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In just a few years, supermarkets have transformed from a novelty into the mainstream channel dominating the retail industry.

Supermarket business is far more difficult than traditional trade. Manufacturer sales reps face a series of challenges: store entry, barcode allocation, shelf placement, fighting for display space, contract signing, promotions, advertising in store circulars, securing special displays, negotiating various fees, and even penalties.

For many domestic companies and marketers who have long worked in traditional trade, supermarket business seems "mysterious, complex, risky, and hard to get started." In reality, by understanding the "truth" of supermarket operations and filtering out the noise of numerous operational details, supermarket business can be reduced to five key points—the Five Elements of Supermarket Business: barcodes, shelf space, price, promotion, and service.

1. Barcodes (Different product items correspond to different commercial barcodes; the number of barcodes in a store represents the number of product varieties carried.)

Self-reflection:

  1. Is our product line complete? Are there any market segments where we lack products? Have we proactively suggested specific improvements to the company regarding product line development?
  2. Have all our existing products been fully listed in supermarkets?

Analysis: Market segmentation is increasingly evident. The same category of goods spans different price ranges, each with its own consumer base, and within each price range, products from various manufacturers and brands compete fiercely.

Take the instant noodle industry as an example:

As shown in the table above, each price range is like a small battlefield where manufacturers compete intensely to carve out a share of that market segment. If a manufacturer's product line is incomplete—missing a certain packaging form, flavor, or price point—it effectively withdraws from competition in that segment, handing over that market share to competitors.

Every supermarket is a microcosm of the overall market.

  • Supermarkets are self-service; their sales reflect consumer purchase intentions and brand acceptance.
  • Supermarkets carry a full range of product categories.
  • Each product category in a supermarket has different price bands (offering goods at various price points for consumers).
  • Within each price band of the same category, several manufacturers compete for a small slice of that supermarket's business.

Supermarkets resemble a fully mature market—total sales for a given category in a single store are relatively stable (the overall market is no longer growing rapidly). Competition among manufacturers is a zero-sum game: if a competitor sells 100 more cases, you sell 100 fewer!

If you find that your number of barcodes in a supermarket is insufficient, it means you are voluntarily withdrawing from competition in that price, packaging, or flavor segment, letting competitors dance alone while you lose sales.

2. Shelf Space (The display positions in a supermarket where products are directly visible to consumers)

Self-reflection:

  1. Assuming equal payment for shelf space, is our shelf space larger than that of competitors?
  2. Are our displays as consolidated as possible to create visual impact?

Analysis: The self-service environment of supermarkets makes consumer purchases more impulsive (especially for FMCG). The display effect and visual impact become the main reasons to persuade consumers to buy—in supermarkets, shelf space is almost directly proportional to sales.

Improving shelf space effectiveness requires two approaches: first, increasing the number of facings for our products; second, increasing the area of consolidated displays.

Supermarket product arrangement generally follows three modes: by brand, by flavor (or style), and by price. In the latter two modes, achieving consolidated displays requires more effort.

Example: In flavor-based displays, supermarkets typically place products of the same flavor together. Within a flavor section, products are usually arranged from left to right by increasing price, and from top to bottom by increasing weight.

As shown in the diagram: This mode facilitates consumer selection but prevents manufacturers from consolidating their products, making it harder to promote their own brands.

Countermeasures:

  1. Comply with the supermarket's flavor-based display rules.
  2. Within the same flavor section, strive to make your products "vertically aligned"—stacking them from top to bottom to create a consolidated display effect.

As shown in the diagram:

3. Price (The price at which products are sold to consumers in the supermarket)

Self-reflection: Compared with targeted competitors, is our price more favorable in this supermarket?

Analysis: The advantages of supermarket channels over traditional trade are the self-service environment and price. Price is also a hot point of competition among supermarkets. Consumers often decide based on price comparison. A 5-cent increase or decrease in retail price can significantly impact sales.

How to determine if your supermarket retail price is appropriate? Simple: first check the prices at retail stores. Products with the same price as yours in retail stores are your targeted competitors (e.g., Hualong Xiaokang 120g bag noodles retail at 1 yuan, Super Master Kong also at 1 yuan, while Mianba 120g bag noodles retail at 1.6 yuan. So although Xiaokang 120 and Mianba 120 have the same weight, in terms of price range, Xiaokang 120's main competitor is Super Master Kong, not Mianba). Then compare your retail price with that of your targeted competitors in the supermarket. With equal brand support, you should match or slightly undercut competitors; against stronger brands, you need to be cheaper to have a chance to win.

If you find your retail price is significantly higher than targeted competitors, you must quickly improve from two angles: the supermarket's markup rate and the distributor's markup rate, striving to at least not be at a disadvantage. Otherwise, you become a "hostage"—paying entry and display fees without getting sales.

4. Promotion (Activities such as buy-one-get-one-free and special discounts in supermarkets)

Self-reflection: Are our promotional efforts in supermarkets more effective than competitors'? (See below for details)

Analysis: Promotions in supermarkets have become a routine sales method rather than a temporary boost. Ineffective promotions can also lead to a "hostage" position.

Supermarket promotion effectiveness depends on the following:

  • Promotional intensity: discount level and choice of gifts
  • Promotional setup: on-site display and atmosphere creation
  • Promotional communication: proper signage, placement, and other communication tools
  • Promotional management: on-site staff efficiency and timely replenishment of products and gifts

To assess your promotional advantage, examine common pitfalls: a. Is our promotional intensity superior to competitors'? b. Are the promoted products placed on special displays like end caps or floor displays? Is the display compliant with standards? (Inexperienced salespeople may put regular products on special displays while promotional items remain buried on shelves.) c. Is promotional communication sufficient?

  1. Are there enough promotional materials (POP, banners, wobblers, balloons, etc.) to attract consumer attention?
  2. Are hand-drawn promotional posters hung in prominent positions?
  3. Do posters follow the "3·15" principle (consumers can read the entire text within 3 seconds, and content does not exceed 15 characters)? d. Are promotional products and gifts replenished and bundled in a timely manner? (Out-of-stocks of products and gifts are common during buy-one-get-one-free and discount events.) Are price tags updated promptly and correctly positioned? e. Efficiency of sales promoters:
  4. Have we trained our promoters to actively recommend our products?
  5. Have we trained them in standard sales scripts?
  6. Do sales reps conduct random checks on promoters' work status and discipline, correcting and encouraging as needed? f. Outdoor promotion efficiency:
  7. Have we defined and ensured standard display and publicity methods?
  8. Where permitted, do we actively use small loudspeakers, distribute DM flyers, etc.?
  9. Are gifts and products displayed separately? Does the promotion table setup and poster highlight the gifts?
  10. Is there in-store signage to "echo" the outdoor promotion? g. If we find that promotional formats or gift choices are ineffective, do we promptly report to the company for improvement? (e.g., switch from outdoor to indoor promotion during sandstorms, or replace unpopular gifts.)

5. Service (In supermarket channels, service mainly involves timely delivery and handling of damaged or expired products)

Self-reflection: Are there instances of delayed delivery causing stockouts or missing items? Are there many near-expiry or defective products on the shelves?

Analysis: Supermarkets have high requirements for delivery timeliness. During holidays, when business is booming, ordering today and delivering tomorrow may lead to stockouts and missing items, losing sales. Moreover, such situations may result in fines, reduced shelf space, re-payment of barcode fees, or even being removed from the store.

Supermarkets also have strict requirements on product dates. Generally, products past half their shelf life are rejected, and products past two-thirds are returned. Therefore, during each store visit, carefully check the batch numbers and quality of existing products. If there is a risk of near-expiry or defective products, take proactive action to handle them promptly—supermarkets will not manage product dates for you; they will remove products "according to regulations" and then notify you to take them back or even discount them, with the loss borne by you.

The Five Elements—barcodes, shelf space, price, promotion, and service—determine supermarket performance. As long as you:

  • Have sufficient barcodes in stores (to capture every market segment)
  • Have an advantage in shelf space and consolidated displays (to stimulate impulse buying)
  • Are not at a disadvantage in price and promotion compared to competitors (to avoid being a "hostage" product)
  • Provide timely service (to avoid stockouts and customer complaint issues affecting sales)

Then supermarket channels will naturally generate good sales. Conversely, insufficient barcodes, poor shelf space, high prices, ineffective promotions, and untimely service will inevitably lead to low sales. In supermarkets, products with low sales inevitably have delayed payments, and low payment rates lead to high expense ratios. Low sales, low payment rates, and high expense ratios naturally cause distributors (or manufacturers) to cut back on investments in sales, promotion, and service in supermarkets, further worsening the Five Elements and creating a vicious cycle.

The essence of management is "simplify complex problems, and implement simple things consistently—that is efficiency."

Coca-Cola's 3A strategy is neither magical nor profound; its value lies in "condensing beverage terminal sales concepts into three sentences and two action indicators, and implementing them consistently from top to bottom."

Supermarket business is complex, but all operational details revolve around the Five Elements. As long as daily training, salesperson evaluations, business visits, and supervisor market inspections are all aligned with these five indicators, you can "guide and constrain salespeople's attention toward the correct and effective direction," achieving "great skill appears clumsy, and twice the result with half the effort."

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