Survey Location: Pingxiang City, Jiangxi Province Survey Time: June 2016 Surveyor: Long Qian, Consumer Researcher at Hongxi Asset Management

Economic Status

  1. Scammers are increasing, whether it's direct selling of jade or underwear, or stores selling financial products. More and more people are betting on Mark Six (lottery), almost the whole population, and the bets are getting bigger. This is consistent with signs of an impending economic collapse.
  2. The steel plant is starting to lose money again. In Q1, there was profit due to massive monetary easing, but once the stimulus passed, losses resumed. Many young employees have resigned, feeling there's no future, and have left to find other jobs, while the older generation mostly remains. This steel plant is considered outdated capacity, producing low-end crude steel, not meeting environmental standards, and lacking cost advantages.
  3. Both terminal stores and hypermarkets believe that income is declining, and it's a consensus that people's income and spending are decreasing.
  4. Vacant stores on commercial streets are increasing, more shops are being transferred, and rents are falling.
  5. Hypermarkets suffer from severe product homogenization. If one store launches a successful product, others quickly copy it, leading to oversupply and killing that category.
  6. Vivo and OPPO stores have opened in the county center, with exquisite decoration, enthusiastic staff, and good sales. The products are beautiful and feel faster than Apple.

FMCG Survey Visits Local Dairy Market Status Store managers, grocery store owners, and salespeople believe that dairy products have seen little growth for several years. There are many new products and intense competition, but sales haven't improved. Anmuxi and Chunzhen sell okay. County consumers still need advertising bombardment plus terminal distribution. Modern Dairy is 72 yuan per box, while in Shanghai Carrefour it's 52. The best-selling product in county hypermarkets is low-end liquid milk at 2 yuan per pack (likely reconstituted milk). Additionally, Modern Dairy sells very poorly, almost no one buys it, mainly because it's too expensive. Online prices are very cheap, only around 30, while they sell it for over 50.

Want Want Surveyed 5 small terminal stores: two owners said sales were flat, three said declining. Hypermarket store managers believe Want Want milk is in decline due to too many competitors, such as QQ Star 200ml, regular 4-pack at 8 yuan, banana flavor 4-pack at 12, Want Want lactic acid bacteria 125ml 4-pack at 8, lactic acid bacteria 5 yuan. Want Want lactic acid bacteria has started distribution in hypermarkets, but sell-through is not good, mainly because there are many ambient lactic acid bacteria products. With many new products, if the company doesn't invest, it's hard to generate sales. The company should add in-store promoters and do tastings, as the product's appeal isn't enough to attract consumers. A woman around 50 in the county said she stopped buying Want Want milk for her kids after seeing online that it's unhealthy. It was found that wherever there is ambient lactic acid bacteria display, Want Want sales decline; where there is no such display, sales are roughly flat. Many companies produce ambient lactic acid bacteria, such as Xiaoyang, Yili, and some unknown small brands. These products are about 350-500ml, priced at 4-5 yuan, some placed in coolers, cheaper or same price as Want Want, and perceived as healthier, so Want Want is greatly impacted. Thus, Want Want also launched its own lactic acid bacteria drink. Currently, it's only distributed in hypermarkets, not yet seen in small stores. During the Chinese New Year, I surveyed the food and beverage wholesale street. All merchants said business is getting harder, sales are declining, but rents are still rising. They believe Want Want is declining, and its price per box is higher than Anmuxi and Chunzhen. Consumers rarely buy Want Want; it barely moves.

Dali In snacks, Dali products sell poorly, but Kopiko is still good, mainly because Kopiko has small packages, while Lays usually has large packages. Dali's small breads are much worse, declining, because there are many competitors, all better than Dali, with beautiful packaging, healthier appearance, and better taste. Their products mainly sell to county residents, but mainly rural people who come to the county to shop (this was also observed in hypermarkets; county residents rarely buy Dali's small breads, only rural people who are price-sensitive). Daliyuan's Haochidian cookies in bulk are barely selling. In one store, previously there were 48 baskets on a display, now only 20. Daliyuan cakes have long been sold at a loss or discount (only 9 points gross margin, while a 100-yuan shopping card gives 10 yuan). There are too many new products, like Xiaoyang, Xiaogongju, Panpan, Quanliyou, etc. County residents generally don't buy Daliyuan cakes; they think they're unhealthy. The store manager believes Daliyuan products are in decline, and people are eating fewer cookies. For potato chips, Lays sells much better, but chips and puffed snacks are also in decline. Oishi and others are also selling worse. County residents generally don't buy Daliyuan products; rural people who come to the county to shop buy more. A second-tier distributor in Qingdao I previously contacted mainly deals in Luzhou Laojiao and also handles Huiyuan's foodservice channel. He said he stopped doing Huiyuan because banquets have decreased, and fewer people eat out. He thinks Qingdao's salespeople are rigid, but Huiyuan's sales office is even more rigid, with poor cooperation.

Hypermarkets A county has three hypermarkets. One owns its property, so it discounts heavily. To attract traffic, others have to follow suit. E-commerce has a significant impact on hypermarkets. Although CPI rose in Q1, same-store sales are still declining. Multi-tier distribution makes prices very high (like Modern Dairy mentioned earlier), so consumers buy more online. But due to some reasons, they can only buy from regional distributors, which also limits purchase quantities.

County Commercial Street 361° store sales down 8%, Jordan store down 10%, two local underwear brands closed, one is clearing stock. Urban Revivo store sales slightly down. New stores: braised pig trotter specialty store, weight loss/wellness store, sauna room, beauty salon.

City Commercial Street Stores clearing stock, posting transfer signs, or closed have increased from about 10% at the beginning of the year to about 30%. All mom-and-pop stores/convenience stores visited have declining sales. All commercial street stores visited have declining sales. Anta store has declined for two consecutive years. One local underwear brand is clearing stock and preparing to transfer. One Urban Revivo store's H1 sales down 20%, another flat (the franchisee store manager said she is looking at locations for expansion). However, HLA is still expanding (still using A-share market money to grab high-rent stores, known as 'Tuhao House', previously a Jordan store). Of five coffee shops, two have closed and become snack shops/malatang. In the department store, first-floor gold stores' sales continue to decline sharply, women's shoes continue to decline sharply. On the second floor, surveyed 5 women's clothing stores, all said sales are declining (surprisingly, one clerk thought corruption is good because more corruption means better business). A clerk in the women's clothing area said this year's sales decline is mainly because government departments don't allow employees to shop during work hours. Sportswear brands: NIKE/ADIDAS May same-store sales up 15%, Li-Ning May same-store sales up 13% (at Baosheng International store, the manager thinks Chaoying 13 and Wade's Way sell well, high-priced basketball shoes at 600 yuan also sell well, products are more fashionable and novel). KAPPA refused to disclose. NB down over 20% this year, 361° down 5%.

Pingxiang Urban Revivo Store Survey Pingxiang is a resource-exhausted and steel-dominated city, currently in decline. Urban Revivo stores, except one on the commercial street that's flat, all others are declining, with sales down 10%-20%. After in-depth communication with store managers, the following was found:

  1. Franchisees are generally dissatisfied with the 5th-generation store image, thinking there are design flaws (goods too high, can't reach even jumping), and the 5th-generation image isn't attractive. Some store managers said the designer should be replaced. They are not enthusiastic about upgrading, mainly because they think the investment won't yield much. I showed two store managers the 68 decoration style, and they were very interested, asking if 68 supports franchising. I told them 68 lacks management capability, product quality and design are poor, and they're all losing money. (But this made me realize franchisees are indeed profit-driven; once they find a better brand, they might abandon their previous partner.) One store manager said if the company's 5th generation were like 68, she would spend 150,000 yuan to do it, believing sales could double.
  2. Compared to other stores, Urban Revivo stores have stronger risk resistance. Many individual underwear companies have closed, many are clearing stock and preparing to close.
  3. Store profitability is still considerable, distributors have a positive mindset, and there's strong motivation for counter-cyclical expansion. Although this year's profit may drop 30%-40%, distributors think doing other things is even less profitable. Urban Revivo is still good, and they've made a lot of money with Boss Zheng over the years. It's just temporarily bad; when other brands go bankrupt, spring will return.
  4. Distributors generally have a desire to open larger stores. Several store managers with small storefronts said they are actively looking for larger spaces. A store on the park commercial street: the manager said business is tough this year, monthly sales are only 80,000-90,000, previously over 100,000, easy money. This year, net profit should be 50,000-70,000. Because her store is deep and narrow, it's hard to do displays. She plans to change locations, but large stores have been grabbed by Aokang at high prices. Aokang has opened 7 stores on this 500-meter street, which seems crazy and definitely not profitable. I asked at Aokang stores; all 7 are company-owned, similar to HLA. These A-share listed companies can raise money freely, disrupting the market. -END- The best domestic FMCG distributor learning platform Focusing on providing professional, practical, and actionable tutorials for companies and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's 18 skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation | [Long press QR code to follow]