Click on the image for details To support the compilation of New Distribution's "2017 FMCG B2B Industry Competitiveness White Paper", our team recently split into multiple groups to conduct in-depth field research in cities with advanced FMCG B2B development. The research is still ongoing. The research primarily involved field visits and surveys of small stores, as well as discussions with management and business personnel from brand manufacturers and distributors, to obtain first-hand market information. From the field visits to small stores, it is evident that most small stores operate very unprofessionally from a retail professional perspective, severely impacting their performance output. Overall, many small stores are only achieving half of their potential performance; if they operated more professionally, they could double their performance. In the current environment of intense competition, rising costs, and declining performance, unprofessional operations will further increase their operational pressure. For B2B platform companies, on one hand, facing such customers makes it difficult to achieve ideal performance, ultimately affecting their own development. On the other hand, such customers also increase market development costs. Therefore, B2B must start by empowering small stores, helping them improve their operational capabilities. By enhancing small store operations, B2B platforms can increase customer stickiness, improve effective market output, and ultimately achieve their own healthy development. From a retail professional perspective, small stores can undergo the following improvements to significantly enhance performance with immediate results. Layout Adjustment: Layout is the primary factor affecting store performance. The key to layout is to make it easy for customers to reach all areas of the store, presenting all products to customers. The principle of layout is to use main aisles, secondary aisles, shelf spacing, and end caps to guide customers conveniently to all areas of the store. Only when customers can access all areas can the store's products be presented to them, and only when customers see products can sales be achieved. Small stores generally adopt "square", "U-shaped", or "E-shaped" layout designs. Additionally, store design should consider customer comfort to increase dwell time. During market visits, we observed that many small stores have severe layout problems, some with completely wrong concepts.
- Closed layouts creating dead ends, preventing customer circulation. Stores must avoid dead ends and ensure smooth, unobstructed customer flow.
- Shelves too long: reasonable shelf length for small stores is around 4 meters, but some have shelves over 10 meters, which is highly unreasonable.
- Shelf spacing too narrow, severely hindering customer passage. Some store owners think this increases product display, but it actually does the opposite. Main aisles should be at least 1.5 meters wide (allowing two people to pass side by side), and secondary aisles at least 90 centimeters (allowing one person to pass straight and another sideways).
- Shelves too high: some stores have shelves over 1.8 meters, making the store feel oppressive and lacking transparency, which severely affects customer dwell time. Small store shelves should generally be below 1.6 meters to maintain openness. Small stores should adjust their layout promptly. A reasonable layout can increase sales by at least 10%. Product Mix Adjustment Products are the core of store operations. Whether the product mix is reasonable is the most critical factor for sales performance. Product mix should follow basic principles, defining target categories, key categories, regular categories, supplementary categories, and seasonal categories. Each category is indispensable and plays a different role, all contributing value. A small store typically carries about 20 major categories and 2,500–3,000 SKUs. Missing products will affect sales output. Product mix should closely align with the store's trade area characteristics; stores in different trade areas have different category and product assortments. Product mix should be adjusted twice a year according to seasonal changes. The main measure of whether the product mix is reasonable is the 30:70 rule. A well-organized product mix should result in 30% of products contributing 70% of sales. Falling below or above this indicator is unreasonable. Currently, small stores have severe product mix problems. There is basically no concept of category positioning, and category and variety combinations have serious issues. Adjusting the product mix is urgent. A reasonable product mix adjustment can increase sales by at least 10%–20%. Key Product Adjustment Key products are the store's signature and main products that effectively attract customers and contribute significantly to sales. Especially in the current highly competitive environment, small stores must organize their signature products to enhance their operational characteristics and differentiate themselves. Selecting key products generally involves focusing on the store's trade area competition, customer needs, and product organization capabilities. Create as many key products as possible to enhance the store's operational characteristics. Only by strengthening key products can a store form operational advantages and effectively attract target customers. Generally, small stores should focus on categories such as dairy, tobacco and alcohol, beverages, snacks, condiments, and personal care. Typically, key categories should contribute over 70% of the store's performance. Currently, most small stores lack awareness of managing key products. Stores lack key and signature products, leading to homogeneous competition among small stores. Guidance on key product management should be provided promptly. Doing key products well can increase sales performance by over 10%. Display Adjustment: For supermarkets and convenience stores, display plays a significant role in increasing sales performance. Good product display is crucial for attracting customers, enhancing product image, stimulating customer interest, and promoting purchases. Product display is both a science and an art. Product display must strictly follow relevant display principles. These principles are valuable experience summarized by many enterprises over years of practice. At the same time, stores should innovate display methods based on their actual conditions and make artistic use of them. Currently, small stores pay little attention to product display. They do not follow display principles or consider display effectiveness, and they do not value how display affects sales output. Special attention should be paid to guiding small stores to improve and enhance display techniques. This is the most important basic skill in store operations. Pay special attention to displays of full-box products, end caps, and main aisle shelves. Good display can effectively increase store sales by at least 5%. Business Strategy Adjustment Retail is the unity of science and art. Retail is an art, a combination art: achieving optimal business results through the combination of different strategies. This includes product mix, customer mix, price mix, and promotion mix. Through combination, stores can meet customer needs and achieve profitability, as well as enhance competitive advantage and achieve profit goals. Doing retail well requires special attention to strategy combination. Currently, most small stores lack business strategies. Their operational state is relatively primitive, and they particularly need guidance to improve their business strategies. Improving business strategies will bring significant performance improvements to small stores. Learn to Use Data to Guide Operations Data is an important foundation for good operations. For small stores, customer data, product data, transaction data, and store data are very important. To operate well, stores must "have a clear picture" of their data. Data should be continuously analyzed. Through analysis, problems can be identified to guide operational improvements. Currently, small stores have severe deficiencies in using data to guide operations. Many stores lack basic data concepts and data analysis capabilities. Most small stores operate with severe blindness. Therefore, B2B platform companies should particularly focus on guiding and improving small stores' data management capabilities. Helping small stores solve data management problems should become a key entry point for B2B platform operations and an important market development tool. Using data management well is crucial for helping small stores improve sales performance, reduce capital occupation, and enhance marketing precision. Provide Good Service Currently, small stores provide very poor service due to lack of supervision and management. Walking into small stores, you see people playing games, sleeping, lying around, and poor hygiene... Small stores need supervision and guidance; service must be managed with supervision. Small stores should be systematically organized and incorporated into systematic organizational management. Solving the service management problem in small stores will bring significant help to their operational improvement. B2B is a systematic project. There is still a long way to go to do B2B well. Focusing on customers and helping small stores improve and develop healthily is an important foundational task for B2B. Bao Yuezhong Column: New Distribution Special Contributing Writer Senior Economist Expert of the Ministry of Commerce's "Ten Thousand Villages and Thousand Towns Market Project" Renowned FMCG Retail Expert Bao Yuezhong New FMCG, New Retail Innovation Practice Studio Click on the image for details The 3rd (CFIC) China FMCG + Internet Conference will be held in Chongqing in October 2017. At this conference, New Distribution has invited 1,000+ distributors, 500+ brand manufacturers, 200+ B2B platform founders, and 100+ investment and financing institutions to participate. The theme of this conference: New Forces, New Ecosystem. We will invite renowned B2B industry experts, mentors, and B2B platform founders to discuss the following topics: Core Topics of the Conference:
How the FMCG industry can achieve new growth opportunities through B2B
How to build a new supply chain behind new retail
How same-city logistics can help B2B achieve leapfrog development
Highlights of the Conference:
The industry's first "2017 China FMCG B2B Industry Competitiveness White Paper"
Case sharing of excellent distributors' transformation and upgrading
Upgraded conference + exhibition, Hall 6 Internet Technology Exhibition strengthens connections
Alibaba Retail Link, Puhua Financial, Eternal Asia Supply Chain, Best Store Plus, Yijiupi, Unilever, Haiding Technology, Yunmei Shares - leaders from various fields will deliver speeches and share pioneering views.
October 17-18, 2017 Chongqing International Expo Center Registration is now open. Long press the QR code below or click "Read Original" to register. Early bird tickets before September 15 enjoy a 30% discount! Add friend and note "Conference Registration" Click the links below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 "FMCG + Internet" Summit Forum 2017 (2nd) China FMCG + Internet Conference Click the links below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 "FMCG + Internet" Summit Forum -END-