On March 18, 2025, the 4th China FMCG Hard Discount Conference was held in Chengdu, where Ren Wenqing, CEO of New Distribution, delivered a keynote speech. This article is based on that speech.

In the past six months, several events in the discount retail sector have drawn significant attention.

First, Three Squirrels acquired two discount retail companies. How should we view this? From the perspective of discount retail, another listed company has entered the arena with a new posture. From the perspective of the FMCG industry chain, it represents the integration of manufacturers and retailers, which is also a landmark event for the new FMCG order we are discussing at this conference.

Second, leading snack chains have been opening 'money-saving supermarkets.' In January, Wanchen announced its official entry into full-category hard discounts, not calling it a discount supermarket or wholesale supermarket, but a 'money-saving supermarket.' Following that, Mingming Henmang also promoted their money-saving solutions, and leading snack chains formally expanded from vertical categories to full categories. The term 'money-saving supermarket' quickly became popular.

These two events have drawn much attention, but there is another event worth noting.

Third, Hema NB has opened over 200 stores in Jiangsu, Zhejiang, and Shanghai. In the second half of 2023, Hema announced a full discount strategy, and the overall direction was later adjusted. However, Hema NB, a discount format with fresh produce attributes developed from first-tier cities, has proven its model and will enter a phase of rapid development.

Why highlight these three events? They all point to one thing: discount retail has passed its grassroots stage; mainstream players have found their paths, and more mainstream players are entering.

From these events, I will share my seven viewpoints.

Viewpoint 1: The 'Label Dividend' of Hard Discounts Is Gone

Every new thing has a period of dividend. In the past two years, from snack discount stores to full-category discount or wholesale supermarkets, simply opening such a store could bring several benefits: consumer traffic, media attention, and cooperation with related resources. Even if your store has nothing to do with hard discounts, adding the word 'discount' to your sign could bring unexpected resources. 'Discount' is a label; at a certain stage, it brings benefits. I call this the 'label dividend.' In 2025, this dividend is gone. For all hard discount entrepreneurs, it is most important to see through the label, understand what you are doing, and what you should do. For example, there is a question in the industry: why can so many Chinese retail enterprises not compete with one Sam's Club? There are many explanations. My understanding is simple: why compare numerous retail enterprises with Sam's Club? Because they all have the 'retail' label. But they are fundamentally different species: most Chinese retail enterprises are just places for selling, while Sam's Club can be understood as a research and manufacturing enterprise that happens to need a place called Sam's Club to sell. The same applies to hard discounts: it looks like everyone is doing the same thing, but in reality, it's different. When you open one store, you are in the retail business; when you open ten stores, you are actually a management consulting company; when you open a hundred stores, you add another identity: a supply chain management company. The 'label dividend' of hard discounts is gone! You must see through the label to the essence, which leads to my second viewpoint.

Viewpoint 2: Return to Market Logic

For a long time, when communicating with friends in the industry, I often get asked: What do you think of this model? Can that format work? Specifically for hard discounts, some ask: Do discount stores have a future? Can I succeed with a discount store? All such questions I call the 'thinking illusion' brought by labels. Musk is praised for his first-principles thinking, but many don't understand what first principles are. It's simple: penetrate the thinking illusion brought by labels. How? You must ask the right questions. Don't ask: Do discount stores have a future? Can I succeed with a discount store? Ask: What kind of retail enterprise does the market need? How can I build such an enterprise? In today's retail transformation era, discount supermarkets, wholesale supermarkets, and money-saving supermarkets are all labels. What matters is not what you call yourself, but what you do. Through various labels, we see the underlying logic of offline retail transformation: shifting from managing shelves to managing products and customers. What determines success or failure is never a certain concept or format, but whether the market needs your enterprise and whether your team can adapt to market changes and better serve your customers. Shifting from managing shelves to managing products and customers is the underlying logic of current retail transformation. Based on this, I want to share my third viewpoint.

Viewpoint 3: Full Discounting Is a Simple Misreading

There is a view in the industry that Chinese retail will move toward full discounting. This is a simple misreading. China's market is vast and complex; the retail market must present a rich and diverse form, with different retail formats serving different groups. Mr. Zhao Bo, founder of New Distribution, explained this chart on the first day of the conference. From this chart, we can see the divergence in consumption decisions caused by income and consumption tendencies: pursuing value for money is one consumption preference, emotional and social value is another, and high or low income also affects your purchasing decisions. In today's China, different people's income and consumption preferences determine that different retail formats are needed to meet their consumption needs. From the dimensions of consumption needs—'more, faster, better, cheaper'—and shopping behaviors—'buy, browse, stock up'—we can see a clear classification of various retail formats in the market. So, from the retail level, full discounting is a simple misreading. But there is another perspective: from the perspective of the entire circulation system, the efficiency of FMCG circulation urgently needs improvement. This leads to my fourth viewpoint.

Viewpoint 4: FMCG Distribution Order Is Being Reconstructed

This is also a core theme of our New Distribution conference. What does the reconstruction of FMCG distribution order mean? Order is a rule of multi-party collaboration, a certainty. Where does certainty come from? It comes from each participant performing their duties. The existing FMCG distribution order: manufacturers are responsible for R&D and production, and set prices; distributors are responsible for distribution and shelf placement; retailers are responsible for display and sales. Why is it being reconstructed? Because the functions of participants are changing. The initiator is retail. Discount retail is the pioneer, followed by supermarket adjustments. This involves two core topics: supply chain efficiency and product differentiation. These topics are the concepts to which many phenomena and changes can be attributed.

Topic 1: Supply Chain Efficiency Supply chain efficiency means, from the production end to the final consumption end, how to reduce links and lower the markup rate? Distributors' B2b platformization, retail discounting and chain operations, and supermarket adjustments requiring direct supply at net prices can all be attributed to this topic.

Topic 2: Product Differentiation Product differentiation means, how can the products offered by retailers to consumers be different from those of other retailers? Why should consumers come to me? Some joint customization between retailers and manufacturers, factory white-label products, supermarket adjustments to product structure, SKU simplification, and retailers' private labels can all be attributed to this topic. Why are snack stores still competing fiercely? Why expand categories? Because they only solved the supply chain efficiency problem, not the product differentiation problem. In the future, all retailers that want to survive and develop must work on these two topics. Speaking of order reconstruction, what was the past order? What will be the future order?

Viewpoint 5: The 'Push' Order Evolves into a 'Pull' Order

In the past, it was an order dominated by brand owners, pushing products to consumers through distribution systems. This is a 'push' order. What is the new order? Organize and mobilize consumers, and find good products for their needs. This is a 'pull' order. If you understand this, you will have a directional understanding of many current industry changes and future trends. Snack stores, Pangdonglai, Aldi, Hema NB, membership stores—these phenomenal retailers differ from traditional retail, but the underlying logic is the same: organize and mobilize consumers, and find good products for their needs. From a macro perspective, we are currently in the midst of circulation transformation. This chart clearly shows that we are currently transitioning from a brand-manufacturer-led market to a retail-led market. So, we must ask: what impact will this transformation have on FMCG manufacturers?

Viewpoint 6: Brand Importance Is Ten Times Greater Than Before

First, for upstream manufacturers, I believe brand importance is ten times greater than before. Why? In the past two years, the development of some new channels has boosted sales for some white-label manufacturers. There is a voice saying that brand value has weakened. I do not agree. In the past, retailers only displayed and sold; now they must choose and decide which products to put on shelves. For example, in supermarket adjustments, we see many second- and third-tier brand products being removed, and even for first-tier brands, your SKUs are decreasing. For upstream enterprises, there are two paths in the future. Either you have strong manufacturing capabilities and do OEM for retail enterprises. Or you are the leading brand in your category, consumers recognize you, and retailers have no choice but to stock you. So, brand is not unimportant; it is increasingly important. In the past, we talked about the three forces of FMCG: product power, brand power, and channel power. Brand is the initiative and the voice; brand power will remain important in the future. The other two forces are not unimportant, but they have extensions.

  • Manufacturing power: R&D capability, product realization capability, product assurance capability, and product service capability.
  • Scenario power: flexibly customize your products according to different channel characteristics, scenarios, and consumption needs, including price, packaging, etc.

Recently, I often say: Enterprises that have upstream industry chain resources and R&D manufacturing capabilities, and can continuously innovate products and build brand mindshare through consumer insights, will become increasingly competitive in the industry's major transformation. What about distributors?

Viewpoint 7: Distributors Must Transform into True Intermediaries

There is always room for intermediaries in the market, determined by the boundaries of enterprises and the laws of market transactions. But not necessarily for distributors. I am not playing word games. I suggest distributor friends carefully examine this chart. Distributors are a role assigned by manufacturers; your identity is an intermediary, but your essence is an enterprise in the market. The role of a distributor is too strong; relying on manufacturers and providing services like inventory pressure, capital advances, and shelf placement may have worked in the past, but it won't work in the future because the market has changed. What to do? Return to market logic, understand your essence, clarify your identity, and find new roles and functions. When retail enterprises return to the essence of retail and truly manage products and customers, a demand for professional service-oriented suppliers emerges. Distributors must build product management and operation capabilities, transforming from traditional distributors into supply chain and professional service providers. What about the relationship with manufacturers? Carrying the genes of a trading company, providing value-added intermediary services to retail customers and upstream manufacturers is actually your unique advantage!

Summary

I have shared seven viewpoints; let me add one more: consumer demand is the gravitational force. From the perspective of the industry chain, the future is the integration of production, supply, and marketing—manufacturing, distribution, and retail are in a 'symbiotic' relationship, serving consumers together. Retail aggregates demand, but its advantage is not in R&D and production; meeting consumer needs requires supplier cooperation. Retailers' advantage is data; manufacturers' advantage is R&D and innovation capability. Manufacturers and retailers used to have a game-like relationship; in the future, it will definitely be an ecosystem synergy relationship (in many scenarios through intermediary service providers). Manufacturers and retailers are both in the millions; intermediaries are indispensable. Small distributors will exit, and the trend of large distributors accelerating! And they must transform into service providers. Manufacturers should value communication and collaboration with large distributors to provide good products to the retail end! This is an era of great transformation, a period of transition between old and new orders. The pain during the process is not decided by any one party, nor does it shift according to any party's will. Most people do not like change; only a few see change as opportunity. Remember: only with change is there opportunity; the greater the change, the greater the opportunity! Finally, I want to share a saying: Wind extinguishes candles, but makes fire burn brighter—you must become the fire and crave the wind. I hope everyone here can seize your opportunity and become that fire that burns brighter and brighter.