The annual Mid-Autumn Festival is approaching. Every year, this festival marks a peak sales season, with manufacturers launching policies and products early to push down the supply chain and ultimately boost terminal sales. This year, however, the overall market landscape has shifted, directly impacting festival sales. The most obvious change is the increasing diversification and fragmentation of channels. From traditional distribution channels to the rise of community group buying and platform e-commerce, and then to flash warehouses, B2B, and the snack discount channels that have gained significant attention this year, the path for traditional distributors has become increasingly difficult. Secondly, supply chain reforms have led some manufacturers to bypass distributors and adopt direct factory supply or direct sales to reach C-end consumers and capture more market share. For example, snack discount stores are a product of supply chain competition, shortening the supply chain to save costs and attract consumers with low prices. This has caused significant harm to distributors. Against this backdrop, we can anticipate certain trends for this year's Mid-Autumn Festival and take corresponding measures.
Cold B, Hot C
The most direct impact of channel market changes is the 'cold B, hot C' phenomenon. That is, distributors and retail stores are facing a cold market with grim prospects, while consumers show strong demand. Given the unsatisfactory channel performance in the first half of this year, it can be inferred that distributors and retailers will remain cautious during the Mid-Autumn Festival. However, according to data from the National Bureau of Statistics, total retail sales of consumer goods grew by 8.2% in the first half of the year, indicating strong consumer demand on the C-end, which seems surprising.
High Price, High Gross Margin
Because retail stores have had a poor year, it's hard to maintain existing sales volumes. To make money, they either choose products with strong brand power and essential demand, or products with higher gross margins. How to earn more gross profit from limited existing sales? Small B-end can achieve high gross margins in two ways: low price with high margin, or high price with high margin. This year, there might be a mistaken market judgment: consumption downgrade, leading to a choice of low price with high margin. This is actually a paradox. Festival gift consumption is a face-saving consumption; consumers will not downgrade their gifts just because of a consumption downgrade. Therefore, retailers are more likely to choose the high price, high margin approach.
Early Start, Late End
Typically, August and September were called the Mid-Autumn season, but this year will be different. The season will start in July, and many major brands have already completed collecting payments from the consumer end. This year's Mid-Autumn Festival and National Day holidays total eight days, which changes consumer holiday behavior. Consumers may travel first and then visit relatives, or vice versa, leading to a second or third round of consumption. Thus, this year's Mid-Autumn season will be longer. Despite the poor channel performance in the first half of the year, we can still see hope. While distributors and retailers are cautious, consumer demand remains strong, indicating market potential. In such circumstances, the response capability of the B-end is put to the test.
C First, Then B
Currently, the retail market has entered an era of severe involution, where one must advance or retreat. Meanwhile, channel changes have made phenomena like 'cold B, hot C' inevitable, meaning that previous sales models no longer work. How to respond to the severe situation? We must start by changing our mindset. Renowned marketing expert Liu Chunxiong once said that when sales decline, most people's first reaction is to save existing volume and prevent sales from falling, but incremental growth does not lie in the terminal; it lies in the hands of consumers.
- Do the Opposite
In previous years, the sales process for the Mid-Autumn Festival was: manufacturers pushed inventory to distributors, distributors pushed to retail stores, and retail stores sold to C-end. Now, this model no longer works. If you follow this model, you'll find that there is only 'cold B' without 'hot C', and you won't enjoy the benefits of this year's 'hot C'. Since 'C is hot', do the opposite: 'C first, then B'. However, it's impossible to achieve large-scale sales to C directly; you can use group buying and other methods to sell a portion to C, collect feedback on 'hot C' information, and make next-step decisions. Seize the 'hot C' phenomenon and convey its warmth to the B-end. So, we call this method 'doing the Mid-Autumn Festival in reverse'. For distributors, the ideal state is not to push inventory first and then collect money, but to collect money first and then push inventory. In today's stock market, market share is fought for; the sooner you collect cash, the more likely terminals will sell your products.
- Scenario-Based Marketing is Important
Why is it important? In the past, consumers went to specific channels like hypermarkets and large supermarkets, where there was almost no scenario. In recent years, with channel fragmentation and changes in consumer groups, many physical stores have begun to focus on creating scenarios to enhance consumer experience. For example, snack discount stores with trendy decor and an array of bulk foods easily attract consumers, especially young ones. Therefore, scenario-based marketing will be a mainstream trend in the future. During peak seasons, due to the short and concentrated time, neither manufacturers nor retailers can achieve direct-to-consumer (to C) models. Scenario-based marketing becomes even more crucial. However, this year's Mid-Autumn Festival sales period is longer, allowing for to C models. Therefore, we should seize this opportunity and fully utilize scenario-based strategies. This provides us with vast imaginative space.
In summary, we need to change the festival sales rhythm from the traditional positive sequence of big B (distributors) to small B (retailers) to C (consumers) to a reverse sequence of C to small B to big B. If we can successfully change the sales rhythm this Mid-Autumn Festival, it will permanently alter the festival sales rhythm in the future.
How Does Channel Reform Affect the Mid-Autumn Festival?
Returning to the issue of 'cold B, hot C' caused by channel changes, we help distributors sort out two key questions:
1. In the first half of 2023, the market was cold, and small B-end lacked confidence in stocking. How to solve this?
In the 'cold B, hot C' situation, only the C-end can change the cold B-end. But no matter how much distributors persuade small B-end, they will still worry about risks. Therefore, we must use consumers to change the mindset of small B-end, making them realize that now is an opportunity. The way to achieve this is to 'do it in reverse', shifting from B-first-C-second to C-first-B-second.
2. What impact does the rapid expansion of snack stores have on the Mid-Autumn Festival peak season?
The Mid-Autumn Festival focuses on gift profits. The gift market has a characteristic: the lower the level, the larger the market, such as township and county-level markets. However, snack discount stores are mainly concentrated in central cities, and although some may be in county-level markets, the overlap between these two markets is not high. Moreover, snack stores mainly sell bulk snacks and target young consumers, so their impact on the Mid-Autumn Festival is not significant. Nevertheless, the business world is constantly changing, and it's hard to say anything is absolute. Distributors need to closely monitor market dynamics, flexibly adjust strategies, and respond to various challenges and opportunities. At the same time, they need to continuously innovate and improve competitiveness in channels and services to meet ever-changing consumer demands.
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