“The market is changing too fast and too drastically!” This is the deepest feeling from our visits over the past year. Many distributors are lamenting that the industry is changing so rapidly that they are left behind if they are not careful. Four months into 2025, what changes are happening in the industry? What opportunities exist for distributors? And what deserves attention? At the recently concluded 10th China FMCG Innovation Conference, through exchanges with industry experts and observation of market dynamics, we have gained insights into some trends that distributors should pay close attention to. These trends not only reflect the future direction of the industry but also directly relate to the survival and development of distributors. Next, I will elaborate on them one by one.

Mainstream Supermarket Adjustments

In March 2024, since Pang Donglai announced assistance in adjusting Bubugao, and by June adjusting Yonghui Superstores, within a few months, local chain supermarkets followed suit, with a clear core direction: The era of traditional supermarkets “collecting rent while lying down” has come to an end.

In the past, traditional supermarkets collected various channel fees in the form of selling shelves, without needing to consider what products were popular in the market or what consumers actually needed. Whoever paid got shelf space, leading to two major dilemmas: high product homogeneity and inflated product prices.

This model proved powerless in the face of weak consumption, the rise of discount stores, and the impact of instant retail, making adjustments an inevitable choice.

And on March 17 this year, a resolution at Yonghui's shareholders' meeting clearly aimed to eliminate middlemen and promote naked-price direct procurement and the development of private-label products; on March 29, at Yonghui's annual supplier conference, it further stated that it would eliminate 60% of small and medium-sized suppliers, lock in 200 core suppliers, and emphasize that “the relationship between zero-supply and supply should shift from game theory to symbiosis.”

Last year, adjustments were only carried out in some provinces and regions, but as an industry benchmark, Yonghui's high-profile transformation is bound to attract more regional supermarkets to follow, pushing the “adjustment” to a new climax.

That is to say, naked-price supply, compressed profit margins; streamlined SKUs, with a large number of second- and third-tier brands exiting shelves; and the establishment of a core supplier system will become the norm in the coming period.

In this process, most distributors will lose business, while a few distributors with advantages in assortment organization and more competitive operating costs will rise accordingly and gain greater market share.

Because supermarkets cannot completely shake off middlemen. First-tier brands still need regional service providers for implementation; the rapid distribution of imported and internet-famous products relies on supply chain resources; and the development of customized products requires collaboration between manufacturers and suppliers.

In addition, most local supermarkets lack the ability to organize assortments and find it difficult to solve problems of supplier management and stable supply sources.

Distributors with service capabilities can play a bridging role, forming deep bonds with supermarkets through selection empowerment, cross-regional assortment, and category co-building.

When adjustment shifts from a trend to the norm, future distributors who want to work with supermarkets must establish close cooperative relationships with downstream stores, help retailers with product selection, and jointly expand category capacity to sustain operations in retail stores.

Retailers Entering the Fray to Grab Distributor Business

In the past two years, discount stores represented by snack discount stores have risen rapidly. Terminal store business has been taken away, and distributors have also been severely impacted.

New Distribution once proposed a viewpoint that hard discount is a phenomenon, a result of oversupply and changes in demand.

Now, for distributors, a greater threat comes from retailers directly “entering the fray to grab business.”

In the past, distributors were responsible for circulation, and retailers were responsible for selling goods, each performing their own duties. However, the current trend is that many retailers are beginning to extend upward, delivering a dimensionality reduction attack on regional distributors.

First, private labels replacing core categories: Retailers such as Hema and Sam's Club have seen private labels account for over 30% in high-frequency consumer categories such as grain and oil, snacks, and daily chemicals.

For example, Aldi's 9.9 yuan shampoo and Hema's customized honey use a “same quality, low price” strategy to seize market share from branded goods, causing many second- and third-tier products represented by distributors to gradually lose shelf space, significantly weakening channel bargaining power.

Second, supply chain capabilities are being exported across boundaries: Hard discount chains not only supply their own stores but also provide goods to external terminals; traditional retailers are also accelerating the removal of distributors, and regional supermarkets, after integrating resources, are even exporting their own products to other terminals and other markets in reverse. For example, “Donglai same-style products.”

In the past, the distribution and retail links were clearly separated, but now they are infinitely approaching each other. In the future, whoever can lock in high-quality retail points in the region and form strong binding relationships with them will win in the competition.

De-distributorization by Large Enterprises

At the beginning of 2025, the manufacturer landscape in the FMCG industry is also undergoing drastic changes.

  • A leading FMCG company's financial report shows that the number of distributors decreased by more than 9,000 year-on-year, a drop of 12.6%;
  • A leading beverage company's data shows that its number of distributors decreased by 28% compared to 2023, and order volume halved year-on-year;
  • A large dairy company directly cut 70% of its distributors, achieving direct terminal connections through a DTC model.
  • ......

Behind these figures lies an important signal: leading enterprises are accelerating the integration and optimization of their supply chain systems, concentrating resources on a few high-quality distributors to improve overall efficiency.

This transformation stems from the structural contradiction between the traditional distribution model and the current market environment.

In the era of commodity shortages in the past, brands relied on multi-level distributor networks to solve the problem of channel sinking. Distributors undertook functions such as capital advance, warehousing, and logistics, using a human-wave tactic to compensate for the lack of direct brand connection capability, which was to some extent a compromise solution of “exchanging scale for market.”

However, as the industry develops, the drawbacks of this model are becoming increasingly prominent: personnel, warehousing, and logistics costs continue to rise, but FMCG profits have stagnated for years, and the overall low human efficiency problem is difficult to solve.

In this context, leading brands have to re-examine their supply chains, concentrating resources on a few high-quality distributors, while those distributors with low efficiency, slow response, and lack of competitiveness will be gradually marginalized or even eliminated by the market.

It is foreseeable that the distributor group is moving towards centralization and specialization. Those distributors who can adapt to market changes, actively embrace digitalization, and enhance comprehensive service capabilities will play a more important role in the new supply chain system. And those who cannot keep up with market changes are destined to be eliminated by the market.

Expansion of Wholesale Supermarkets

After snack quantity stores, giants have begun to aggressively enter money-saving wholesale supermarkets to cover a wider range of consumption scenarios.

In September last year, Snack Youming announced its entry into hard-discount full-category wholesale supermarkets, breaking through 1,000 stores in just two and a half months, becoming the first thousand-store wholesale supermarket brand. Wanchen Group followed suit by launching “Laiyoupin Money-Saving Supermarket,” and Mingming Henmang, Ai Zhekou, and others have successively entered the fray.

This type of full-category discount supermarket, which focuses on “low price and money-saving,” is core to bypassing the traditional distributor system and directly connecting with regional factories.

It focuses on high-frequency, rigid-demand categories such as leisure snacks, rice, flour, grain and oil, daily chemicals, fresh and frozen products. It creates a “few SKUs + high turnover” full-category product model, breaking price barriers through a “split-case wholesale” model to harvest consumers.

The expansion of money-saving supermarkets is more like an “upgraded version” of snack discount stores, extending the price advantage from snacks to a wider range of high-frequency daily necessities. It not only siphons off some of the customer flow from supermarkets but also erodes the business of community convenience stores and small supermarkets through low-price strategies, forming greater channel squeeze.

From the perspective of distributors, if money-saving supermarkets are present in your city, we suggest that if conditions permit, you may try to franchise 1-2 stores to learn their product structure, pricing strategy, and operating model, and feed back into your own operations. At the same time, by optimizing product structure, simplifying SKUs, and improving turnover, you can help local small stores improve operational efficiency to enhance your own competitiveness.

Growth of Instant Retail

According to data from the National Bureau of Statistics, in 2024, total retail sales of consumer goods increased by 3.7% year-on-year, online retail sales of physical goods increased by 9.5%, while instant retail became the fastest-growing consumption track with a year-on-year growth rate of 32.1%. This growth rate is 3.4 times that of traditional e-commerce and 17 times that of offline supermarkets.

Many distributors have also reported to New Distribution that instant retail is currently the only channel that can still achieve stable growth.

The rapid rise of instant retail stems from consumers' growing demand for “instant gratification.” As the pace of life accelerates, consumers are increasingly dependent on quickly obtaining goods.

JD.com data shows that orders for whole-box beverages, grain and oil, and condiments increased by 45%, while Douyin e-commerce recorded explosive growth of 220% in orders for home medical devices. Consumers are “voting with their wallets” to show that the deterministic supply of “30-minute ultra-fast delivery” has become a more important decision factor than low prices.

This certainty comes from the platform's deep integration of localized supply chains—platforms no longer rely on “central warehouse nationwide dispatch” but instead connect local supermarkets, distributor warehouses, and brand forward warehouses for “localized supply.”

This also gives distributors the opportunity to participate, without needing a nationwide presence to share in the dividends.

In the past year, we have also come into contact with many distributors of beverages, daily chemicals, and snacks who, through deep cooperation with O2O flash warehouses, have expanded their categories on the one hand, and on the other hand, used platform data to optimize their product structure, establish a one-stop product supply chain, and then cover small and medium-sized supermarkets with their assortments.

Against the backdrop of sluggish growth in traditional channels, the high-speed growth of instant retail is a rare incremental opportunity. Distributors should pay close attention to the local layout of instant retail and seize it if conditions and opportunities allow.

It is not only an effective channel to meet consumers' immediate needs but also an important lever for distributors to break through the growth bottleneck of traditional channels.

Final Thoughts

Over the past year, it has been evident that the distributor community is very anxious, and the anxiety stems from the breaking of path dependence—the market is changing, and higher demands are placed on distributors. Compared to previous years, business is indeed not as easy to do.

But within change, there are often opportunities. The market acumen, customer relationships, and logistics networks accumulated over more than a decade of operation will not become obsolete overnight.

The key lies in being able to clearly discern trends, decisively seize opportunities, and see clearly which core advantages need to be maintained and which directions must be adjusted. When it's time to transform, don't hesitate; when it's time to persist, don't be intimidated by external changes.

Look at changes rationally and continuously improve operations.