The pandemic is once again spreading across various regions, affecting nearly 30 provinces. Compared to the sudden arrival of COVID-19 in early 2020, although there is still some concern and closed management has brought many inconveniences, the sporadic outbreaks in the past have made various regions battle-hardened. Over the past two years, we have accumulated experience and become more composed in prevention and control. I believe it won't be long before this round of the pandemic ends, and it is highly likely to be the final battle in our fight against the epidemic. Facing this wave of resurgence, it is estimated that it has had a significant impact on distributors' businesses. Although it won't be like early 2020, when inventory piled up, gift boxes were unsold, sales were blocked, and businesses were on the brink of life and death, there are still many obstacles in logistics and distribution, personnel visits, and sales turnover. The raging pandemic has reduced people's movement, naturally leading to fewer offline sales and a slower market. In this context, what should distributors do? The so-called peak season is for sales, and the off-season is for market development. During this short period that is even more "idle" than the off-season, I think we can make business plans. Business plans are made by distributors every year at the end or beginning of the year, but the starting point is basically a summary and review of the current year and the goals for the next year, still focusing on the upcoming business. The "business plan" mentioned here is relatively more abstract, making 3-5 year plans and thinking about the direction and model of the trade business. Since the pandemic has arrived, distributors have already made some emergency preparations in the past period. What remains is to see the progress of pandemic control. Next, take a few sheets of paper, hold a pen, and let's explore the possible directions of the trade business together. Find Your Position In the past, when distributors thought about their own business, they basically focused on upstream brand owners. But today, let's change our perspective and place the business in a city, whether it's a prefecture-level city or a county-level city. Based on the categories you operate, take a broad look at your trade business and see what level it is at. In the past, we often talked about which brand ranked first in local sales and which ranked second. Now let's also see where our business ranks compared to peer distributors in a city. Why rank? To know your position. The current market competition is a competition for existing stock, not a stage for making the cake bigger, but a stage for dividing the cake. The grabbing of store shelf space is either taken by this brand or that brand, and the amount of resources grabbed is not only related to the brand's own strength and investment but also greatly related to the distributor behind it. Knowing your position, using it as a coordinate, is the starting point for planning your business. In the past, when we talked about market competition, it was more about competition between brands, but in fact, if we define the market competition within a prefecture-level city or county-level city, the main competitors are actually distributors versus distributors. 1) If you are ranked first, great. But if it's a small victory over the second place, you should continue to expand your store share in this category, achieving a gap of two to three times, so that you can get obvious resource preference in stores; If it's a big victory over the second place, maintaining stability is the current focus. At the same time, because of the resource preference in stores, your organizational configuration is relatively good. At this point, can you consider splitting the organization to expand into adjacent categories and strengthen your store moat? 2) If you are ranked second or third, not bad. The position of second or third is also good, with basic business, and the leader can't eliminate you, but your own profitability is average. At this time, you need to consider future risks. Don't compare scale, resources, or manpower with the leader; look at operational efficiency, especially business efficiency. Which stores contribute more, which products contribute more, which salesperson contributes more. Behind increasing business efficiency, you actually need a sales team that can win battles, preparing for future business expansion. Check if there are still opportunities for well-known brands in this category? Frequent contact. If there are not many opportunities, either expand into adjacent related categories, such as from paper and hygiene to washing and care, or from grain and oil to condiments; or expand into third- and fourth-tier brands under this category. The core of expanding third- and fourth-tier brands lies in whether you have marketing and promotion capabilities, such as in-store shopping guide teams.**** 3) If you are ranked fourth or below, be careful. At this point, the resources of first-tier head brands have basically been divided up by the top three, and it's hard for you to gain more say in stores through brands. The best way: focus on multiple third- and fourth-tier brands in adjacent categories, combine them, and attack township or circulation small stores; To gain profits and market share from third- and fourth-tier brands, you need to have capabilities that other well-known brand distributors don't have. The core capability here is marketing and promotion. What is marketing and promotion capability? 100 shopping guides distributed in various stores, able to manage them well, generate volume, and achieve growth. Do first-tier marketing for third-tier brands; that is the core competitiveness. Find your ecological niche in the regional market and design your own business path based on it. In the stock competition of categories, you can't just look at the rise and fall of brand owners; you must also make yourself stronger amid brand competition. When you are strong, brands will naturally come. Understand Retail Trends If you are not in a first-tier or developed second-tier city, the offline retail format is relatively simple and not too complex. The retail formats in third- and fourth-tier cities are basically divided into three types: Type 1: A local retail system dominates. For example, Pangdonglai in Xuchang, Dazhang Supermarket in Luoyang, Xiangjiang Department Store in Hengyang, Meishilin in Handan, etc. A dominant retail system often has "overbearing clauses." Even if distributors have a deep cooperative relationship with stores now, they should still evaluate in real time to prevent retail store policy changes, forced direct supply from manufacturers, and erosion of the basic business. Type 2: Local retail systems are tripartite. This is relatively the best state for local distributors. They check and balance each other, and even if stores change policy terms, they won't act arbitrarily. Type 3: Local stores are in a state of separatism. This is also beneficial to distributors. At this time, it tests the distributors' store operation capabilities, with one store one policy, one store one plan. Although scattered, it's not easy to do well in all. In addition to the different patterns of local retail formats, attention should also be paid to the trends of community-oriented and fresh-food-oriented chain store systems. The typical characteristics of community-oriented and fresh-food-oriented are that stores are getting smaller. In the past, the mainstream was over 1000m2, but now new stores are more around 500m2 in communities. Moreover, the area for FMCG standard products in stores is getting smaller, and store unit output is also decreasing, with more space given to fresh food categories. For distributors, this means that past shelf resources and floor stack resources are becoming fewer. Because the area is small, promotional forms also need to change. In the past, weekend tasting and roadshow activities could be done anytime. But now, due to space limitations, they cannot be implemented. At the same time, because shelf resources are reduced, store purchasing tends to favor explosive and best-selling products. It is increasingly unfriendly to new products. Although this is the same challenge for every distributor, when facing challenges, whoever can plan ahead, understand the purchasing needs and KPI orientation behind community-oriented stores, and prepare for the future will gain more sales in the process of store communityization. All distributors should not consider the issue of the number of shelf resources, but the issue of the proportion of shelf resources. No matter how limited the resources are, the capable and the winners get more. Don't complain about changes in the objective environment, but rather compete for the limited resource share in the objective environment. Of course, the above-mentioned retail store format trends depend on the proportion of categories in various channels. For example, daily chemical and snack food categories have a high proportion in supermarket stores, so the importance of this trend is self-evident. But if it's beverage and alcohol categories, the main channel is still circulation small stores. More attention should be paid to how to seize the opportunity of community chain stores as soon as they appear. Formulate Your Own Strategy After knowing your position and understanding the external retail environment, the next step is to formulate your own business direction. In the past, "New Distribution" has provided clear direction and path guidance for the development trends of distributors. This article will appropriately extend business trends based on different category perspectives. 1. Beverage and Alcohol: For beverage and alcohol categories, the focus of business is on traditional circulation small stores, mainly mom-and-pop stores. The direction for distributor business expansion: First, expand adjacent categories. Beverages are a daily necessity with high frequency, and you can achieve weekly visit frequency in small stores. Therefore, consider introducing relatively lower-frequency categories, such as snacks and non-staple foods, condiments, vinegar, and soy sauce. In the early stage, you can introduce categories in the form of wholesale distribution; Second, go deep into the catering channel. Catering is a very tough bone for circulation small stores, but once you get in, the barriers are deep enough. In addition to beer, if you are in the beverage category, on the one hand, consider doing private labels, focusing on soda and lactic acid bacteria drinks, based on local advantages, and root in catering; on the other hand, it's regular beverages, such as lactic acid bacteria drinks, coconut juice, and other juice categories. 2. Snack Foods: There are many categories of snack foods, and the corresponding channels are relatively scattered, including traditional circulation small stores, KA hypermarkets, single large stores, and snack food system stores. Because the category capacity is large enough, there are also many business models. Combined with the trends of supermarket communityization and snack food specialty stores, distributors can pay attention to the distribution of local snack food retail formats. Focus on a single channel and operate across regions; or focus on a region and expand categories for multi-channel operation. Both are possible. In the past, deep distribution of snack foods was relatively weak, and there is room for further channel refinement, but it is necessary to achieve a balance of labor costs under channel refinement through category expansion and combination. 3. Daily Chemical and Household Miscellaneous: In the past, the channels for daily chemical and household miscellaneous categories mainly focused on supermarket stores. Because of large store sales and high unit output, daily chemical and household miscellaneous distributors mainly focused on a specific sub-category, such as paper and hygiene, oral care, laundry, etc. But with the trend of store communityization, coupled with the impact of online on daily chemical categories, a single category can no longer balance cost expenditure. Multi-category daily chemical operation is an inevitable direction for distributors. In addition, in the past, daily chemical products had less distribution coverage in circulation small and medium stores, and less attention was paid. In the past, because large stores had high unit output and small and medium stores had small capacity and slow turnover, they were not valued. Now, through multi-category combination, gather categories to improve coverage and deep cultivation of small and medium stores. 4. Condiments, Grain, and Oil: Condiments, grain, and oil are similar to daily chemical categories in channel operation. In addition to achieving deep cultivation of small and medium stores through multi-category combination, distributors must pay attention to three types of channels: First, the communityization and fresh-food orientation of chain stores. Although it is not friendly to daily chemical products, it is friendly to condiments, grain, and oil, and even a dividend to some extent; Second, group purchase benefits for enterprises and institutions. This special channel has received relatively low attention from distributors in the past, but now it has become a very important channel with high gross margins and less service, more based on personal connections to enter; Third, O2O channels. Whether it's self-operated platforms like Pupu Supermarket and Dingdong Maicai, or platforms like JD Daojia and Meituan Flash Purchase, as well as O2O home delivery business of KA chain stores, the family consumption scenarios behind these channels are naturally suitable for condiments, grain, and oil categories. Due to the impact of the pandemic, the growth of such channels has been very rapid and requires an independent team to follow up. The above are the business directions for distributors in different categories. Due to space limitations, only some framework directions are proposed. Let's return to what was said earlier: in the past, distributors only anchored their business on brands, thinking about how to complete tasks and achieve targets. But as an independent business entity, distributors should fully consider their position in the regional city, their strength, and changes in downstream retail formats. At the same time, combine their core capabilities and external market opportunities to seriously design their own business development plan, rather than being limited to a certain brand or a certain channel.