On the afternoon of November 27th, the 2024 "Consumer New Forces Conference" co-hosted by Financial Union, the STAR Daily, and organized by New Consumption Daily and Venture Capital Daily was held in Xuhui District, Shanghai. More than 400 people attended on-site. Participants included leading companies in the retail innovation, medical beauty consumption, coffee and tea drinks, outbound ventures, olfactory economy, and other popular industries, as well as multiple investors from top institutions such as Qicheng Capital and Fengrui Capital.

At the theme speech session of this conference, Qicheng Capital partner Wan Xiao, from the perspective of an investor, shared profound insights on how consumer companies can seek breakthroughs in the era of stable consumption.

Over the past decade, Qicheng Capital has invested in more than 20 companies in China, with a total annual sales exceeding 80 billion and serving over 0.1 billion families in China. Among them, there are more than 15 companies with revenues exceeding 1 billion, and 6 with revenues exceeding 5 billion. Qicheng Capital has also invested heavily in offline stores, including over 30,000 stores set up in communities and over 3,000 stores in shopping centers.

Consumer market enters the era of stable consumption: Channel differentiation and user dominance

Wan Xiao pointed out in his speech that the current Chinese consumer industry is undergoing cyclical trials, with the uncertainty of the macro environment posing many challenges to the industry.

He believes that there are still many existing markets in China's future, where a decrease in large expenditures and an increase in small expenditures will become an important direction of consumer spending. At the same time, the willingness of users to pay is also becoming more divided, with differences in consumer confidence among different groups, therefore, companies need to constantly explore consumer demands. Wan Xiao also proposed the Qicheng Capital's "Consumer Clock" theory. He emphasizes that in the era of stable consumption, companies need to find opportunities around options and necessities, upgrades and replacements.

Wan Xiao believes that in the era of stable consumption, the focus should be on the channel-side differentiation trends. For example, online retail has evolved from shelf e-commerce differentiation to e-commerce with single products and price mechanisms represented by pdd holdings, as well as content e-commerce represented by Douyin. Both forms of e-commerce achieve precise matching of supply and demand through efficient algorithms and mechanisms, thereby enhancing the overall transaction efficiency of the channel.

At the same time, offline retail is also showing a significant trend of differentiation. Quality retail and discount retail are gradually replacing the traditional large-scale shopping mall model. Quality retail companies such as Pinduoduo and Sam, by improving service and product experience, create their own differentiated competitive advantage, while discount retail focuses more on the full-chain cost control, providing consumers with higher value-for-money products through efficient operations and supply chain management.

In the view of Q&M Dental Capital, the consumer market has now shifted from an incremental market to a stock market, from a seller's market to a buyer's market, where user voice is becoming stronger. User demands, preferences, and purchasing power are becoming key factors determining brand and channel development. However, with the decentralization of media and centralization of channels, the value chain distribution is gradually leaning towards channels.

"Volume price" and "volume value" are equally important.

In the current market environment of supply and demand imbalance and oversupply, how consumer companies seek breakthroughs has become the focus of all parties in the market.

Wan Xiao believes that in the current market environment of stock or even reduced volume, users' dominance is increasing, overall commodity fill prices for enterprises are gradually decreasing, and the industry profit pool is shrinking. Enterprises need to shift from opportunity-driven to capability-driven, from growth-first to efficiency-first, and from scale-oriented to value-oriented. Companies need to build their capabilities in the directions of 'downward volume price' and 'upward volume value,' while using the upgrade and integration of media and channel infrastructure to reduce testing costs, and create new user demands.

In terms of volume price, companies need core capabilities in low-cost full-chain management and low-cost production. Companies need to achieve price advantages by optimizing production processes and reducing operational costs while ensuring product quality.

In terms of volume value, companies need to create new user demands, not just meet existing demands. Creating demand requires companies to have strong innovation and low-cost testing capabilities. Disorderly innovation and creation may lead companies into difficulties, so companies need to have the ability of low-cost testing, adjust products through shorter chains, more efficient user reach, and faster feedback pathways, and reduce innovation costs.

For the development of the new generation of national brands and national chain stores, Wan Xiao has proposed five 'universal' and four 'transformation' strategies. The five 'universal' ones include: universal availability, full chain connectivity, full channel coverage, universal volume innovation, and versatile organizational model; the four 'transformation' ones include: community-oriented, discount-oriented, manufacturing-oriented, algorithm-oriented. In addition, companies also need to 'attack' on content, products, and channels, and 'defend' in the supply chain to ensure sustainable growth.

Finally, Wan Xiao emphasized the importance of organizational capability in the development of enterprises. He stated that the reason why most companies are weak in growth is not due to unclear strategies, but rather the inability to find excellent talents and the lack of self-motivation. Therefore, companies need to establish mechanisms for agile retrospective and high-frequency retrospective, continuously optimize and improve organizational capabilities to address the challenges of the current era.