The epidemic has basically moved from the outbreak period to the post-epidemic period, with the peak already passed. Many companies resumed work around the 20th, and the previously tight production capacity, especially for grain, oil, and instant food products, should ease. It is foreseeable that road closures and city lockdowns will be lifted by the end of the month, and transportation nationwide (except Hubei) will gradually return to normal. Offline retail will also gradually recover as the epidemic subsides. The sudden outbreak caught the entire industry off guard. However, from the FMCG industry perspective, the most severely affected categories are basically gift boxes, baijiu (white spirits), and ingredients supplied to small B-end restaurants. Other industries are relatively less affected, mainly due to temporary store closures in retail and restrictions on epidemic prevention and work resumption. Looking at a longer time frame, the short-term impact on the industry is huge, especially in the first quarter. But in the medium to long term, the phased "revenge" consumption and steady consumption growth should not significantly affect the annual baseline. -01- Short, Medium, and Long-Term Response Strategies for Manufacturers and Distributors Services cannot be stored, and sales nodes cannot be stored either; once they pass, they are gone. At this time, the mindset of manufacturers and distributors is crucial. They should not just focus on the immediate epidemic anxiety but look further ahead. ** As bosses and senior management of manufacturers and distributors, they should think that in the face of the epidemic, it is not just about building walls, but more about building windmills, treating the epidemic as an opportunity to seize market share. How to do it specifically? Learn to stand in the short, medium, and long term, starting from the needs of manufacturers, distributors, retail stores, and consumers, combined with the development trend of the epidemic, and systematically design response strategies. Teacher Liu Chunxiong said, only by seizing the epidemic period can you seize the post-epidemic period. If you don't take action in advance now, you won't be able to seize it after the epidemic. 1. Epidemic Period: January 24 - February 24 (Short-term) 1) Consumer Demand: At home, unable to go out. From being unaccustomed to gradually adapting. Family diets gradually become lighter, mainly grain, oil, and instant food. At this time, consumers will pay attention to online spicy snacks and leisure foods to adjust their tastes. Demand for spicy and leisure foods increases. 2) Retail Store Status: Most are closed, a small number are operating, and offline business is bleak. Some stores, especially fresh produce and daily necessities, are very popular and in short supply. Some categories in the channel may face shortages or unsold inventory, two extremes.**** 3) Brand Actions: It's both a holiday and an epidemic period, so factories are basically shut down. At this time, the core actions for manufacturers are inventory checks, statistics, and customer care. Team morale must not drop; appropriate training should be provided to maintain employee work status. At this time, manufacturers should focus on household consumption, pay attention to home delivery channels, and emphasize online communication and sales. 4) Distributor Actions: Due to factory shutdowns and store closures, there is widespread unsold inventory and supply shortages. The reality of village, city, and community closures makes distribution difficult for distributors, with low employee return rates, and some regional trading companies are still unable to operate normally. At this time, distributors should actively engage in self-rescue, focus on sales at key stores, promptly check channel inventory, adjust inventory, and comfort terminals. For some key terminals, arrange personnel to replenish goods in a timely manner, and actively contact manufacturers regarding out-of-stock items and market issues. In addition, distributors should focus on trying to establish new channels, such as food delivery, fresh produce home delivery; social e-commerce, community e-commerce, community group buying, WeChat business, and online e-commerce. 2. Post-Epidemic Period: February 24 - March 24 (Medium-term) 1) Consumer Demand: Can go out appropriately and gradually return to work. But still worried about the epidemic's impact, so going out is mainly for work and shopping. Diet is still mainly at home, with fewer social activities. Shopping begins to shift from home delivery services to large chain institutions - hypermarkets, but online popularity will not decrease. 2) Retailer Status: Most retail stores gradually open, but business won't improve much. Foot traffic is still low, and retail will still mainly rely on online methods. Hypermarket traffic will increase compared to the epidemic period, but shopping is purpose-driven, and consumption is still mainly household stocking. 3) Brand Actions: Factories gradually resume work, production capacity slowly recovers, sales personnel in various regions gradually return to their posts, and distributor demand surges. Some unsold inventory issues begin to be reported on a large scale. It is recommended that brands make accurate assessments and breakdowns based on market conditions. Adjust the pace according to goals, and provide moderate authorization to some old customers with tight cash flow to alleviate downstream financial pressure. At this time, replenishing offline channels is the top priority. Quickly handle market issues and resolve the epidemic's impact in the shortest possible time. At the same time, further improve the organizational construction of online sales. 4) Distributor Actions: Manufacturer goods gradually arrive at warehouses, village and city closures begin to loosen, and employees gradually return to work. Some poorly managed customers face capital shortages; some employees may consider changing jobs, leading to labor shortages for distributors. It is recommended that distributors promptly replenish goods to downstream channels, exchange goods, visit key customers in person, and promptly pay display fees. Resolve channel issues as soon as possible and recruit urgently where there are shortages. Minimize losses during the epidemic as much as possible, while actively planning the next phase of work. 3. After the Epidemic Ends (Long-term) 1) Consumer Demand: The epidemic is resolved, users can freely work and socialize, and pent-up social needs will surge, leading to a wave of revenge consumption. Spicy and heavy flavors, barbecue, hotpot, and other foods that consumers can't make at home will be popular. 2) Retailer Status: Business gradually returns to normal, but users' habit of ordering online is gradually formed. Omnichannel ordering has become a lifestyle for users. The diversified and three-dimensional layout of retail is also a trend that retail companies focus on. Industries with booming business include services, catering, and industries with strong social and human resource elements. 3) Brand Actions: Business returns to normal. Offline remains the main sales channel for most brands. Seize the basic market and don't abandon traditional offline retail business. At the same time, begin to try BC integration and connect the three-dimensional space. Brands should seize the "community and social group" window period and gradually shift marketing focus from offline to online. Based on consumer behavior and demand, start full-network layout, especially home delivery, store visits, social groups, and private and public domain traffic.**** 4) Distributor Actions: Business returns to normal. Manufacturers will gradually shift the pressure of first-quarter sales tasks to the next three quarters. While stabilizing core and key channels to normalize sales, distributors should actively try to connect with localized online traffic, expand new channels, and try diversified distribution methods. At the same time, the sudden epidemic means that future distributors will definitely be large distributors with large supply chains. Therefore, with sufficient funds, quickly make layout in brands and categories. In terms of distribution categories, focus on the big health field; in terms of channel structure, both online and offline should be emphasized. The above are the key emergency measures for various ends of the FMCG industry during the special period. Of course, looking at the entire 2020 from a longer time dimension, consumer demand and psychology after the epidemic are still optimistic, but behind the optimism, consumption motives and behaviors are changing. The trend remains unchanged, but the process is accelerating. The future may not be a repetition of the past. We need to analyze how to find certainty from uncertainty. The certainty here includes two core parts: one is the adjustment of marketing focus; the other is the layout of home delivery business. -02- Marketing Focus Recommendations for 2020 The marketing focus of FMCG manufacturers and distributors is gradually shifting from a single online or single offline approach to an integrated online-offline cognitive transaction relationship, connecting the three-dimensional space, F2B2b2C, and chain-network integrated marketing. 1. What is the three-dimensional space: namely, retail space, online e-commerce space, and social space under the WeChat ecosystem.** 2. Online-offline integration: That is, for a consumer existing in three spaces simultaneously, the enterprise's marketing elements should be re-laid out based on the user's cognition, transaction, and relationship structure. 3. F2B2b2C: That is, the online, digital, routing, and financialization of the supply chain path. **4. Chain-network integration: That is, the integrated marketing of cognition, transaction, and relationship in the three-dimensional space combined systematically with the digital supply chain. In chain-network integration, the chain connects upstream and downstream data, and the network establishes connections with users. How to establish connections? The core is community and social groups. Community stores are based on physical space, and social groups are virtual spaces under the WeChat ecosystem. Community and social groups transform localized people from offline physical transaction attributes to online social attributes. Of course, it needs to be emphasized here that community and social groups are not just about pulling people into groups. If connections are not established, pulling groups is like driving sheep into a pen. The value of social groups is to build online network effects. By constructing social relationships through the same region, similar interests, similar age, and opposite gender. A common understanding: Current business has shifted from "goods don't move, people move" to "people don't move, goods move." Based on this consensus, our marketing work should redesign the marketing system from the user's behavioral logic (interests, hobbies, needs). -03- Home Delivery Business: Key Points for Food Delivery and Community Group Buying Operations In 2020, home delivery business will be an area that every FMCG manufacturer and distributor focuses on. Here, "home delivery business" mainly refers to food delivery and community group buying. For the food delivery channel, first, it's important to understand that merchants on food delivery platforms are more volatile and have a much higher exit rate compared to offline physical stores. At the same time, the logic within food delivery is very different from ordinary dine-in, so manufacturers must deeply recognize the differences when laying out online food delivery for restaurants. Regarding community group buying, there are currently over 300 community group buying companies nationwide, with nearly 50,000 group leaders. Active community group buying regions are mainly distributed in Hunan, Shandong, and Guangzhou. National leading companies include Xingsheng Youxuan, Shihui Tuan, and Tongcheng Shenghuo. Other small community group buying companies scattered across various regions form alliances, with larger ones like JD.com's community group buying alliance. In addition, there are vertical category groups such as maternal and child, as well as community social group buying spontaneously organized by individual supermarkets. When laying out community group buying, first, the products must have the following five characteristics:
1) Rigid demand; 2) High frequency; 3) Low value; 4) Planned purchase; 5) Individual decision-making; It is emphasized here that community group buying mainly targets household consumer categories. The main categories sold are fresh produce, rice, flour, grain and oil, water, beverages, dairy, leisure foods, household cleaning and paper products, home and personal care, and some small appliances. Theoretically, all categories sold in community convenience stores can be sold through community group buying. In summary, 2020 will have fluctuations, but the basic market will not be significantly affected. The epidemic is fair to every FMCG manufacturer and distributor, even for the severely affected dairy industry. Ultimately, it's all about competing for consumers. ** In a fair environment, the epidemic is a touchstone and a mirror, all depending on the efforts of manufacturers and distributors!