Editor's note: Business opinions have positions. "Guides must die for supermarkets to live" is no exception. From the manufacturer's standpoint, they don't want guides to disappear and don't believe they will, as guides are unilaterally beneficial to them. From the supermarket's standpoint, guides are a chronic poison. Guides have contributed to the current difficulties and bitter fruits of supermarkets. Guides are beneficial in the short term but harmful in the long term for supermarkets. Guides themselves are innocent, but the business model they represent is toxic. The essence of guides is: manufacturers pay various fees, and supermarkets cede the front-of-store stage to manufacturers, at the cost of interfering with consumers' freedom of choice.

01 The earliest guides to disappear were those stationed by baijiu and beer companies in restaurants. After the rise of the "plate-in-plate" model for baijiu terminals, "buying stores + guides" became the standard practice. Restaurant guides were once a massive team. At one time, a certain baijiu brand had tens of thousands of guides nationwide; a certain national baijiu operator maintained a guide team of about 5,000 in supermarkets year-round, exceeding 10,000 during the Spring Festival. The direct consequence of the "plate-in-plate" model was the rise of "bringing your own liquor" for mid-to-high-end products, leading to the collapse of this terminal model. Consumers bringing their own liquor was forced, and guides played a part in it. Why did the "plate-in-plate" model collapse? Because it was harmful to consumers. Buying stores meant that one or several brands monopolized the terminal. With terminal monopoly, consumers had no choice. After buying stores, manufacturers stationed guides who used various "techniques" to guide and persuade consumers. Baijiu consumption is inherently about face. In such scenarios, under the guidance of guides, consumers were "forced" to make reluctant choices. Over time, consumers "rebelled" by bringing their own liquor. The "plate-in-plate" model was unfavorable to consumers but favorable to manufacturers and restaurants in the short term. A unilaterally beneficial model cannot last. With the prevalence of "bringing your own liquor" and the collapse of "plate-in-plate," weren't guides accomplices? What is harmful is not the guides themselves, but that guides became part of the toxic marketing model of "plate-in-plate." Guides are innocent, but the marketing model they rely on is toxic and cannot last. Along with restaurant guides, baijiu as a source of restaurant income also disappeared. In the past, no matter what promotions restaurants did, "baijiu and seafood were never discounted."

02 Guides are a Chinese characteristic, rarely seen abroad. Terminal interception, which interferes with consumers' free choice, how could it thrive? For both manufacturers and supermarkets, guides have been part of the basic business model for a long time. Without guides, this business model would not run efficiently.

  • For manufacturers, this model is deep distribution and terminal interception.
  • For supermarkets, this model is the back-end profit model. These two models have perfectly matched and formed the stage-specific characteristics of Chinese commerce. Both are outdated business models. To explain the demise of guides, we must start with these two models. The demise of guides is the demise of traditional business models.

03 As part of manufacturers' channel strategy, guides are a component of leading brands' supermarket strategy. After deep distribution comes terminal interception. Terminal interception has three major actions: buying terminals, terminal interception, and supermarkets driving circulation. For FMCG leading enterprises, this strategy is deeply ingrained. Buying terminals means purchasing the best displays and end caps in supermarkets, then concentrating displays to showcase brand power. This strategy was initially used in supermarkets and has now extended to slightly larger snack stores. By raising terminal barriers, weak competitors are excluded from terminals. That is the logic of this model. Buying terminals only provides traffic potential; only guides' "terminal interception" can convert traffic. This role was earlier called promoters, now guides. The result for leading brands is that doing business in supermarkets is not profitable. Why invest so much manpower and policy if it's not profitable? Because of "supermarkets driving circulation." Although supermarkets are not profitable, they can drive circulation, which is the truly profitable channel. For old brands, this logic still works; for new brands or new products from old brands, it is ineffective. Paying back-end fees to buy terminals, guides intercepting users at the front, supermarkets driving circulation—for manufacturers, this is a positive cycle. Apart from dissatisfaction with rising back-end fees, there seems no harm to manufacturers. If marketing had not evolved, and if the back-end profit model still worked, leading FMCG brands would still have strong willingness. So, leading FMCG manufacturers are unwilling to admit that guides are about to disappear. Look at the personnel structure of leading FMCG brands: hundreds of dealer management staff, thousands of distribution staff, and tens of thousands of guides. Of course, these numbers vary by industry scale. Additionally, some guide teams belong to manufacturers, others to dealers. Although ownership differs, they play the same role. What is dying is not the guides themselves, but the entire terminal marketing system on which they depend.

04 What truly affects the survival of guides is the "awakening" of supermarkets. Chinese supermarkets are a wonder of world commerce: the oddity is that the world uses front-end profit models, but Chinese supermarkets use back-end profit models. Walmart insisted on the "front-end profit model" for a long time, resulting in its early development in China lagging behind Carrefour, then Walmart was forced to change, verifying "bad money drives out good." Simply put, the front-end profit model is: suppliers provide good products, and supermarkets handle sales. Supermarket profits come from product markups. The back-end profit model is different: supermarkets collect back-end fees (various entry fees, display fees, promotion fees, etc.), then "rent out" counters (displays, end caps, etc.) short-term, and manufacturers complete display, guiding, and promotional sales. Supermarket profits mainly come from back-end fees. The essence of the back-end profit model is to cede the front (store) to suppliers (manufacturers, dealers, etc.), making the front a stage for manufacturers. When the front becomes a stage for manufacturers, the role of guides becomes very important. Without guides, it's like having a stage but no actors. Collecting back-end fees and giving up the front stage—the advantages and disadvantages of the back-end profit model are both here. On the front stage, the protagonists are guides. Guides play three major roles: one is merchandising; two is terminal interception and traffic diversion; three is guiding to expand sales. In the current terminal system of manufacturers, guides are indispensable. By collecting back-end fees, supermarkets simplify their role and ensure profits. Of course, harm follows. But in the early days of rapid supermarket development, the danger was masked. Although the back-end profit model is toxic, the danger of chronic poisoning is not visible early. Manufacturers pay fees and gain the front stage, thus having opportunities for performance. This is absolutely beneficial for leading FMCG companies. So, although leading companies complain about high supermarket fees, they actually simplify supermarket competition; no matter how high the fees, leading brands are willing to invest. Is terminal interception harmful or beneficial to consumers? Overall, the benefits are explicit, and the harms are implicit. But the interference of guides with consumers' free choice during shopping has aftereffects. It's common to listen to guides on-site and regret it at home. The emergence of "bringing your own liquor" for baijiu is an extreme consumer rebellion, but no one in the marketing community has reflected on it. The interference of guides with consumers' free shopping behavior in stores will slowly accumulate and cause a qualitative change. The "awakening" of supermarkets is that the back-end profit model can no longer continue.

05 Retail is very difficult now. Some say retail's difficulties are due to e-commerce; others say the way out is new retail. Whether new retail is the way out is still being tested, with no conclusion yet. Traditional retail is toxic and riddled with diseases, which is a consensus. The cause is the back-end profit model. Taking back the front that was ceded to manufacturers, making the store not a stage for manufacturers but a stage for supermarkets themselves, and no longer letting guides interfere with consumer shopping—this is an inevitable trend. I am not a retail expert, but I have immature observations. Through observing excellent enterprises like Xuchang Pangdonglai and Yichang Yasi, I roughly summarize retail transformation in four phrases: scenes attract traffic, experience enhances conversion, bC strengthens relationships, and private brands generate profits. This is a return to the front-end profit model.

[Return to the front-end profit model]

· Scenes attract traffic · Experience enhances conversion · bC strengthens relationships · Private brands generate profits

Scenes attract traffic. Make the store scene-based, immerse consumers in scenes, and let scenes awaken needs. In the internet age, when orders can be placed anytime and anywhere, scene-based need awakening is crucial. Less transaction color, more life scenes. Awaken consumption needs in scenes. This is the core of scene-oriented marketing. Experience enhances conversion. Only do experience, not sales. Otherwise, stores will warn. This is a new practice of some retail enterprises. I believe this practice will be quickly promoted. Even if manufacturers send store personnel, they can only do product experience, not interfere with consumers' shopping behavior. bC strengthens relationships. That is, through bC integration, strengthen the relationship between stores and users. Private brands generate profits. Private brand profitability is Pangdonglai's unspoken secret and the main profit model of retail in developed countries. Not only large supermarkets should launch private brands, but medium-sized supermarkets should also jointly launch private brands. For example, the private brand of "Ant Alliance," a consortium of 102 supermarkets with sales over 200 million each, is very successful. The more well-known the brand, the harder it is to earn retail profits. By reasonably combining well-known brands and private brands in stores, expand private brand sales. Because private brands have higher retail gross margins, they will become the main profit method for future retail. With the emergence of private brands, concentrated displays of well-known brands are harmful to supermarkets. Using well-known brands to attract traffic and private brands to generate profits will become the front-end expression of supermarkets. Therefore, with private brands, supermarkets will inevitably no longer let well-known brands be the protagonists at the front. The above four points, the core is "no longer ceding the store stage to manufacturers," and the result is the disappearance of the guide role. Of course, industry transformation has a long transition period. The back-end model is harmful, as has long been concluded. But the formation of the front-end model is not something a single retail store can change alone. Tradition is an ecosystem, and transformation is a collective transformation of the ecosystem. At the same time, what dies is not the guides themselves, but the entire ecosystem of manufacturers and supermarkets. "Guides must die for supermarkets to live" is a business opinion from the supermarket standpoint.

06 Having been in marketing for 30 years, I have predicted and witnessed the demise of a series of marketing roles. This is inevitable in marketing evolution. Since 1998, I witnessed the demise of the "salesman" role, replaced by the rise of the "sales representative" role. Since 2014, I predicted the demise of the "sales representative" role. Now only small and medium enterprises have sales representatives; leading enterprises have replaced them with "distribution staff" as the main body. Since proposing the bC integrated digital transformation concept in 2019, I predicted that "distribution staff" would also die. Twenty years ago, observing foreign supermarkets and finding no guide role, I began to think: why does China have this role? In 2010, observing Pangdonglai, I saw that its private brand was the core of its core, and felt that "private brands" were the biggest opponent for manufacturers. About four years ago, I felt that the existence of guides was really too dangerous for supermarkets. Two years ago, I saw that some stores no longer allowed "guides," replacing them with roles like "experience officers." The demise of most marketing roles is an inevitable result of continuous marketing evolution. Because marketing functions change, positions change, and original positions disappear.

07 FMCG guides will definitely die. Because guides are generally a "harmful" role, especially manufacturer guides. Of course, some industries will still have guides, such as car sales and clothing sales. But guides must be merchant-oriented and serve the overall profit of the merchant. The problem with Chinese guides is that they serve brand owners and are paid by supermarkets. Thus, the service purpose easily shifts from maximizing consumer interests and supermarket profits to maximizing brand owner profits. Who do guides harm? They harm consumers and terminals. Of course, the harm to consumers is implicit. No one does things that are harmful and unprofitable. Guides are beneficial to manufacturers, especially in the short term. The harm is chronic, and the benefit is immediate. This is why guides have existed for a long time. When the harm accumulates to a certain level, it directly leads to the disappearance of the position. Guides are toxic, but guides are innocent. From the supermarket perspective, guides must die for supermarkets to live. The front-end profit model for supermarkets is taking shape. From the manufacturer perspective, the disappearance of guides means the terminal model is outdated; what is the new model?

Source: Teacher Liu's Digital New Marketing (ID: liuchunxiong1964j) Author: Liu Chunxiong