At Yonghui's shareholders' meeting on March 17, Miniso's chairman Ye Guofu served as the head of the reform leadership group, guiding Yonghui's adjustment work on the front line, and proposed the 'three major changes' and 'three improvements and two reductions.' This signifies that Yonghui's adjustment has entered deep waters. Among Yonghui's reforms, the supply chain reform explicitly aims to eliminate middlemen, and vigorously promotes net pricing, direct sourcing, and private label development to strengthen Yonghui's product competitiveness. Yonghui's Removal of 'Middlemen' Directly Targeting the Biggest Ills of Traditional Retail From these specific measures, we can see they all directly target the ills of traditional retail. 1. Net Pricing Eliminating redundant fees to reduce procurement costs, thereby increasing price competitiveness. Through the 'zero entry fee' policy and shortening payment terms to 45 days, it forces itself to shift from relying on rent income to focusing on operational profits. 2. Direct Sourcing Completely eliminating middlemen to reduce procurement costs, thereby increasing price competitiveness. As demonstrated by the Zhengzhou Longhu Jinyicheng store, cutting 60% of middlemen, direct sourcing from 200 core suppliers, reducing procurement costs by 15%, forcing itself to focus on efficiency and solve the problem of lagging supply chain response. 3. Private Label Development In the current and foreseeable future of homogeneous product competition, leveraging Miniso's design resources, launching 60 new products in 2025, incubating 10 bestsellers with annual sales exceeding 100 million yuan, to create differentiated product advantages, forcing itself to focus on product operations and upgrade from selection capability to product design capability. All these ills are hard to change thoroughly until they threaten survival. Traditional offline retail enterprises have formed their inherent business models over the past two decades of development in China. They sell not products but shelf space. According to incomplete statistics, typical KA systems have fees such as barcode fees, entry fees, annual brand management fees, special display fees, special-shaped shelf fees, DM poster fees, special price subsidies, temporary promoter fees, etc. Of course, in an era where supply far exceeded effective demand, this was entirely applicable, and life was comfortable. But it also created the ills of traditional retail enterprises—dependence on backend margins (Yonghui's 62% of SKUs contributed less than 15% in 2024) and lagging supply chain response (Yonghui's new product shelf time of 45 days vs. Hema's 7 days).** This is only the surface; the greater impact lies in the weakening of overall organizational capabilities. When procurement no longer has the ability to select products across the market, and product operations can no longer analyze individual SKU data, the competitiveness of traditional retail enterprises gradually disintegrates. In the current era of shrinking volume, where new retail enterprises have been studying operational efficiency and product competitiveness from day one, this appears vulnerable. Yonghui's aggressive reform is precisely to break these ills and adapt to the needs of the times. But rather than a reform, it is more like traditional retail enterprises bidding farewell to the past era. The old retail era of comfortably earning 'second landlord rent' is gone forever, and the new retail era of 'efficiency first' is arriving. The retail industry, which undertakes the function of social commodity circulation, is also beginning to focus on its social value, enabling more efficient circulation of goods across society. Yonghui is just a microcosm. This supermarket reform not only affects retailers themselves but also transforms the original FMCG industry chain, especially distributors. In the new era, efficiency is paramount. Where should distributors go? In the foreseeable future, a large number of traditional retail enterprises will implement direct sourcing and net pricing strategies, bypassing middlemen, which is an inevitable industry-wide trend. As middlemen, distributors must recognize this and find their future value direction. They must face a harsh reality: not only supermarket adjustments, but also discount retail and membership stores are all improving social circulation efficiency, just with different target customer groups. Distributors' business space will inevitably shrink continuously. Shrinkage means a process of competitive elimination. Essentially, the value most distributors earned in the past was the market pricing result of undertaking industry chain functions like 'capital advance + logistics.' When retail enterprises implement net pricing and direct sourcing, this industry chain function is severely weakened. In other words, for distributors to make money in the future, they must find new industry chain functions and earn new market value. In my market visits over the past year, I have seen many distributors extending upstream and downstream based on their original distribution business, venturing into manufacturing (self-controlled supply chain) or retail (opening stores, wholesale-retail integration). Switching roles to earn market value from retail or production. Three directions for distributor business transformation (role extension or capability extension) But if just as distributors, the future requires more capability transformation, becoming service-oriented distributors. That is, serving customers and helping them solve retail product issues. From the retailer's procurement perspective, depending on the type of retail enterprise, their biggest need for products is product selection and assortment. Therefore, buyer and assortment capabilities have long-term value. In the shrinking era, especially as retailers pursue competitive differentiation, there is always demand for new, good products. Thus, being able to quickly screen out good products and reduce the workload for retailers is obviously valuable. This has been well validated at Sam's Club, where a large number of external buyers help Sam's search the entire market for good product opportunities. For some local retailers, especially LKA or BC supermarkets, they may lack the ability to organize product assortments, whether due to complex supplier management or unstable supply sources, for various reasons. But to compete with peers across all channels (especially in China, where online retail and instant retail cannot be ignored), this capability is particularly important. For example, a typical BC supermarket has over a hundred SKUs in the household cleaning and daily chemical category, and the needs of surrounding consumers are certainly multi-dimensional. By using customer surveys, adjusting assortment structure, and other actions to maximize satisfaction of surrounding residents' needs, the output of the entire category can be improved. Obviously, this is a win-win situation for both distributors and BC supermarkets. This ability to analyze and assemble assortments is not possessed by traditional BC supermarkets. However, the industry has already evolved distributors with such excellent capabilities, who are deeply trusted by customers. Distributors deal with products; as long as they stand from the customer's perspective, understand retailers' product needs, and help solve their problems, they will have irreplaceable industry value. Of course, for middlemen, the solution is not limited to this; I believe there are many more skilled practitioners with their own business wisdom. But in the new retail era, we practitioners should all think clearly: what is our industry value in the next era? With clear positioning, there are still many business opportunities in the FMCG industry.