---
title: "How Should FMCG Manufacturers Respond to the Impact of Snack Discount Stores on the Channel System?"
description: "From a distributor's perspective, the rise of snack discount stores is a product of changing times, reflecting the shift from manufacturer-led to consumer-led markets. Manufacturers must adapt by supporting regional brand chains and avoiding the trap of involution, as these discount channels become an unavoidable force."
author: "于秀伟"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2023-11-08"
language: "en"
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# How Should FMCG Manufacturers Respond to the Impact of Snack Discount Stores on the Channel System?

> From a distributor's perspective, the rise of snack discount stores is a product of changing times, reflecting the shift from manufacturer-led to consumer-led markets. Manufacturers must adapt by supporting regional brand chains and avoiding the trap of involution, as these discount channels become an unavoidable force.

**From a Distributor's Perspective on Snack Discounts**
I consider myself a veteran in the FMCG industry, having transitioned from a manufacturer's sales role to a distributor, and then gradually expanding into B2B platform business and snack store chain franchising within my trading operations. I have completed multiple role changes and witnessed the industry's evolution over the years.
When I first entered the industry as a manufacturer's salesperson, society was marked by material scarcity, and the FMCG sector was still in an era dominated by manufacturers.
Later, I left the manufacturer to start my own business, engaging in traditional trading agency operations, and my identity shifted to that of a distributor.
At that time, the FMCG industry was becoming increasingly diversified, with a wider variety of products in the market and a corresponding expansion in market demand. As a distributor, my daily work involved proactively contacting manufacturers to negotiate business, thinking about how to sell goods at higher prices while maintaining the price framework set by manufacturers.
When my third venture, the B2B platform business, emerged, the dynamics of demand and supply underwent new changes. Market demand was growing, but supply still exceeded demand. As a platform operator, I needed to stand from the perspective of consumer needs and select the best products from a wide range.
By 2021, the company began experimenting with retail by opening snack discount stores. At this point, the market had become consumer-led, requiring attention to product quality and low prices, with product popularity directly reflected in sales performance.
Thus, the company's business has formed three stable lines: **distribution, platform, and franchise operations.** Among them, the second curve is based on the first, and the third curve is based on the first and second.
While other distributors hesitated about whether they could open snack discount stores, I had already verified through continuous experimentation that distributors can indeed operate such stores!
**Snack discount stores are a wonderful product of the changing times.**
Looking back, they are the collective creation of several generations of FMCG professionals, from manufacturers and distributors to hypermarkets and small retail shops. It is precisely the pricing and service chains of these traditional channels that have provided the opportunity for snack discount stores to succeed.
When the FMCG industry completed its shift from manufacturer-led to consumer-led, the "opportunity" began to materialize.
The industry's focus varies with the dominant role, and part of the charm of snack discount stores lies in their full embodiment of the consumer sovereignty era.
Compared with the traditional 6 million small shops, snack discount stores offer consumers a completely different six-sense experience, including visual, auditory, tactile, olfactory, gustatory, and perceptual. Moreover, prices are sufficiently low.
Today, on platforms like Douyin, streamers often use slogans like "I've brought the price down" to attract consumers to their live streams, which is a highly effective customer acquisition tactic. Snack discount stores have successfully achieved this through hard discounting.
**The combination of delightful experience and low prices creates an attraction akin to a black hole, making snack discount stores a popular destination for consumers.**
**Impact on FMCG Manufacturers**
The snack discount format originated in the south and has achieved great success there, now expanding and spreading to the north. Although the climate and environment differ between north and south, and markets may vary, consumers' pursuit of a better life is universal.
Under this trend, opening a snack discount store almost guarantees good foot traffic.
What impact will the long-term erosion of traditional channels by the snack discount format have on the traditional channel system?
Recall the rise of e-commerce, which weakened the trust relationship between traditional channels and consumers, often leading consumers to scan products to check price information before purchasing.
Therefore, when such a format reappears in the market, it easily touches the fragile trust relationship in consumers' minds, causing them to no longer believe in the original sales channels and pricing methods. This is one reason why some large snack discount stores achieve monthly sales of millions—they successfully break consumers' existing perceptions of pricing and sales channels.
With trust collapsing, the various roles in traditional channels become victims, voicing grievances.
So, who benefits from this transformation?
In fact, the beneficiaries are not just a specific group but the entire industry!
More and more manufacturers are beginning to accept this trend, establishing hard discount project departments led by senior executives, who personally coordinate production, finance, brand, marketing, and other systems to engage strongly with leading brands in the snack track, achieving outstanding performance.
However, these collaborations currently remain limited to top brands.
**The SKU count in snack discount stores is extremely precise and small. If only leading store brands are relied upon to satisfy so many manufacturers, the track will become very crowded.**
A large number of FMCG manufacturers have no opportunity to enter, let alone benefit. What should they do in this situation?
**How Should FMCG Manufacturers Respond?**
Currently, many manufacturers are very conservative about traditional channels, which have a huge volume. Both emotionally and in terms of interests, they are reluctant to take overly strong measures to change the existing channel structure.
However, facing the overwhelming growth of snack discount channels, it is time for manufacturers to make some changes.
If conventional entry and cooperation do not work, it is crucial to consider re-supporting distributors, just as they once supported them in intensive channel cultivation, and develop them into regional brand store chains of a certain scale.
Why support regional brands?
At this stage, market attention is mainly focused on national leading brands, which is far from sufficient.
Leading brands will inevitably weaken manufacturers' branding in the future and develop their own private labels. In contrast, regional brands with distributor genes aim to cooperate with manufacturers that cannot keep up with the first-tier track in the vast snack system, working together with manufacturers.
There should be many distributors across the country seeking new paths, and they cannot do without manufacturer support.
Of course, this support is mutual.
Regional small brands can provide real data and consumer preferences, showing manufacturers the speed of product sales and popularity in the channel. They maintain interactive cooperation with enterprises to support production-oriented companies, helping them make quick and efficient decisions.
Some manufacturers may question whether they will be reduced to mere OEM factories without any say. In reality, as development progresses, companies that can become OEM factories are fortunate; many enterprises even consider it a luxury to become OEM factories, as all tracks are crowded.
Is it feasible for manufacturers to take no measures to respond to snack discount stores?
If so, products may have nowhere to be sold.
Some manufacturers may think this view is alarmist, as their current situation is still good. Why must they change?
**Everyone needs to avoid falling into the vicious cycle of involution.**
In certain regional markets, channels continue to decline, failing to generate sufficient profits and business support. This means that even if more resources are invested to drive market development, it lacks practical significance.
No matter how hard one tries, the market will eventually face decline, and the funds and resources invested earlier will only yield short-term sales effects.
A couple of days ago, a brand stated that increasing investment in certain traditional channels still yields results. But in my view, regardless of which channel you invest more in, you can see some effect. The key issue is whether this effect is long-term or short-term. It is necessary to abandon unprofitable markets and reduce sales-side expenses.
**In the long run, snack discount stores are a powerful channel that manufacturers must face, and necessary measures need to be taken.**
**From December 5-7, 2023, the First China FMCG Hard Discount Conference will be held in Zhengzhou. At that time, Yu Xiuwei, founder of Tangshan Yihe Trading, Dianjiatong B2B, and an active snack store chain, will be present to share insights on "From Traditional Distributor to Entering Discount Retail: 3 Years of Thinking and Summary." Interested friends should not miss it!**


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