According to Nielsen data, from January to August 2024, the overall FMCG all-channel growth rate was 2.6% year-on-year, a relatively slow growth rate. Except for water, beverages, and alcohol, other categories showed negative growth in offline channels. The chart below shows the operating data of 302 medium and large distributors nationwide in the first half of 2024. (This data is a small sample and is for reference only.) Combined with the overall FMCG growth rate and distributor operations, almost all FMCG categories are declining, indicating a stagflation period. This inevitably makes distributor bosses question whether this business can continue, whether to switch to other industries, whether to continue representing first-tier brands with thin profits, and whether good service to downstream customers can help grow the business. How to help? Such questions plague distributors. Facing the stagflation period of the FMCG category, what should distributor friends do? This article discusses from four dimensions: upstream and downstream of distributors, internal operations, and distributor bosses. Upstream | Be with the "strong" Upstream | Be with leading strong players. Distributors often report that first-tier brands have thin profits, and any slight misstep in operations could lead to losses. However, during economic downturns, first-tier brands of leading companies can ensure their sales volume, keeping the overall market stable. At the same time, during industry stagflation, leading companies have more capital and strength to lead distributors through the downturn. Condiment industry | A certain condiment company Strong support. A certain condiment company is deepening its channel reform to support and assist distributors, and its distributor channels are expected to grow steadily. In 2024, the company will continue to deepen its strategy of supporting and assisting distributors:
(1) Expand the scope of exclusive distributors, deepen distributor binding through 3-5 year long-term contracts, and enhance distributor enthusiasm; (2) Strengthen distributor alliance organizations, organize quarterly distributor exchanges, and improve the system for sharing distributor experiences. (3) Optimize and clean up distributors with low activity and fit, and concentrate resources to help high-quality distributors grow stronger and bigger. Civil electrical industry | Bull Group Strong guarantee. Bull Group adopts a regional agency system for its socket products nationwide. To protect the value chain of multiple parties, Bull Group uses prefecture-level cities as units, with only one agent per city. The agent supplies all terminals in the region and cannot cross regions or change prices. This ensures that the entire distribution layer enjoys high profit treatment compared to industry peers, which is conducive to improving distributor loyalty and reducing irregular operations. Bull will assess distributor performance. The elimination rate for converter distributors is estimated to fall to single digits, but the elimination rate for new channels and new categories remains relatively high. There are still high requirements for distributors. Milk powder industry | A certain milk powder company Precise service. A certain milk powder company is further下沉 its organization to more remote city-level cities, including establishing a new distributor service structure that allows local distributors to serve local markets. At the same time, it improves the product matrix, thereby driving the continuous increase in the number of effective distribution stores in lower-tier markets, allowing the entire value chain to obtain reasonable returns. Home appliance industry | Opple Lighting Empowerment. Opple Lighting promotes diversified marketing methods, continuously focuses on building TOP excellent distributor stores, and has achieved good growth in consumer business. The company continues to strengthen cooperation with distributors to drive business growth, providing guidance and supervision of operational processes to ensure distributors execute according to standards, thereby improving the operational level of the entire distributor system. Upstream | Be with growth-strong categories. A category that can grow steadily will naturally have good sales now and in the future. Distributors need to have keen market insight when selecting products, so they can ride the wave. Currently, distributors operating in a single category still account for the majority. During the FMCG stagflation period, when distributors transition from single-category to multi-category operations, they can find a second growth curve for themselves from categories. Provide better supply solutions to customers to enhance market competitiveness and risk resistance. In existing cases, distributors tend to adopt multi-category portfolio strategies with high relevance, which can reach more downstream customers. Dongpeng Beverage disclosed that its distributor channel revenue in 2022 was 7.581 billion yuan. In 2023, distributor revenue was 9.758 billion yuan, an increase of approximately 2.278 billion yuan year-on-year, a year-on-year growth of about 30%. Nongfu Spring's 2023 performance announcement shows that the tea beverage segment centered on Oriental Leaf exceeded 10 billion yuan in revenue, reaching 12.66 billion yuan, a year-on-year increase of 83%, making it the biggest driver of Nongfu Spring's performance growth. Some distributors said: "Since 2023, in the region I am responsible for, sales of Oriental Leaf have reached 12 million." Therefore, when you want to expand category operations, you can consider categories with sustained growth potential in the market. Upstream | Be with profit contributors. Businesspeople seek profit; products with only volume but no profit are hard for distributors to accept. In business, you need not only volume support but also profit contributors to maintain healthy corporate revenue. The product structure should be reasonable. The product composition can refer to the product role portfolio strategy based on the "4321" asset allocation rule. Distributors can adjust the proportion of products according to actual conditions. Internal | Be with "capable" people Internal | Be with the backbone. To better cope with the current environment, many distributors have begun to adjust their organizational structure and personnel. Some distributors have reduced staff from 92 to 64; others from 86 to 45. Many distributors have achieved efficiency gains by reducing staff. However, there is a problem in this process: who does the distributor boss choose to spend the winter with? The backbone is the pillar of the entire tree of branches and leaves. They are irreplaceable, such as those who can create incremental performance for the company while also having the ability to lead branches and leaves to develop continuously. Internal | Be with potential people. When a company develops to a certain extent, it will inevitably face the issue of succession, whether it is the successor of the boss or the successor of the company's backbone. Only by inheriting the achievements of predecessors can a company continue to go further and longer. How to judge whether a person has potential? Simple performance evaluation may only reflect the employee's current work performance, not fully reflect their potential. Therefore, performance evaluation can be combined with potential assessment to comprehensively judge an employee's development potential. In addition to having a complete human resource management system and information platform within the enterprise, which can organize and implement 360-degree evaluation, you can also use simple methods: critical event observation, short-term task assessment, peer evaluation, and self-awareness assessment. Evaluate from these simple perspectives. Internal | Be with cross-functional roles Cross-functionality means a person undertakes work in multiple functional positions. After the enterprise implements personnel reduction measures, the work responsibilities of the remaining employees will naturally increase accordingly. Employees who can handle cross-functional roles essentially save costs for the enterprise. Letting employees take on multiple functional positions is not simply forcing them to learn what they don't know, but extending corresponding job functions based on their original functions. For example, sales staff who have done many proposals can also take on some market promotion work, but it needs to be arranged within a reasonable time frame, such as during the off-season, to avoid excessive resistance from employees. Downstream | Be with large, high-performing, and strong stores The current competitive environment is not suitable for extensive management. Downstream requires refined management, and distributors need to have a classification concept for downstream customers. Distributors consciously sort out terminal stores, focus their energy, and use less input to produce more value. For example, A-class stores account for 15% of the number of stores but contribute 65% of sales; B-class stores account for 15%-20% of stores; the rest are C-class stores. Usually, the top 15% of stores contributing 65% of sales is a relatively healthy value. If the difference is too large, consider whether adjustment is needed to avoid over-reliance on large stores or the situation of no large store support. In addition to simply classifying stores by sales, to ensure that money is spent where it matters, distributors can consider conducting a "large, high, strong" analysis of their stores. Use region, store, and product as analysis dimensions. Let data speak, not intuition, when spending money. Because some stores may seem to have good overall sales, but it may be supported only by best-selling categories, while some products are continuously declining. At this time, you can think about the problem of product decline rather than simply continuing to invest resources. There are also products with low sales in a single store, but you may overlook that they are high-growth products with good development trends. When you realize later that this product is very suitable for the store, competitors may have already seized the opportunity, and you are one step behind. Distributor Boss | Be with confidence Declining business has dealt a blow to many distributors, and some have even lost confidence in the entire industry because past experience seems unable to help their business grow. Instead, the harder they work, the more frustrated they become. For example, one distributor friend revealed that after his efforts, his business fell from a 20% decline to a 35% decline. The stagflation of the FMCG business may become a medium- to long-term fact, not a short-term nightmare. After the pandemic, China's consumer confidence index is at a low level. Consumers have a pessimistic outlook on the future economic environment, and their willingness to consume is also low. In this situation, it is difficult to effectively stimulate consumption in the short term, and the space for distributor business growth has also narrowed, making competition increasingly fierce. Facing such changes, distributors must first adjust their mindset, build confidence, and正视 their strengths in the FMCG industry. Under the current environment, besides doing what they are good at, other industries may not necessarily be better than the current one. When sales are not growing, confidence is the fulcrum for distributor bosses, employees, and downstream customers. Once the distributor boss's confidence collapses, the other two will also collapse. So it is important for the boss to strengthen confidence, as it will affect the team, affect customers, and ultimately affect the business. To maintain better survival, you can only compete in the existing market. In such a market, the elimination rule of survival of the fittest and the strong prevailing is more emphasized. Finally, distributor bosses, the current environment forces change. It may even be necessary for bosses who have left the business front line to re-enter the market, return to the front line, and have zero-distance contact with the market to discover subtle changes in the market and respond quickly based on those changes.