"Today, I am mainly busy changing the price tag. Two days ago, we received a notice of unified price reduction in the work group. The price reduction this time is quite strong, especially in the three categories of preserved meat, dried fruit and nuts. " On December 1 ST, a clerk of Impression City Store in Gudun Road, Hangzhou, a good shop, told Yinshi Finance. Three days ago, Liangpin Shop Co., Ltd.（603719.SH）Yang Yinfen, the new chairman, issued an open letter from internal staff.For the first time in 17 years since the official announcement was implemented.maximumScale price reduction ".
Yinshi Finance came to the store of Hangzhou Joy City, a good shop, at noon, and the clerks had just replaced a batch of new price tags. The clerk of the good shop pointed to a nut gift box and said, "This gift box has just been put on a new price tag. The original price is 89 yuan. This time, it has dropped 29.1 yuan, which is very strong. The prices of dried mangoes and hand-torn meat jerky are also close to half."
Yinshi Finance then visited two other stores. According to the clerk, the product discount activity has been promoted one after another since the "Double Eleven" promotion, and this time it is a large-scale unified price reduction. Take a regular store in a good shop as an example. There are about 500 to 600 SKUs on sale every day, and the products involved in price reduction account for more than a quarter. "There are almost 150 price tags that need to be replaced alone."
Take the first job
The day when the open letter was released was also the third day of Yang Yinfen’s new job. The title of this letter directly says,During his tenuremaximumThe goal is to lead the good shop to become one of the 5% head enterprises that cross the economic cycle.At the same time, the open letter makes it clear that drastic reform is the most important thing he will do after taking office, and the core of this round of reform is to strengthen business innovation and improve operational efficiency. The first step is to "cut a knife" at the retail price of products, and "price is close to the people" is his first tone.
Why should we take the lead in reducing prices? In Yang Yinfen’s view, this is "self-help". "At the moment, what is in front of us is not only a question of whether it is difficult to live, but a question of whether it can live or not." "Behind a series of changes, there is only one core purpose: to return to the image of a good shop next door and to the route of good quality and close price; No change, we really may lose our qualification at the poker table, "Yang Yinfen said frankly in an open letter.
This sense of urgency is not unreasonable, and actively seeking change is only to reverse the trend. Although the growth rate of good shops has obviously slowed down in 2022, 2023 is the real turning point for the company.For the first time in history, both revenue and net profit declined.According to the third quarterly report of Liangpin Shop, the company achieved revenue of 5.999 billion yuan in the first three quarters, down 14.33% year-on-year; The net profit of returning to the mother was 191 million yuan, down 33.43% year-on-year, and the non-net profit was 122 million yuan, down 44.23% year-on-year.Among them, the net profit returned to the mother in the third quarter was 19.98 million yuan, a year-on-year decrease of 97.88%; Deducting the non-net profit loss of 2,078,800 yuan.
Seeing the words "loss" appear, the company is really anxious. Shortly after the announcement of the third quarterly report, the good shop officially changed coaches. Between the lines of the open letter, investors can even read that "the life of leisure and snack enterprises is very difficult", and "climbing period" is the definition of the company’s current development stage by good shops.In view of the dilemma of declining performance, the company pointed out in the survey minutes that the overall sales scale of the company fluctuated due to factors such as stratification and grading of consumer demand, differentiation of online platforms and users.
This "differentiation" is mainly caused by the differentiation of consumption structure influenced by the economic environment, and the price sensitivity of consumers has been obviously improved. A few months ago, a good shop was once called a "snack assassin" by netizens because the price of stewed duck tongue and boneless chicken feet with lemon was as high as 528 yuan/kg and 229 yuan/kg respectively. This is a recent phenomenon. "A few years ago, consumers didn’t have a strong concept of’ price per catty’, but since last year, they obviously felt that buying by catty was’ expensive’, so more and more customers had the impression that our store products were’ more expensive’. This time, it is necessary to knock down the price of the store products, and also want to change consumers’ perception of the brand. " Wu Ling, head of the brand of Liangpin Shop, said.
According to Wu Ling, this unified price reduction is mainly aimed at offline stores. In November, specific work such as store pilot research and collecting user feedback was carried out. After the release of the chairman’s open letter, all stores in the country acted in a unified manner and completed the price adjustment work.This time, the average price of 300 products was reduced by 22%, with the highest reduction of 45%, and the average reduction of nuts reached 40%. This round of price reduction focused on snacks with cost optimization without affecting quality and high repurchase rate, which will also become the long-term strategy of good shops, and gradually make 80% of products "close to the people" in the future.
The price tag replaced by the store.
Yang Yinfen believes that consumption has entered a rational era, and "people’s money bags are tighter", and price reduction will be the first step to prompt consumers to reopen their money bags.
Industry squeezes bubbles
The slowdown in economic growth has caused all walks of life to live a tight life. The differentiation of consumption structure has changed consumers’ thinking and habits, which has spawned a series of "new species" with different styles of play, which is also an important factor leading to the differentiation of brand snack enterprises’ performance.In the first three quarters of 2023, in addition to the rare year-on-year decline in revenue and net profit of good shops, both revenue and net profit in Iraq also declined, and the net profit of non-returning mothers was deducted for the fourth time in the same period of last five years; I really miss your deduction of non-homecoming net profit, which has been at a loss for more than a year. Three squirrels appeared for three consecutive years, and the revenue in the first three quarters declined year-on-year.
"Now’ snacks are busy’ these brands are playing too hard." Shortly after the release of the open letter, the insiders of the good shop expressed their feelings to Yinshi Finance. In her view, in 2023, the discount snack shop had a serious impact on the Hubei market, the base camp of the good shop, resulting in a significant decline in the number of people entering the store. This is also an important driving factor for the official price reduction strategy. She believes that this move can be understood in a sense that the company has changed its previous high-end strategy. "Many things don’t need to be so fine, so we should give up the quality persistence that consumers are not aware of."
In the words of Yang Yinfen, it is "to make every penny spent on quality by good shops be perceived and recognized by consumers".
Indeed, discount snacks, fresh snacks and discount snacks, these "new species" that ran into the track in just two years, expanded rapidly with the blessing of capital, and seized the sinking market step by step. Among them, discount snack shops are undoubtedly "conspicuous packages" among the "new species". According to the recent research report of Guotai Junan, the expansion of discount snack chain has accelerated since 2020, and the number of stores will exceed 20,000 by the end of 2023 and 30,000 by 2024, which has promoted the penetration rate of zero food in the sinking market and cost-effective people. Among them, the head brand "Snacks are Busy" has exceeded 4,000 nationwide in just six years.
Although in the eyes of most consumers, brand snacks and discount snacks belong to different sub-tracks, Wu Ling said, "The snack industry has no middle, high and low-end customers in essence, and it is oriented to consumers. Therefore, the influx of’ new species’ will inevitably cause obvious differentiation to the company’s customer base and squeeze the original market scale."
Through interviews, Yinshi Finance found that even the good shops after unified price reduction may not be able to compete with other types of snack shops in terms of price. Take the pork jerky with the highest order rate in good shops as an example. As the key product of this price adjustment, the price of the classic pork jerky after price adjustment is 65 yuan/kg, which is lower than that of 89 yuan/kg in Sam supermarket. However, the prices of pork jerky in discount snack shops such as Wife’s Adult and Mulao are mostly 40~50 yuan/kg. After the price reduction, the meat and nut snacks in good shops are still slightly more expensive than the products sold in discount snack shops.
Obviously, the main purpose of this round of price reduction of good shops is not to grab the market with "new species", but to optimize product positioning, enhance brand image, and pay more attention to themselves. Just as Yang Yinfen’s attitude towards "new competing products":"We are taking a differentiated road, which is essentially a different development path from discount snacks. Our road is more difficult, more challenging and more valuable. Our current difficulty is that we have not made differentiation and sense of value. "
An industry insider explained to Yinshi Finance that there are obvious differences between brand snack shops and discount snack shops. On the one hand, there are different portraits of users. Customers who pay attention to product quality and tend to be healthy foods are more sticky to brand snack shops, especially parents who buy snacks for children will give priority to brand products. As Yang Yinfen said: "A business with a customer price of tens of yuan and a food that is eaten into people’s bodies, ordinary people will definitely choose a brand with better quality and be better to themselves."
On the other hand, it is the different ways of market expansion. Brand snack shops pay attention to the specifications, decoration and the quality of shop assistants, and will invest more money in improving the quality of stores and strengthening staff training, eventually forming a differentiated play.In the face of fierce and disorderly market competition, price "involution" will become the new normal of snack industry, but not all products will adopt low-price strategy, but products and customer groups will be graded and layered, and products with low profit and high profit will also be divided into strong sticky customers and potential customers.
In fact, for the overall development of the current snack industry, most people in the industry think that "the bubble is a little big", and the rapidly expanding discount snack shops and discount snack shops may win for a while only by price war, but they will still face the same dilemma as the current brand snack shops in the near future.
Optimize supply chain
In this round of price reduction, good shops always emphasize "quality-price ratio", and its main purpose is to get rid of the shackles of price war and find a longer-term way to break through. Good shops said that the "supply chain revolution" will continue to be promoted in the future, so as to truly reduce prices without degrading quality. In fact, the space for this round of price reduction mainly comes from measures such as improving supply chain efficiency, improving lean production, optimizing operating costs and introducing gross profit red line.
According to the company’s annual performance report, from 2018 to 2022, the gross profit margin of good shops was 31.21%, 31.87%, 26.89%, 26.77% and 27.57%, respectively, with a slight overall decline. In the third quarter of this year, the gross profit margin declined again. After a round of large-scale price reduction, will it further reduce the company’s gross profit margin? The person in charge of the company said, "it won’t." If we continue to squeeze the profit space to ensure the steady growth of the company’s performance, it will not be worth the candle. Good shops rely on the "supply chain revolution" that has been launched since 2020. By visiting nearly 30 suppliers, they help suppliers improve their lean management capabilities in 12 dimensions, including operation standardization, automation and continuous flow operation.
Taking nut products as an example, as raw material-based products, in the past, good shops required suppliers to purchase raw materials with specified specifications, and the procurement cost remained high because of the high grade. At present, good shops bring the purchase of bulk nut raw materials into the direct mining system with suppliers, and change the strategy of raw material acquisition, carry out unified market mining, and then classify raw materials to make different types of products with different models and grades of raw materials.
In addition, in order to achieve "price degradation without quality degradation", the company has also set up a gross profit red line, which will be "stopped" once it is higher than the red line. In this way, the internal team is forced to reduce intermediate costs and improve management and operation efficiency.
It is not only good shops that ask the supply chain for a "quality-price ratio". After a continuous decline in performance, the three squirrels put forward the strategy of "high-end cost performance" for the first time in 2023, saying that it is necessary to ensure product quality and realize profit spillover through the optimization of the whole link of the supply chain, and transfer this profit to consumers, so as to achieve high quality and cost performance. Different from good shops,Three squirrels are investing in their own production capacity.According to a recent survey of three squirrels, "The company has independently invested in the construction of demonstration factories such as daily nuts, macadamia nuts and pecans. Driven by the scale advantage, the output has gradually increased, the production cost has been gradually optimized, and the yield of finished products has gradually improved." This strategy seems to be working. In the first three quarters of 2023, although the income still declined year-on-year, the net profit of three squirrels returned to their mothers rose by 81.42% year-on-year.
An industry insider who once served as the channel director of listed leisure snack enterprises told Yinshi Finance that, in his view, leisure snack enterprises operating with light assets under the platform and OEM mode do not have core barriers and are vulnerable to market competition. "Many discount stores that are rising now rely on opening up the supply chain, so the supply chain is facing more intense competition."
Facing the dilemma of "saving oneself urgently", the good shop has taken an important step. Although there is no obvious feedback from the consumer terminal, the capital market has given an encouragement.Half an hour after the opening on December 1, the daily limit of the good shop was reported at 21.32 yuan, and the turnover was enlarged to 120 million yuan, with a total market value of 8.55 billion yuan. "The scale since its establishment 17 years ago.maximumA price cut "benefits quickly.