Every time distributors sign contracts with modern channels like hypermarkets and supermarkets, some are happy and some are worried. For many distributors, cooperating with hypermarkets has become a chicken rib—discarding it is a pity, but eating it is tasteless. In recent years, many distributors have accelerated their exodus from hypermarkets. This year, news has broken out across the country about incidents like "a well-known trading company withdrawing from XX supermarket." However, some distributors treat the modern channel as a treasure. They put high-margin products and new items into the modern channel and make a lot of money. It's not uncommon for 10% of sales volume to contribute 20% or even more of profits, turning the modern channel into an enviable "treasure bowl." Why do some distributors find the same supermarkets and hypermarkets a headache and want to escape, while others thrive? What causes such a serious polarization? -01-
Because you're not professional, you're wasting a money-making path!
Why do many distributors find the modern channel difficult? We mainly talk about big stores (hypermarkets, supermarkets). First, with the emergence of various new channels, the proportion of modern channels has declined. Hypermarkets and supermarkets themselves are not having an easy time, so they start to squeeze profits from upstream suppliers. Under heavy pressure, many modern channels are too cost-conscious, to the point of finding every excuse to charge distributors fees, even electricity and plastic bag costs. Many distributors, lacking professionalism, can't even reconcile accounts to see where deductions are made, which leads many to feel that the modern channel doesn't make money, or even loses money, so they naturally want to escape. Does that mean abandoning this path? Of course not. Supermarkets themselves understand that distributors are upstream, and the relationship is like fish and water. If they drive away distributors, they will collapse. So, although the phenomenon of charging various fees exists, as long as you are professional enough in reconciling accounts and clarifying fees, some can be avoided. Only those "unprofessional" distributors who are used to old ways and can't do the math will fail to survive. Distributors who don't make money in the modern channel are either afraid of trouble, can't calculate accounts, or have inadequate promotions... In the end, it's just not being professional enough. Looking at the distributors who have grown big and strong in the FMCG industry, which company doesn't value the modern channel? Treating it like a worn-out shoe? That doesn't exist. As long as it's operated properly, the modern channel is an excellent path for distributors to achieve high profits, and it's an indispensable part of growing the business. So, where is the problem for distributors who don't make money in the modern channel? From feedback from many friends, it can be summarized into two points: Not professional, and poor communication. Why not professional? If you ask many distributors how to do the modern channel, they can't explain why. They don't learn or research, don't know what to do when encountering difficulties, find it troublesome and tiring, and stick to old methods, only offering special prices. Watching competitors sell 150,000 to 160,000 in one promotion period while they only sell 20,000 to 30,000 is the norm for many distributors. Compared to traditional channels, the modern channel has too many rules and regulations. From signing contracts, there are fees for ground promotion, year-end rebates, personnel management, and even credit card usage. Reconciliation is very tedious. You also need to report promotion schedules, communicate with procurement managers, train salespeople and promoters, etc. Both the people involved and the costs are complex. So, in this situation, we need to be more professional to profit from the modern channel. From strategic planning to how to do promotions, from contract signing to fee sorting and settlement, all of this requires sufficient professionalism and fine management to do well in the modern channel. In addition, many distributors and their salespeople have problems communicating with supermarket buyers. Every distributor who has been in business for years understands the importance of customer relationships. Without good communication, even if you want to enter the store for promotions, if you don't have a good relationship with the buyer, they may delay you, arrange a bad position, or even not schedule your promotion at all. -02-
How to operate "professionally"?
First, you need to calculate accounts clearly. Entering supermarkets is largely capital-driven because of high advance payments and long payment cycles, and supermarkets will deduct your money under some inexplicable items, which leads many distributors who can't calculate accounts to find at the end of the year that they don't make money after deductions. If you don't even know the costs involved, it's best to give up on supermarkets, otherwise you might easily lose money. This is the most basic. Only with data can business be visible and controllable. When truly negotiating cooperation to enter the store, we must first understand that the psychology of supermarket buyers is that sales volume comes first, because they need to complete their performance targets. As distributors, we want profit first, with sales volume second. At this point, we need to consider how to balance and plan negotiation strategies accordingly. For example, if I want to negotiate the contract for the next year, I take out last year's data. How much was invested in costs, what was the cost rate, what were the rebate fees and sales, and whether we made or lost money. Speaking with data to the buyer is persuasive and can avoid supermarkets adding fees and terms. Customer relationships are also a bargaining chip that benefits your negotiation. There are many techniques and methods, such as catering to their interests. I have a salesperson who found out that a supermarket buyer likes fishing and goes every week. He didn't like fishing, but his friend had a big fish pond, so every weekend he took the buyer to his friend's place to fish, and gave him the fish for free. Over time, they became fishing buddies, and subsequent negotiations to enter the store were smooth sailing. Therefore, doing targeted emotional work, such as collecting the buyer's hobbies, birthday, etc., and sending holiday greetings are also good ways to improve customer relationships. If you can also have in-depth communication on interests, the relationship will be more solid. Negotiating based on good customer relationships often yields twice the result with half the effort. Professional negotiation can easily save a few percentage points in costs compared to competitors. So I suggest everyone learn more and buy some relevant books to read. After truly entering the store, first, be diligent. "Diligence conquers all difficulties." In the modern channel, you need to be diligent and visit often. When in the store, proactively wipe products, adjust product positions, do some material work, check if products are near expiry or locked codes, help promoters stock shelves, check the warehouse, etc. Because compared to traditional channels, it's more complex, so it's recommended that one salesperson be responsible for at most 8-10 supermarkets; more than that, they can't manage. Another point is product selection. I think you must do high prices. If you enter supermarkets with low prices, it's basically already dead. Only with high prices can you have profit margins, can you afford to buy floor displays, shelf space, personnel, and activities, and can you bear the supermarket's various fees and deductions. "Grabbing" resources is also important. Supermarkets have limited floor space and limited monthly promotion slots. How to ensure your products are in every promotion, have your floor displays every time, and that the supermarket thinks of you when they have activities—all depends on "grabbing." The so-called grabbing here means, on one hand, doing customer relationships well, and on the other hand, your products can bring enough sales and profit support to the supermarket. Especially during Mid-Autumn Festival and Spring Festival, whoever can grab display and floor resources will sell goods. Another point that can effectively increase sales is personnel interception. As consumers, we also see in supermarkets that for the same category of goods, there are several promoters. As soon as someone comes over, the promoters approach. No matter how good the brand is, it can't beat the interception of a promoter. In addition, focus on DM (direct mail) promotion periods. Consumers have become accustomed to thinking that DM periods mean discounted products. In the current supermarket channel, sales during DM periods may account for more than 60% of long-term sales, and they will buy even at high prices. So the more frequent and numerous the DM periods, the higher your product sales will be. This is why I keep emphasizing selling high-priced products in the modern channel—not only to fill the cost gap but also as a good opportunity to increase profits. Having said so much, the core is still two points: first, high prices to ensure profit; second, good customer relationships to secure floor displays and promotion slots and negotiate lower fees. Additionally, continuous learning, including for salespeople and promoters. A good promoter can often bring in tens of thousands or even a hundred thousand in extra sales during one promotion period, so training is also essential. As long as every link is done well, even if supermarkets have high deductions and fees, profits can still be considerable. -03-
Consumer trends determine the importance of the modern channel
Why is the modern channel so important, and why do we still do it even though it's so complex? This relates to current consumer trends. On one hand, from the channel perspective, China's population is becoming more concentrated, and one-stop shopping is becoming more frequent. Large chain supermarkets are also gradually sinking into townships as urban and rural residents' incomes increase. So even under the impact of other emerging channels, big stores remain the primary window for brands to build their brand image, and also the primary sales channel for mid-to-high-end products and new items. On the other hand, consumers are more pursuing consumption experience. The experience brought by hypermarkets and supermarkets cannot be provided by small mom-and-pop stores. Even online experiential activities often rely on offline big stores. With the outbreak of the pandemic, health has become a more important attribute of products, leading to a continuous emergence of new products. Under such trends, it's more conducive to promoting high-value-added products. According to market research data, new products and high-priced products see over 50% of their sales through the modern channel; traditional channels are often the concentration camp for mass-market products. So, whether for profit or for the development of the brands you represent, the modern channel is of utmost importance. As a well-closed channel, the modern channel has obvious operational benefits. For brand owners, having products in supermarket channels not only serves as a price benchmark but also enhances brand image and brings them closer to consumers. Therefore, brand owners will never ignore the importance of this channel. If brand owners focus on it, can you as a distributor ignore it? For distributors, the modern channel is still the sales channel with the largest customer traffic. It's easy to intercept consumers in supermarkets, thereby promoting sales. In addition, the supermarket channel has influence within a certain range, which also helps drive product sales in other channels. Perhaps the operation of the modern channel is fraught with difficulties, but whether from consumer trends or the improvement of your own business structure, it means distributors must conquer the modern channel and operate it well. Such a modern channel will no longer be a "chicken rib"; it will be your main source of profit. Once the tip is adopted, a reward of 400-2000 yuan will be paid. If you like this article, click [Wow] and share it with friends.******************