In the past, I only heard of mass-market KTV, but now "mass-market snack shops" have also appeared in the streets and alleys.
After the college entrance examination, Huahua, who lives in Wuhan, frequently went to mass-market snack shops. This type of store sells all kinds of snacks together, using low prices in exchange for high sales, focusing on a cost-effective ratio. Even if the bulk snacks in the store are sold by the catty, they are cheaper than many supermarkets or convenience stores, which makes Huahua, who is cash-strapped but likes snacks, very happy.
Behind the popularity of consumers, there is a new upsurge of opening stores for mass-market snacks. The total number of "snacks are very busy" stores across the country has exceeded 3,000, and according to media statistics, this number ranks third in the industry. In addition, many mass-market snack shops, including "Zhao Yiming Snacks", are also growing rapidly in scale and have obtained multiple rounds of financing.
For other peers on the track, there is no doubt that they feel the danger of competition. For capital, the rise of mass-market snack stores has brought new imagination. However, there are also voices who believe that this kind of low-price store has low gross profit margin, weak anti-risk ability, and is difficult to be sustainable.
Can the "mass sales model" become a gold nugget and a real outlet on the snack track? Or short-lived false demand, false prosperity?
"New gold nuggets" in the trillion-dollar track
Casual snacks are a trillion-level big market and a long track.
The "2023-2024 China Snack Food Industry Status and Consumer Behavior Data Research Report" released by iiMedia Consulting shows that from 2012 to 2022, the market size of China's snack food industry continued to grow, from 530 billion yuan to 1,165.4 billion yuan, and is expected to reach 1,237.8 billion yuan in 2027.
Among the many fast-moving consumer goods, casual snacks are marked with the obvious brand of "broad customers and many categories". Enterprises must achieve a high penetration rate to expand their business scope. Therefore, channels play the role of "Mr. Key" in the development of enterprises and industries.
Taking history as a mirror, we can know the ups and downs. Standing on today's trillion-dollar snack market and looking back at the past, the three stages of channel changes have formed the current market status and also promoted the rise of batch after batch of snack brands.
The first stage is when e-commerce has not yet emerged, and comprehensive supermarkets are big channels. Chain stores represented by Wal-Mart and Carrefour have promoted the rapid growth of brands such as Qiaqia Food and Daliyuan; in the second stage, online e-commerce has begun to develop rapidly.
The third stage is the stage of channel differentiation. From 2020 to the present, online traffic continues to peak, offline passenger traffic slows down, and residents’ willingness to consume declines. Through efficient channel operation to form a cost-effective mass retail snack store, it ushered in new development opportunities.
"Snacks are very busy" was born in Changsha, Hunan Province. The number of stores opened in recent years has basically maintained an exponential growth. The pace of expansion is quite special. Instead of directly spreading the net across the country, it starts from Changsha and spreads to surrounding cities in a radial manner. This is similar to the expansion route taken by another internet celebrity brand in Changsha - Cha Yan Yue Se.
Another mass-market snack shop brand "Zhao Yiming Snacks" was born in Yichun, Jiangxi. It has followed the people-friendly route from the very beginning, and will fully liberalize franchising in 2020. The expansion speed is also growing exponentially. As of this year, the total number of stores nationwide has exceeded 1,000.
"Yidian Finance" observed that mass-market snack stores have been favored more and more in terms of consumers and capital.
At the consumer level, price is still the most attractive key factor for mass-market snack shops to place orders.
In general, the prices of products in mass-market snack stores are mostly 20-30% cheaper than those in supermarkets. A 500ml bottle of Coca-Cola is priced at 3 yuan in most convenience stores, while it is only 2-2.4 yuan or even lower in some "snacks are very busy" stores. In the "Zhao Yiming Snacks" store, the 5 yuan bottle of Yuanqi Forest in other stores only costs 3.7 yuan, and the prices of other products are also much cheaper.
Not only are they cheap, but these mass-market snack stores also have a wide variety of products. There are generally more than a thousand SKUs in the store, including well-known top snack brands and many small brands.
You must know that many consumers used to purchase large quantities of packaged snacks. They either went to offline supermarkets, but they were expensive, or they shopped online, but there were always things they didn’t like. In mass-market snack stores, it is not expensive to pick up a big bag of your favorite snacks, which indeed meets the needs of many mass consumers for "personalization and cost-effectiveness".
In the business logic of these mass-market snack stores, it is better to meet the snack needs of 80% of the mass consumer group than to compete with big brands in 20% of the mid-to-high-end market. It can be said that while satisfying the needs of mass consumers for snack consumption, they have taken away part of the share of snacks that belonged to supermarkets, convenience stores, and e-commerce.
Every time a new business model emerges or when the entrepreneurial trend blows, capital will always come smelling the smell.
From 2021 to the present, many snack brands such as Snacks are very busy, Snacks Best, Love Snacks, etc. have successfully obtained investment. In February this year, "Zhao Yiming Snacks" completed a 150 million round A round of financing led by Black Ant Capital. BESTORE also invested in this financing. "Veterans" in snack brands seem to be paying attention to this field.
However, even if the capital is entering the market, after experiencing fake outlets such as shared bicycles, the market is still cautious about emerging entrepreneurial outlets. There are still many voices questioning the fake demand for mass retail snack stores, and whether they can last for a long time in the fierce competition is still a question mark.
"Danger and Opportunity" in the Nuggets
The competition among enterprises today is not the competition between products and services, but the competition between business models.
Some people think that, regardless of the superficial turmoil of mass-market snack shops, this business is a fake prosperity and will not last long, because its model is not innovative and its gross profit margin is low.
According to industry insiders, even the most popular mass-market snack shop "snacks are very busy" has a gross profit margin of only about 18%. From a horizontal comparison, the gross profit margins of Yifen, Yanjin Store, Liangpin Store, and Three Squirrels in 2022 will be 43.13%, 34.72%, 27.67%, and 26.74%, respectively.
Indeed, from this point of view, the mass-market snack store is not a profitable business.
However, some people think that any emerging business will have a period of incubation before it explodes and even matures, including games and e-commerce. At present, mass retail snack stores are in the early incubation period, and in the later stage, they will reduce marginal costs and increase gross profit margins with the advantages of scale.
Whether it is a real trend or a fake prosperity depends on the essence of the mass retail snacks model. The core is four words-"low price and high volume".
This kind of business model does not have any new elements, and is even a bit simple and crude, but it is very difficult to really implement it.
In the traditional retail mode, snacks will go through multiple links after leaving the factory, including agents, distributors, retailers and so on. Each link will generate part of the profit. After layers of overweight, even if the ex-factory price is low, the price will be raised after it reaches consumers.
Different from traditional retailing, the business model of mass selling snacks is to cooperate with manufacturers or large distributors. On the one hand, through large-scale purchases in batches, the purchase price is reduced. The store network of "Zhao Yiming Snacks" has been reduced from the previous several levels of distributors to the three levels of "brand-warehouse-store". This allows it to maintain its expansion speed with lighter assets, reduce expansion risks, and lay a "low-price foundation."
There are many other mass-market snack stores that are using this model to achieve low prices. This low-price model is not a money-burning war in the Internet model in the inertial thinking-attracting users through low-price subsidies, and then raising prices after attracting users, but relying on fast-paced, high-turnover product selection and purchase, eliminating a lot of intermediate links, and improving channel operation efficiency, and this efficiency must be higher than that of traditional supermarkets.
However, it is worth noting that it is not easy for emerging brands such as "Zhao Yiming Snacks" and "Snacks Are Busy" to realize the benign operation of this model, and it may even cause a business crisis.
The main difficulty is that, on the one hand, at the front end, store operators must have a timely and in-depth insight into consumer preferences, be able to eliminate slow-selling products according to consumer preferences, and timely update products that are more popular with consumers, so as to continue to attract consumers into the store.
On the other hand, at the back end, mass-market snack shops must rely on volume to reduce costs. However, if there are too many varieties, high requirements are placed on procurement, and procurement is actually a technical task that relies heavily on experience. It needs to match consumer preferences. At the same time, it must avoid excessive inventory and financial pressure, which will lead to a break in the capital chain.
Improving efficiency seems to be a simple job, but in fact it is very complicated. If a certain link is not kept up, it will cause a business crisis.
Moreover, even if the single-store model is successful, it is only a good start. Off-site expansion is the touchstone of whether the business model can be sustainable, which in turn puts forward higher requirements for the model replication ability of mass retail snack stores.
Generally speaking, although it is difficult, the mass retail snack store is still a high-quality business and a real outlet. According to a research report released by Zhongtai Securities, snack food retailers are expected to exist for a long time as an important new retail format, and it is estimated that there will be 60,000 to 70,000 stores in the long term. According to the estimates of Huaan Securities, the market size of mass-market snack stores is nearly 100 billion.
What capital values is not the current profitability, but more emphasis on future growth. Even though the current gross profit rate of mass retail snack stores is not high and their ability to earn money is poor, but by grasping the lifeline of "high efficiency", they can avoid becoming a "false prosperity" entrepreneurial outlet in the future and continue to open up a broad space for development.
In short, from the current point of view, the "danger and opportunity" in this Nugget field coexist.
Two “value paths” to the future
The core of business continuity is to increase repurchase, and the sole purpose of an enterprise is to create customers.
In order to continue the business format of mass retail snack stores and maintain long-term growth, one thing must be done well, that is, to continue to create customers, which needs to be divided into "vertical" and "horizontal".
First of all, it is necessary to create higher value for consumers in depth and form repeat customers.
Snacks itself is an industry with strong categories and weak brands. For a long time, many snacks have only names but no brands, such as marinated eggs, dried beans, etc., and very few can make "categories into brands", such as Weilong, which makes spicy strips, and Chacha, which makes melon seeds.
Any brand that makes innovations in its category will definitely be able to obtain market dividends. Mass retail snack brands can develop in-depth categories, and innovate in product categories and quality to tap the diversified needs of individual consumers, thereby increasing consumption frequency.
You must know that consumers have low expectations for the expenditure required for mass-market snacks. If category innovation surprises consumers with more possibilities, it is very likely to increase user stickiness and increase repeat customers. At present, the category of "snacks are very busy" has surpassed many top snack brands.
Although mass-market snacks focus on cost-effectiveness, the foundation for the survival of snack brands is quality. If this is ignored, no matter how high the cost-effectiveness is, it will not be able to attract repeat customers.
In terms of quality control, top snack brands including Three Kinds of Squirrels, Liangpin Store, and Yanjin Store have accumulated profound experience. If you cooperate with these brands, you will be more confident in quality control. "Snacks are very busy" has directly formed cooperation with players such as Yanjin Shop and Ganyuan to minimize the possibility of uneven supply quality. In terms of quality control, "Zhao Yiming Snacks" uses the supplier scoring system to score manufacturers, trying to be more objective in quality control.
Second, expand the capacity of the overall customer base horizontally.
In order to attract more customers into the store, mass retail snack stores must add more discount categories and high-frequency consumer categories, including beverages, convenience foods, etc., in addition to bulk snacks. On the one hand, this can form a stronger store drainage effect, and on the other hand, it can prolong the stay time of customers in the store, thereby increasing the opportunity to buy snacks with higher prices, and creating more profit points.
In addition to expanding consumer groups for supplies, mass retail snack stores should also expand broader channels in sinking markets. On the one hand, the channel itself is the survival foundation of snack shops. On the other hand, the high cost performance characteristics are obviously more popular in sinking markets with more price-sensitive consumers.
For example, after "Snacks are very busy" opened more than 100 stores in Yueyang, it continued to open stores in various counties in Hubei, and embarked on a path of "encircling the cities from the countryside". Similarly, since its birth, "Zhao Yiming Snacks" first sank to various villages and towns, and then spread from Jiangxi to the whole country.
Many people believe that mass-market snack stores such as "Snacks are very busy" will have an impact on earlier snack brands such as Three Squirrels and BESTORE. In fact, in the industry competition field, the situation is always changing. According to the data, Xiaolu Lanlan, an Internet baby food brand owned by Three Squirrels, has created hawthorn sticks for mass sales on the Douyin e-commerce platform, ranking top 1 in the sales of mountain plants. As mentioned earlier, BESTORE participated in the financing of the mass-market snack brand "Zhao Yiming".
In the future, there will be more "rookies and veterans" on the track of mass selling snacks. Who will be impacted ultimately depends on strength.
Generally speaking, mass retail snacks are still a relatively new retail format. It can form an upsurge, which essentially stems from the changes in snack food channels and the changes in the concept of consumer groups in recent years. Whether it can form a scale in the future and form a bigger outlet remains to be seen.
Might as well let the bullets fly a little longer.