Preface: Compared with traditional channels, we used to believe that special channels represented by government units, gas stations, banks, schools, etc., were relatively closed, requiring no significant capital or manpower to maintain. Once developed, they would bring long-term, stable sales. As a gathering place for young people, campus channels have high acceptance, high consumption frequency, and a stable customer base, once being a private domain for distributors. But today, with intensified competition in traditional channels, are campus channels still a "hot potato" in the eyes of distributors?
Campus stores are cooling down, barely maintaining business
"Sales dropped 50% last year. I used to cover all local campus stores, but now I've had to cut more than a dozen." A campus channel distributor said helplessly. Another snack food distributor said that due to relevant policies, many primary and secondary school campus supermarkets cannot sell snacks, and only a few bread and milk products can still be supplied. Although the categories in university stores have not been reduced, sales have also declined severely. Even roadshows and promotional events have had little response, and foot traffic cannot be concentrated.
During the three years of the pandemic, because students could not go out, many campus channel distributors' businesses "benefited from misfortune," and any amount of inventory could be digested. But after the pandemic was lifted, campus stores are no longer the only choice, and declining sales have become a common phenomenon. The most obvious change is that the back-to-school season has cooled down, with dismal sales.
"The campus store business is getting worse year by year. In the past, we had to load whole trucks a week before school started, but now many outlets order in small quantities, even splitting cases to make up an order," said Wang Jie (pseudonym), a salesperson who has been in the campus store business for 8 years.
There are two reasons for this: first, the post-80s and post-90s generation have become parents, and they are more open in their interactions with their children, giving students more control over their living expenses; second, consumption habits have changed. In the past, during the welcome season, parents would handle all the daily necessities and snacks for new students, even preparing small items like locks and sewing kits. But when the post-80s and post-90s became parents, they are more open with their children, directly transferring living expenses to their cards, leaving students to manage their own spending.
With the booming logistics industry and the increasing penetration of e-commerce year by year, for these young consumers born in the internet age, nothing is more comfortable than buying all kinds of daily necessities in one stop without leaving home. Moreover, with intensified competition among online platforms, low prices and subsidies have become a daily occurrence. During promotional periods, e-commerce prices are even lower than distributors' wholesale prices, which is extremely tempting for students with limited living expenses.
"Many students haven't even arrived, but their packages arrive first. Some campuses have only two supermarkets, but there are four or five package collection points, almost at the dormitory door!" said Wang Jie, the salesperson responsible for campus stores. The grand scene of campus supermarkets being packed in early September is gone, replaced by courier stations piled high with packages.
Stores are struggling, but distributors are even more so!
Declining store sales also shift pressure onto distributors.
1. Students look at price, stores look at profit
Customer relationships often become insignificant in the face of interests. A daily chemical distributor reported that in the face of e-commerce impact, many stores do not care whether the online low price is a first-order discount or for different specifications; they simply show screenshots and demand that distributors lower prices. "The platform has billions in subsidies, but who will subsidize me?" Facing prices far below their wholesale prices after platform subsidies, distributors have no way to complain, and many long-term cooperative outlets have deteriorated in relationships, losing them in the next bidding round.
2. High channel deductions and fees, thin distributor profits
Many campus stores know their business is not what it used to be, so when signing agreements, they often sign for a full year of fees, and the fees are increasing year by year. Entry fees, display fees, barcode fees, etc., are no less than those in hypermarkets. A dairy distributor revealed that for the same product, while outside channels have a profit margin of over ten points, campus channels may require 25-30 points, but the price must remain the same as outside, harming the interests of suppliers. First-tier brands have thin profits to begin with. In the past, when shipments were stable and volumes were high, it was manageable, but now many first-tier brand distributors are feeling the strain, yet they have to endure it because even a fly is meat, if you don't do it, someone else will.
3. Unequal relationships, distributor rights not guaranteed
Campus supermarkets usually bid every two years. After the school posts a bidding notice, distributors must submit materials as required, including qualifications, product SKUs, supply prices, and deposits. Relevant personnel will also visit the distributor's warehouse for on-site inspection. At the same time, there is no regional restriction for bidding, meaning distributors who want to do campus stores must compete not only with local distributors but also with those from other regions. After going through a series of cumbersome procedures, even if they win the bid and cooperate with the campus store, and pay various fees such as entry fees, display fees, and barcode fees, the signed agreement cannot restrict the store's behavior, and the store manager still has the right to purchase goods from other sources.
4. Thresholds further raised, capital risks increase
It is understood that many campus supermarkets, in order to reduce procurement and operation costs, contract the stores to companies specializing in campus contracting. After the contracting company pays to take over the store, they pass this cost onto distributors. At this point, 30 points is no longer enough; they usually require 35 points or even more. However, high deductions are only one aspect; the most critical thing is to always be wary of contractors running away. In the past, campus stores typically agreed on payment terms with suppliers on a semester basis, and even in special cases, they would settle within the year. Even if the payment period was extended, as long as the school was still there, there was no fear of not getting paid. But contracting companies are different. During a market survey in the Sichuan-Chongqing region, a distributor reported that a foreign contracting company had come to their area and taken over all local university supermarkets. However, this company has a very poor reputation elsewhere and still owes many distributors unpaid accounts, with no way to complain.
What can still be done with campus channels?
For most distributors, although the volume from campus channels is not large, due to the characteristics of the channel and consumer group, it is regarded as a testing ground for new and high-end products, and many products that are difficult to "digest" are also dumped here. Now, in the face of various changes, can campus channels still be done? How?
First, it can definitely be done, but we must face the reality that changes in consumption habits and declining store foot traffic are unavoidable. However, in today's rapidly developing internet era, almost all channels are facing unprecedented changes. The key lies in how to respond to challenges and make adjustments.
As for how to do it, based on past exchanges with some excellent distributors, I have made a few summaries for reference.
First, at the store level, allocate resources based on profitability. Reduce investment in stores with poor performance, and provide certain resource support to stores with high sales and profits.
Second, supply in stages according to category characteristics. What sells well on campus? Snacks and beverages are products with low unit prices and high consumption frequency. Especially beverages, which are heavy, have transparent prices for first-tier brands, and are less affected by e-commerce. For categories like daily chemicals and paper products, where brand concentration is low, they are easily affected by price wars and e-commerce, especially during events like "618" and "Double 11," when students tend to stock up in large quantities to meet thresholds for discounts.
A daily chemical and paper products distributor shared his solution with me: supply different products to stores at different times according to category characteristics. For example, the back-to-school season brings a wave of stockpiling, so it is a good time to increase investment in daily necessities like toilet paper, laundry detergent, shampoo, and body wash. By purchasing displays and doing outdoor events, you can increase exposure of high-profit products and achieve high conversion. After this wave fades, reduce investment in stores, maintain the basic business, and occasionally do special promotions on old-date or slow-moving products, spreading the word through campus walls and social groups. At the same time, source some beverages externally to make up for the decline in sales during the off-season.
Third, if profits are poor, fight for displays and adjust product structure
In a stock or even shrinking market, growth comes from "grabbing." Facing declining foot traffic, how to achieve high conversion of consumers who enter the store is key to increasing sales. Consumer demand is fixed, whoever can grab good shelf positions and displays in the limited shelf space has a greater chance of selling their products. But the display area in campus stores is ultimately limited, and they cannot have as many promotional slots as hypermarkets to boost sales; most of the time, they rely on natural traffic. To further ensure profit maximization, distributors can use store sales data to update and replace products, reduce products with low self-purchase rates, and while controlling the share of big single products, introduce new high-margin products as supplements.
Fourth, deeply bind with stores and provide one-stop product solutions
In today's uncertain business environment, to further reduce procurement and sales costs, stores have higher requirements for suppliers' product selection and supply chain capabilities. What products sell well? What products can make money? Is the inventory complete? To deeply bind with stores, you must meet their needs for low prices, good sales, complete inventory, and convenience. Based on channel characteristics and consumer needs, organize product assortments with final sales and profits as the guide. Provide stores with a richer selection of products and brands. By solving store needs and helping them increase sales, it will naturally feed back into business growth.
Fifth, adapt to changes and explore other growth points
Campus store sales are declining, but consumer demand is constant. It is understood that many universities are developing on-campus mini-programs and dormitory supermarkets, mostly operated by students, providing delivery services to students' doors to meet immediate needs. Although the volume is small, the advantage is low operating costs and a certain markup rate, which can to some extent make up for the gap in store sales.
Final Thoughts
In the past, we thought campus channels were relatively closed, and for distributors, such closed channels were indeed a good business. But now, the winning strategy of relying on special channels or any single channel has failed. To survive in increasingly fierce competition, in the end, you have to "rely on your own abilities." To keep moving forward, you must spend more time and energy thinking about this business, keeping up with trends, broadening channels, and competing for market share.