Where Have All the Sales Gone? A former president of a multinational retail giant recently said at a meeting: "Originally, supermarkets had two shopping peaks a day. The first peak was in the morning, mainly elderly people and housewives; the second peak was in the evening, mainly office workers. Now, the second shopping peak has disappeared." So, where have these shoppers gone? According to the "China Shopper Report" recently released by Bain & Company and Kantar Worldpanel, the sales growth rate of China's FMCG market in 2015 was only 3.5%. At least it shows that FMCG is still growing. However, the 2015 annual reports of FMCG giants show that their sales generally declined. Master Kong (2015 annual report): revenue -11.09%, profit -35.99%; Uni-President (2015 annual report): revenue -1.72%, profit +192.26%; Shuanghui Development (2015 annual report): revenue -2.19%, profit -5.35%; Tsingtao Brewery (2015 annual report): revenue -5%, profit -14%; Coca-Cola (2015 annual report): revenue -5%, profit -16%; Want Want (2015 annual report): revenue -9.2%, profit -12.6%. We can't help but ask: the industry is growing slightly, but the industry leaders are declining. So, where have all the sales gone? To "explain" the phenomenon of disappearing sales, many people have put forward various viewpoints, and perhaps each has some truth. The "Working Population" Decline Theory This statement is quite fresh. The "China Shopper Report" by Bain & Company and Kantar Worldpanel states that products targeting blue-collar workers have been hit the hardest. The main reason for the decline in instant noodle and beer sales is the decline in the working population. The report also mentioned another reason: low-end manufacturing jobs have been transferred to lower-cost regions such as Bangladesh and Vietnam. I agree with this statement. I have observed that Foxconn employees have strong spending power. When young people with income gather together, the consumption power they form is astonishing. This statement is supported by data. According to the latest data from the National Bureau of Statistics, China's labor force has declined in absolute terms for the fourth consecutive year. In 2012, the population aged 15-59 decreased by 3.45 million compared with the previous year; In 2013, the National Bureau of Statistics adjusted the statistical scope of the working-age population to 16-60 years old. The results showed that the working-age population decreased by 2.44 million compared with the end of the previous year; In 2014, the working-age population decreased by 3.71 million compared with the end of the previous year; In 2015, the working-age population decreased by 4.87 million compared with the end of the previous year. Over four years, the labor force cumulatively decreased by 14.47 million. Although our country's population is still growing, the structure is changing. On the one hand, the labor force is decreasing; on the other hand, the number of industrial workers is decreasing even more. This not only affects consumption issues but also affects the category structure. As Bain said, the decline in instant noodles and low-end beer is closely related to the working population. The E-commerce and Micro-commerce Diversion Theory After the rise of the Internet, new channels have increased, causing serious diversion. So, who is diverting? First, e-commerce diversion. The disappearance of the afternoon consumption peak in supermarkets can be reasonably explained by e-commerce diversion. Office workers and students are precisely the mainstream consumer groups of e-commerce. In 2015, C-end e-commerce accounted for 12.9% of total social retail sales. The diversion mainly affects traditional channels, especially large stores. However, in traditional channels, convenience stores are said to be beneficiaries. On the one hand, some people stay at home and order online; on the other hand, they buy nearby. This is a change in lifestyle. Second, micro-commerce diversion. Although micro-commerce has not formed a major climate, its diversion impact cannot be underestimated. Especially for niche products and high-end products, micro-commerce's share is quite significant. Third, circle marketing diversion. The Internet has strengthened connections between acquaintances and semi-acquaintances. Although circle marketing does not use e-commerce or micro-commerce sales platforms, it is also an invisible business channel influenced by the Internet. Fourth, new integrated channel diversion. Traditional channels include agents, distributors, retail stores, and consumers. Any integration of these links can form new channels, such as some abandoning agents and some abandoning retailers. These new integrated channels will definitely put pressure on original channels, making sales feel much worse than before. The Substitution Consumption Theory When studying instant noodle consumption in the past, there were two unexpected findings: First, most instant noodles are actually "cooked" rather than consumed during travel. That is, instant noodles used to be a substitute for regular meals. In many white-collar offices, instant noodles used to be available, and it was normal to eat them to satisfy hunger during overtime; Second, instant noodles are also "snacks", such as dry noodles, which are very common in the student market and rural children's market. However, now that the O2O food delivery market is developed, fewer people cook instant noodles, and fewer use them as regular meals. Students and children also use instant noodles less as substitutes for fruits and snacks. Instant noodles fell from 50 billion packs in 2010 to 40 billion packs in 2015. The prevalence of substitutes is an important reason. Of course, the claim that instant noodles are "not nutritious" also has a significant impact. The Return to Normal Consumption After Revenge Spending Theory This is a statement I proposed. People who experienced the natural disasters in the early 1960s often say that more people died from overeating than from starvation. When people are hungry for a long time, once they can consume normally, they will have revenge spending. Long-term hunger leads to craving. Craving leads to revenge spending. When I was a child, fruit was rare. Seeing others eat fruit made me crave it. Later, when I started working and had income, I especially loved eating fruit. I could never eat enough; even when full, I wanted to eat more. That is craving. Just after getting married, I ate all the fruit at my wife's home. Now, I have eaten enough fruit. Even particularly delicious fruit, I just taste it. Consumption has returned to normal. Some people also say that Chinese families' refrigerators are always full, which is also an instinctive response to past long-term hunger. I believe that China's past FMCG consumption was abnormal. The abnormal part, I think, was revenge spending. Now that products are abundant and the sense of consumption hunger has disappeared, consumption has returned to normal. The Consumption Upgrade Theory Among FMCG products, dairy products have grown slightly better than others. This is because the consumption upgrade in the dairy industry has been done well in recent years. In some industries, mainstream products have not been upgraded for more than 20 years. Consumers should have developed aesthetic fatigue long ago. The current decline in consumption is consumers' punishment of manufacturers. In the past, there were relatively few price bands for products, which was normal when consumers' overall purchasing power was not high. Now, price bands should be widened because every time a price band is opened, a certain amount of consumption energy is released. Another phenomenon of consumption upgrade is that food-related industries are more affected. The Bain report also mentioned that although FMCG only grew by 3.6%, cosmetics sales grew by 15.5%, and skincare products grew by 13.2%. This also shows that in consumption upgrades, the category structure will change. Market Chaos Period Only by identifying the symptoms can we prescribe the right medicine. But now it is difficult to identify the symptoms. There are more factors affecting consumption now than ever before. On a large scale, they include the impact of the Internet (e-commerce), the impact of global economic downturn and economic crisis, the impact of China's economic slowdown, the impact of consumption upgrades, and the impact of the new generation's consumption concepts. These factors are intertwined, forming a chaotic state. It is difficult to isolate the impact of any single factor, and decision-making is also difficult. More importantly, some people use these external factors as excuses for inaction. After all, the decline is due to external factors, and everyone is declining, so they find excuses for themselves. The judgment that traditional industries have entered a period of slow growth can be established. But it does not mean that enterprises can do nothing. For example, how to enhance immediate capabilities even in a state of no growth or decline is a new topic. -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and applicable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operation | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operation management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation | [Long press QR code to follow]