"After delivering goods worth hundreds of thousands to XX hypermarket for a year, I didn't receive a single cent. At year-end, they sent a reconciliation letter saying that after deducting the payment, we still owe them **10,000 in fees." The distributor held the reconciliation letter, both angry and helpless. It sounds unbelievable, but it truly exists. Distributors work hard all year and end up losing money. When it comes to hypermarkets, both manufacturer sales reps and distributors shake their heads. Now that hypermarkets are gradually exiting, everyone is clapping in approval. A distributor who has cooperated with multiple hypermarkets lamented: "In the past, as an agent for XX brand, I saw the true colors of X-hui and XX-fu, and X-yijia. I just want to say they deserve to go bankrupt. If you supply a product at 10 yuan, selling below 20 yuan means a loss. Payment terms start at 3 months, some half a year, with various unequal treaties. Forget it." Indeed, manufacturers and distributors have suffered from hypermarkets for too long! Why are hypermarkets disliked by manufacturers and distributors? A decade ago, hypermarkets were the darling of the FMCG industry. With high foot traffic, complete product categories, and standardized displays, they were the go-to for daily shopping. For FMCG manufacturers, hypermarkets were a testament to brand strength. Whether they could enter top hypermarkets and secure core displays was the benchmark for brand market position. Therefore, manufacturers and distributors were willing to bear entry costs and cooperate with store promotions, relying on hypermarket traffic for brand exposure and sales growth. At that time, cooperation was mutually beneficial. Later, as hypermarkets grew rapidly, the various fees paid by manufacturers also rose. Eventually, hypermarket sales declined, but fees were hard to reduce, even exceeding the value of goods. To maintain profit growth, hypermarkets intensified their exploitation, "sucking the blood" of manufacturers and distributors. Many entered hypermarkets only to lose money. 1. Hypermarkets have numerous fees; before any sales occur, huge investments are required. Initially, there's an entry fee. After entering, you can't sell yet; you must pay a barcode fee per SKU. Every new product requires another payment. After paying the barcode fee, you still need to pay display fees, or your products will be left in the warehouse or a corner to gather dust, only to be returned to the distributor or manufacturer after nearing expiration. Even with displays, you must run promotions; otherwise, competitors will, and you'll have no sales. Promotion costs are borne by the brand, and if you can negotiate a 50-50 split, that's considered generous. But you think that's it? You also have to pay for poster advertising. A manager from a leading dairy manufacturer said: "For one promotion, a single SKU costs 20,000 yuan in poster fees. Two SKUs cost 40,000. If you don't pay, the buyer deducts it directly from the payment." Of course, these fees are tailored; top brands with high sales are charged more to maximize profit extraction. 2. Fees are required to increase year after year. "Next year's contract rebate must increase by 1.5 percentage points, and the barcode fee per SKU will rise by 2,000 yuan..." The buyer gets straight to the point. The manufacturer's sales manager cautiously says: "The company requires no increase in contract rebates; otherwise, I can't get the seal. How about this: for each promotion slot, we can add 5,000 yuan to the poster fee." Fees must increase annually. If the brand disagrees, the hypermarket stops stocking. A regional distributor for a daily chemical manufacturer, facing a fee increase from a local old-brand hypermarket, had to plead with a smile: "Manager Li, this fee has more than doubled. I really can't bear it. I'd lose half a year's profit!" "I've helped you achieve so much sales; this fee is nothing," the buyer said firmly. The distributor's appeal was futile. They either accept the high fees or get delisted and exit, losing all bargaining power. 3. Most infuriatingly, hypermarkets later turned to outright robbery. During holidays and store anniversaries, to attract traffic and boost performance, hypermarkets unilaterally cut prices and demand brands bear the price difference. The manufacturer manager said: "I told you we're not participating in your promotion; the company doesn't allow such low prices." "This is a unified store-wide annual marketing task; all brands must support it, or we won't cooperate." Despite multiple communications stating non-participation, non-authorization, and non-approval, the hypermarket pressured with "unified annual marketing tasks, all brands must support." If they didn't accept the deductions, products would be delisted and annual cooperation terminated. Brands and distributors were forced to compromise. At year-end, when brands or distributors saw the statement, they were shocked by the numerous deductions. "Initially, they wouldn't provide a detailed breakdown, saying it was exported from the system. After much communication, they agreed to give details. Checking item by item, we found many fabricated fees. When we confronted the buyer, they'd remove them. If you don't ask for details or check carefully, they assume you agree." "Every statement from XX Gao has over-deducted fees," a distributor for a major manufacturer said angrily. "We have to check every item, deliberately wasting our energy. This is outright robbery." Another distributor revealed: "For promotion deductions, the sales data they provide is in Excel format. In other words, if they alter the data, you have no evidence, so you have to suffer in silence." 4. Payment cycles get longer, dragging distributors down. A FMCG distributor, supplying a local chain supermarket for a long time, had over 400,000 yuan in payments overdue. Repeated reconciliations and payment demands were endlessly delayed and evaded. "Profit margins are thinning. With your 400,000 yuan in payments, I've been covering costs with my own capital. Now I can't even afford the next batch of goods. If this continues, I really can't go on," the distributor pleaded. Many distributors are trapped by large bad debts, their capital chains completely broken. Combined with years of fee deductions and inventory backlog, they can't sustain operations, leading to extreme tragedies—a true microcosm of countless small and medium distributors being squeezed by hypermarkets. Why are hypermarkets becoming more outrageous, even unscrupulous? With declining foot traffic and profits, hypermarkets shift performance pressure onto manufacturers and distributors, demanding profits from brands without regard for their survival.
Why can hypermarkets control brands?
In the early days, hypermarkets had high traffic and sales, giving them more bargaining power. To maximize their own interests, they exploited brand partners. Twenty years ago, the negotiation manual leaked from Carrefour, then at its peak, showed how hypermarkets invested heavily in "how to extract greater benefits from brands." If brands didn't meet their demands, they'd compare with competitors, threaten to delist, or give the cold shoulder until brands relented. Other hypermarkets rushed to learn from Carrefour's manual, even going further. I. Exploiting brands' need for prestige. In the FMCG industry, hypermarkets are not just sales channels but also showcases of brand strength. The industry's unwritten rule is that if you can't enter top hypermarkets, you're not a major brand. "Hypermarket shelves, end caps, and displays are our most direct brand exposure. We must secure them at all costs," a senior manufacturer leader demanded. Moreover, when senior leaders inspect markets, hypermarkets are must-visit sites. In a regional market for a leading dairy brand, a dispute over contract terms with a local hypermarket led the regional manager and distributor to voluntarily stop supply, even at the cost of missing targets, to save face. Soon, a senior leader inspected the market and visited the hypermarket, finding only a few products on sale. He asked the regional manager, "Why do we have so few products here?" "Because the hypermarket wanted to increase fees, and we couldn't agree, so we stopped supplying." The leader instructed: "Sales should be win-win, not confrontational." Because of this, regional sales and distributors dare not confront hypermarkets and are forced to accept unreasonable terms. The leader's core logic: Hypermarkets are the brand's facade. Better to lose money maintaining brand image than to cut supply and lose market momentum. Thus, even at a loss, brands must maintain displays, supply, and promotions, not daring to cut supply or exit. II. Exploiting performance assessment pressure, tying it to salespeople's careers. Both manufacturer sales reps and distributors have hard sales targets monthly and quarterly. In earlier years, hypermarkets were a major source of brand sales. Hypermarkets exploit this, using sales targets as leverage: if you don't accept their terms, they marginalize your displays, reduce shelf space, and cut orders, directly impacting your performance. "XX hypermarket accounts for 30% of my annual sales. If there's a significant fluctuation, my annual target is at risk, and my job next year is uncertain," a manufacturer sales rep said. Failing to meet targets means demotion or elimination for sales reps, and loss of channels and market share for distributors. No one dares take that risk, so they keep compromising, letting hypermarkets have their way. III. Introducing competition to create internal strife. Another core tactic is never forming deep partnerships with a single brand, deliberately fostering competition and internal strife among brands, reaping the benefits. The reason is simple: shelf space and promotional resources are limited. Hypermarkets intentionally bring in multiple competitors in the same category, creating an atmosphere of scarcity. Whoever pays more fees and bears more promotion costs gets better displays and resources. When brands negotiate, buyers use a standard line: "Your competitor has fully covered all promotion and display fees. If you don't cooperate, we'll replace you with them." They pressure brands with competitors' policies, forcing them to concede and increase investment.
In summary, hypermarkets can unscrupulously squeeze manufacturers and distributors because they precisely exploit brand needs, target business pain points, and actively provoke competition among brands.
Hypermarkets are becoming increasingly useless for brands. The FMCG industry today is vastly different from a decade ago. Online business is booming, new scenarios are emerging, and hypermarkets are declining. Once the core channel for traffic, growth, and brand endorsement, hypermarkets now face traffic exhaustion and sluggish sales. They retain only weak brand display value but still charge peak-era high fees, making the value-cost ratio severely mismatched and the channel completely useless. At this point, brands have built a diversified channel matrix and can confidently say "no" to unreasonable hypermarket fees. "Hypermarkets are reducing fees; barcode fees and anniversary fees are gone. Since hypermarket sales account for a low proportion, if we lose money, we simply stop cooperating," a manufacturer manager told me. The essence of business cooperation is mutual benefit. A one-sided exploitative model is doomed. The lesson for FMCG brands is to avoid over-reliance on any single channel and build a diversified channel matrix. Only with channel diversification can you take the initiative in the market.