As the 2016 Mid-Autumn Festival approaches, distributor Sister Wang is not feeling the usual joy. As a major distributor in a second-tier southern city, she used to achieve annual sales of over 100 million yuan, typically completing 50-60% of her annual target before the festival, sometimes even 70-80%. Now, she hasn't even reached 35% of her target, and with the festival imminent, shipments show no significant improvement.
As the general manager of her trading company, Sister Wang's concerns go beyond declining sales and profits. Having accumulated initial capital during the high-growth years, her main worry now is the declining morale of her team. Previously, at this time, salespeople were eager and unstoppable, working overtime to deliver goods, and arguments over grabbing stock were common when manufacturer shipments arrived. Now, they can't be bothered, and many are leaving to become micro-business entrepreneurs or start their own ventures.
Perplexed, Sister Wang sought my advice. As a 17-year veteran in FMCG, having participated in a company's turnaround from near bankruptcy to over 10 billion yuan in annual sales, I have some insights.
Instead of offering quick fixes, I first shared an undeniable reality: although China's economic downturn is nearing its bottom in 2016, the bottom is not the flat L-shape many imagine, but rather wavy, possibly even a deep squat. The industries most likely to experience a deep squat are traditional ones like milk, beverages, water, biscuits, ham, and instant noodles.
First, consider separately: if the ham and instant noodle industries cannot offer green, healthy, or clearly upgraded products that consumers accept, their decline will be rapid and far from bottoming out.
The water industry will see differentiation: water priced above 2 yuan, especially with new concepts or nutritious origin, is on the rise. Water below 2 yuan is mostly on promotional pricing, with flat or declining sales.
Milk and beverages are theoretically consumption trends, but even experts' claims that drinking milk daily strengthens the Chinese or that plant protein replaces animal protein cannot stem the slowdown in consumer demand. Just look at what's on daily special in supermarkets or what's piling up in distributors' warehouses.
But not all FMCG sectors are declining. For instance, Yili's Ambrosial, Bright's Moxilian, and imported pure milk are rising, and Mizone and Xiaoming Classmate show significant growth. So what should distributors, who bridge manufacturers and terminals, do? Teacher Yipian Xiaozhou believes that to safely navigate this phase and thrive in the next boom, distributors should focus on four aspects:
Conduct a deep review of your product portfolio: identify cash cows, stars, dogs, and question marks. Develop different strategies for each, and decisively eliminate dog products.
After the review, confirm which products to keep and communicate with manufacturers to gauge their attitude and actions. If the manufacturer is heavily investing in a product or it's their star product, align your strategy accordingly.
Personnel deployment: once products and manufacturer directions are clear, optimize your team structure. Decide whether to merge roles, increase investment in certain areas, and ensure the right people are in the right positions to maximize performance. In a downturn, performance (i.e., sales) is everything; without it, all else is empty talk.
Determine strategy and tactics: with the team in place and strategy set, use appropriate tactics to activate the market and create a thriving sales atmosphere.
If distributors do all the above, there's no guarantee of huge gains, but if there are still distributors making money in the market, it will be your trading company. When the economy recovers and grows, the one who laughs will be you, who planned ahead.
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