "learning." Although we have been trained for many years and have developed deep distribution skills, the rules of this era have indeed changed. You can look down on WeChat businesses, not recognize B2B, and think these are not the "right way" for product distribution, but you cannot refuse to learn about them and understand them. Although terms like IP, scenarios, communities, and traffic conversion are far from our work, you cannot be unaware of the first principles behind them. In addition to learning, New Distribution suggests paying close attention to industry changes and actively participating in internal innovation projects, such as the new retail departments that companies have added in recent years. Many bosses say that the only constant in their company is change. In fact, in this era, the only constant is change. For those of us in this era, if we don't want to be left behind, we should accept and participate in the changes of this era. Click the links below to review the highlights of the 1st, 2nd, 3rd, and 4th FMCG + Internet Conferences: -END-