Terminals are where products and consumers complete transactions. As the name implies, they are the final port of the supply chain. For distributors, terminals are platforms for product display and layout, and the best places to observe market changes and maintain consumer engagement.

Now, as industry changes accelerate, distributors should better understand the composition and characteristics of terminal channels in the current market. Only by mastering the most real-time and in-depth terminal information can distributors review their channel structures, arrange their strategies, and discuss optimal terminal layouts before each new marketing season.

In the current market, terminal channels are generally divided into the following six categories:

1. Hypermarkets Hypermarkets include warehouse-style stores (over 10,000 square meters), A-class stores (over 5,000 square meters), and chain or independent self-service retail stores. These stores are characterized by spacious premises (over 1,000 square meters), more than 10,000 product types, and the sale of clothing, home appliances, durable consumer goods, etc. They use sales techniques to attract bulk purchases, adopt low-profit policies to ensure high volume, and typically have more than 10 checkout counters. Representative examples include Walmart, RT-Mart, Metro, and domestic stores.

Advantages of this channel: Located in prime business districts, high foot traffic, standardized management, suitable for generating sales and enhancing brand image.

Disadvantages: High costs, long processes, long payment terms, and intense competition from similar products. Many traditional distributors admire the sales capability of hypermarkets but are deterred by high operating costs, hesitating and sighing. In fact, the function of large stores should not be interpreted in a single dimension; their considerable sales volume is achieved through "channel resonance." Channel resonance refers to maximizing marginal sales over a certain period by combining the rich displays and consumer communication methods of the store with the long-term cultivation of consumers through traditional small stores and other channels.

In simple terms, the specific approach is divided into five steps:

Step 1: Observe. Examine three factors: Product attributes — Does it form household consumption habits? Timing — Has it achieved exposure breadth in traditional small stores and other channels? Has it formed consumer purchase habits in traditional small stores and other channels? Relationship — Do you have enough SKUs in the store system? Are you familiar with the operating procedures and habits of the department? Do you have enough say?

Step 2: Listen. Observe the operating status, prices, promotions, and consumer acceptance of competing products in the target store. At the same time, determine whether to follow or squeeze based on the competitive situation.

Step 3: Ask. First, ask the manufacturer if there is reasonable fee subsidies or operational guidance, and whether there are plans for brand promotion in this channel. Second, ask the store about deductions and fees. Then analyze your own profits and make decisions.

Step 4: Diagnose. First, diagnose the manufacturer — Based on its previous traditional channel operations and brand investment, determine whether it has the determination for sustainable operation; otherwise, do not enter hastily for short-term gains. Second, diagnose the store — Based on its ability to sell fresh and short-shelf-life products, judge its business capability, and thus decide whether to enter and which store to enter.

Step 5: Negotiate entry. Based on product characteristics, sales expectations, cost investment, and store requirements, gradually unfold negotiations. Due to space limitations, details are not elaborated here.

2. Convenience Store Chains This terminal channel model primarily consists of chain-operated self-service stores. These stores sell a limited range of goods, typically with a small area (under 100 square meters), about 1,000 product types, open 24 hours, with at least two freezers, automatic cash registers, and good lighting in doors, windows, and showcases. Representatives include 7-Eleven, C-Store, etc.

Convenience store chains and hypermarkets belong to the modern trade, with similar characteristics and operating strategies, so they are not elaborated here.

3. Medium-sized Supermarkets Medium-sized supermarkets are also known as B-class supermarkets, single-store supermarkets, independent supermarkets, or medium-sized grocery and department stores. The store area is 300–1,000 square meters (chains with fewer than 5 stores), with 3,000–10,000 product types, and typically at least 3 checkout counters.

In the traditional trade, medium-sized supermarkets are A-class channels with strong selling capability. Although they also have fees, they are more reasonable compared to hypermarkets and large supermarkets, making them more attractive for distributors and companies to cooperate and enter.

In addition, because the entry threshold for this type of terminal is relatively low, a tiered fee policy can be adopted, allowing the sales team to handle entry or distribution, with an optimal maintenance cycle of twice per week.

4. Small Stores In the practical terminal operations of the FMCG industry, practitioners often refer to stores under 200 square meters, such as tobacco and alcohol grocery stores, grocery and department stores, mom-and-pop stores, balcony stores, station and dock stores, noodle and fast-food restaurants, snack shops, and even mobile stalls, collectively as small stores. Although small stores are small, they cannot be ignored. The sales share of a single small store is almost negligible, but the cluster effect of small stores is huge and difficult to estimate. The marginal sales, brand marginal effects, and marginal profits brought by each new small store are the most important factors for distributors to consider.

However, for distributors, distributing to small stores is a troublesome matter. Vehicles, personnel, strategy, timing, and execution logic are all indispensable. If any link has a problem, it will affect the overall process. (There will be a dedicated article on distributor distribution work later, so I won't elaborate here.)

For these small stores scattered across every corner of the country, distributors are reminded to maintain orderly actions and prioritize layout. Generally, at the beginning of the marketing season, distributors need to race against time and grab territory, as speed is crucial. But at the same time, they must follow the concept of "80% of resources concentrated on attacking 20% of key stores." Once successful, it yields twice the result with half the effort. The remaining 80% of stores can be taken down step by step without haste.

5. Catering First, correct a misconception: do not treat snacks, fast food, or even late-night temporary stalls as catering channels.

The catering channel here refers to hotels with scattered seats, private rooms, or distinctive features. Because their operating hours differ from grocery terminals, they often start work near noon and close late at night. Therefore, the catering business team of distributors must adjust their work schedules accordingly.

The characteristic of this channel is that the product premium rate is between 50% and 200%. For example, JDB (a herbal tea brand) normally sells at 3.5 yuan per can in grocery terminals, but in catering terminals, the retail price is often 6–10 yuan. In some higher-end restaurants, it can even be sold at 15 yuan per can. This requires distributors to fully consider entry conditions and policy adjustments during negotiations.

6. Special Channels Special channels, also known as special trade or closed channels, refer to channels that do not primarily sell the target product. For example, internet cafes, bath centers, KTVs, and other entertainment venues. The common feature of these channels is that retailing goods is their sideline, but because the target consumer group matches well, they are actually efficient channels for target products.

These channels cannot be ignored; their driving effect and marginal effects are the best in the channel system. It is no exaggeration to say, "Doing special channels is doing brand building"!

However, for distributors, operating special channels requires high professionalism in negotiation and maintenance. Therefore, it is recommended that distributors establish a professional special channel team and try not to draw personnel from the traditional channel team to operate in this area.

Reprinted from: Food Edition

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