On April 6, in Chengdu, China, the 8th China FMCG Innovation Conference opened grandly as scheduled! Zhao Bo, founder of New Distribution, delivered an opening speech and gave a brilliant presentation titled "How Can the FMCG Industry Break the Deadlock Amid Involution?" He analyzed the constant factors affecting the market and how the FMCG industry can break through, focusing on the business environment. What environment are enterprises facing? Today, what kind of environment are enterprises facing? We need to look at this from a micro perspective, that is, from the product or brand perspective. Clayton Christensen discussed an important topic in Competing Against Luck: Consumers buy our products to "hire" us to solve their problems. This is the basic premise and starting point of all marketing. On this basis, a successful brand exists to provide customers with an indispensable solution in a specific scenario and to establish an effective marketing tradition for it. Given the above, let's look at what business operations are. We believe that business operations are like a coupled system where any "gear"—such as sales, product, scenario, production, or channel—must keep rotating and meshing precisely to achieve success. During operations, business decision-makers constantly adjust their operational ideas. Therefore, the biggest problem is not internal operations but the external environment. A company is like a car: when driving, it not only needs an internal engine, wheels, and steering wheel, but also external roads and weather. So what is the external weather? Constants and variables. They are important factors determining how fast we can run. Here, "constants" refer to supply and population, while "variables" refer to the economy, international environment, and supply chain. The internal perspective is controllable, but external variables are uncontrollable. Constants cause huge market changes Changes in constants have led to many differences in today's business environment. Constant changes can be divided into supply and population: 1. Population From a demographic structure perspective, the total population is declining, aging is deepening, and China's urban population is larger than the town population. After the emergence of Generation Z, typical consumption characteristics include lack of meaning and emotional consumption, leading to different behavioral decisions. From a consumption behavior perspective, China's centralized consumption has officially ended. The consumer market has begun to show diverse demands, with a large number of emotions such as emotion, health, social interaction, and addiction emerging. Second, K-shaped consumption has emerged. On one hand, people dress well, but internally they are "Pinduoduo." In recent years, a large number of discount stores and snack bulk stores have appeared, and Pinduoduo has grown significantly. When brands remain unchanged, people tend to consume rationally, but at the same time, it also brings high-end consumption, creating a huge conflict. Then there is omni-channel consumption, integrating online and offline, and integrating cognition, transaction, and relationship. It has changed from a single offline channel to a multi-dimensional channel, and the challenges brought by the upgrade in channel dimensions are also significant. In terms of consumer cognition, based on massive information supply, consumers have delegated their choice rights. Because of the massive amount of information, many of our choices must be left to algorithms. Consumers' experience threshold has risen; ordinary materials and ordinary emotional value can no longer bring emotional satisfaction to consumers. 2. Supply In terms of supply, massive information supply has led to information overload. Information equality and super apps have brought island-chain communication, and algorithm-driven information cocoons have become significant social issues today. The emergence of new technologies such as personalized recommendations, precise matching, choice delegation, and virtual and augmented reality has brought huge challenges to the consumer industry. Looking at products, infinite shelves have brought infinite supply, causing consumers to face a large number of choices. The category structure of channel innovation has changed, with a large number of fresh/low-preservation/short-shelf-life, organic/zero-additive products appearing. Physical retail, social private domain, online e-commerce, and interest e-commerce coexist. Changing from a one-dimensional channel to a three-dimensional channel is not simply an increase in quantity but an increase in dimensions. In addition, the integration of online and offline and urban integration has increased, posing huge challenges to enterprises. Finally, the supply chain, today's technological iterations, digital intelligence, online automation, and numerous optimizations in models such as routing, consolidation, and short-chain have led to a trend of one increase and one decrease in the entire market: the total number of distributors is decreasing, while the scale of individual distributors is increasing. Overall, constant changes have brought about severe involution. Although the pandemic has ended, competition has not decreased. Due to reasons such as China's aging population, opportunities for quantitative growth have disappeared, but structural market opportunities still exist. So how should FMCG enterprises break the deadlock? The only opportunity is innovation. Innovation is the only opportunity Where are the innovation opportunities? The aging population, the emergence of new consumer groups such as small-town youth and small-town socialites, and their consumption logic are different from the past. Consumers' aspiration for a better life, quality upgrades, innovations in supply chain models, distribution models, and the emergence of many new scenarios all present opportunities. Changes in consumer emotions and changes in content, social, and value systems bring new market opportunities. We see that in recent years, many new consumer brands have emerged, and the underlying logic is to satisfy consumers' emotional expression. Finally, continuous optimization, iteration, and disruption in technology still present many opportunities. Under the changing environment, enterprises, as coupled operating systems, constantly change internally and externally, and through the continuous PDCA cycle, they complete their business operations. But this cannot be separated from two changes: one is variables, and the other is constants. Constants are the biggest changes that leverage the entire market. This year's constants, derived from changes in population and supply, have given rise to many things that were done in the past. We need to look from a higher perspective. How can China's consumer goods break the deadlock? The answer is "innovation." Therefore, our conference is named [China FMCG Innovation Conference]. I believe that in the next five to ten years, this is a topic that all enterprises must face. To grow, you must innovate; to survive, you must innovate. PS: For those interested in the on-site speech content, please follow the recent posts on the WeChat official account of New Distribution. We will compile and publish all speakers' speeches for readers. Click Read Original to see more highlights of the 8th China FMCG Innovation Conference...