The consumer market is experiencing a trend of “exquisite mass merchandising”

What is "sophisticated mass merchandising" and why is there a trend of "sophisticated mass merchandising"? Let's think about the reasons based on consumer demand.

Recently, the topics of "5 slices of potatoes for 18 yuan" and "Hamburgers are getting smaller" have become hot searches on the Internet. While netizens have questioned whether the merchants are "cutting corners", many people have also found that the size of many commodities in life is visibly getting smaller.

On supermarket shelves, potato chips have sharing packs of more than 150g and regular packs of about 70g, as well as 15g mini packs. Coca-Cola has also launched 300ml small bottles and 200ml small cans. Even in the beauty industry, more and more people are beginning to try big-name repackaging products.

As businesses take the initiative to reduce quantities, a consumption trend of "sophisticated mass merchandising" is spreading across various fields.

1. New consumption trend of reducing quantity without deteriorating

Many people attribute the phenomenon of smaller and smaller portions of goods to the behavior of merchants "fleecing consumers" in pursuit of profits. But in fact, the emergence of small-portion goods is not contrary to the demand trend of the consumer market.

In the catering industry, Haidilao has long launched half-portion dishes - the portion is reduced by half, and the corresponding price is also half of the full portion. The purpose of Haidilao launching half-portion dishes is not to "cut corners" to increase profits, but to help reduce the burden on consumers when ordering dishes, while stimulating consumers to try more dishes.

Especially for hot pot, a special form of formal dining, the rich selection of ingredients is its feature. When choosing hot pot, consumers are more inclined to use the same soup base, so that they can eat more different kinds of ingredients, thus improving the overall dining experience.

In addition, the half-portion model also solves the problem of high barriers to entry for hot pot. Since hot pot is settled in the form of "hot pot base + side dishes", and the price of the hot pot base is usually equivalent to the price of the dishes, and the price of the hot pot base in some brand hot pot restaurants is even more than 50 yuan, the fewer the number of diners, the higher the threshold for choosing hot pot. For single and common double dining needs, hot pot is unlikely to be the choice of consumers.

However, with the "half-portion" option, within the same budget, the combination of "hot pot + half-portion" not only lowers the threshold for choosing hot pot, but also ensures the quality of dining for one or two people by ordering a small amount of food with a variety of dishes. This "exquisite mass-market" operation model is also showing greater value to the current catering industry.

In the past year, ice cream assassins, beverage assassins, and stationery assassins have attracted market attention one after another. The phenomenon of the word "assassin" being mentioned repeatedly also reflects the trend of further polarization in the consumer market: consumers will still pay for high-quality products, but the objective fact of shrinking wallets and budgets has also made cost-effectiveness another mainstream demand in the consumer market.

The 2023 Chinese Catering White Paper shows that the average customer spending on noodles, rice vermicelli, spicy hot pot and other catering tracks has declined from 2020 to 2021. In the Chinese fast food track, fast food brands including Country Style, Hometown Chicken and Mr. Rice have expanded rapidly by relying on on-site cooking and self-selected weighing.

In the self-selected weighing model, merchants still have the right to set prices, but consumers can control the amount of consumption by adjusting the portion size of dishes during their own selection. The prospectus previously released by Country Style shows that the average consumption amount per order of Country Style has been declining. From 2019 to 2021, the average consumption amount was 26.6 yuan, 25.6 yuan and 25.3 yuan respectively, and the average consumption amount per order in the first five months of 2022 dropped to 25 yuan.

In response to the consumer demand for "reducing quantity without changing quality", Chinese fast food has achieved rapid growth by relying on the ultimate cost-effectiveness of "exquisite mass-marketing" and catering to the actual needs of consumers for "delicious and inexpensive food".

2. Don’t like the original, but prefer the sample

The consumption trend of "exquisite mass sales" is not only reflected in the catering industry. In recent years, the "big brand small samples" popular in the cosmetics consumption market are also a two-way choice made by merchants and consumers under the trend of "exquisite mass sales".

In the 1940s, Estee Lauder, which was in its infancy, quickly gained popularity by distributing free samples. Since then, samples have been retained as an important way for beauty brands to promote new products. However, for young consumers who have just entered the workplace, full-size international cosmetics are often expensive. And many people may need to use a full-size product for a long time after buying it, and the concept iteration and product update of beauty brands are very fast, so it is easy to want to buy new products before finishing the previous ones, which causes a certain degree of waste.

In contrast, in order to allow consumers to experience the product before purchasing the full-size product, the sample is not large in quantity - usually it can only be used 1-7 times. This small but high-quality product attribute is more in line with the actual needs of young consumers. After seeing the opportunity of the sample business, some merchants have launched a new business model around "exquisite mass merchandising".

In 2017, HRMAY, a beauty and cosmetics store, opened its first physical store in Shanghai. In the following years, THE COLORIST, HAYDON, ONLY WRITE and other beauty and cosmetics stores appeared one after another. Compared with the centralized sales channels of traditional beauty and cosmetics brands such as Sephora and Watsons, the main feature of beauty and cosmetics stores is that they mainly sell samples of big brands.

In addition to beauty and cosmetics stores, sample consumption also has an online form. Long before the emergence of beauty and cosmetics stores, there were a large number of merchants selling "big brand sub-packaging" products on e-commerce platforms. Different from the large-scale business model of beauty and cosmetics stores that officially describes the purchase of goods from counters and channels, "big brand sub-packaging" is usually done by small merchants who purchase regular products from duty-free shops or purchasing channels, and then manually divide them into smaller "samples".

Compared with the sample prices in offline beauty stores, the "big brand repackaging" stores on e-commerce platforms are able to split products into smaller specifications, so the unit price of some products can be as low as less than 10 yuan, thus attracting young groups including students.

The core advantage of big-brand samples is "small quantity and low price". For young consumers, the unit price of big-brand products generally ranges from several hundred to thousands of yuan, while the price of samples is usually less than one hundred yuan. Within the same budget, buying samples can experience more big-brand products at the same time, which not only meets their own consumption ability, but also satisfies their fantasy of exquisite life.

It is precisely because of the insight into consumers' demand for high-quality and diversified products that international brands such as Dior, TF, MAC, Bobbi Brown, etc. have successively launched mini-packaged lipsticks in 2022.

In addition, with the rise of domestic cosmetics in recent years, consumers' loyalty to big-name beauty brands has been declining. Young consumers are beginning to tend to try different cosmetics from different brands. Samples do not increase the consumer burden in terms of quantity or price, and are therefore favored by many consumers who value a fresh experience.

3. New Brand Ideas under Consumer Classification

In fact, we can see from the catering and cosmetics industries that the essence of "exquisite mass merchandising" is to prioritize quality and provide as many choices as possible within the limited budget of consumers. This is similar to the "lipstick effect" often mentioned in economics, but there are also obvious differences.

From 1929 to 1933, during the Great Depression in the United States, sales of cosmetics, represented by lipstick, did not decrease but increased. The reason behind this is that although lipstick is not a necessity, it is cheap and decorative, which can bring certain psychological comfort to consumers. Therefore, the "lipstick effect" is often used to describe the consumption phenomenon that "whenever the economy is bad, people's consumption turns to cheap consumer goods."

The current popularity of "exquisite mass merchandising" and the "lipstick effect" have completely different market environments. After three years of the pandemic, the domestic consumer market is still in the stage of economic recovery, but consumers have already experienced the improvement in quality of life brought about by a round of consumption upgrades. As the saying goes, "It is easy to go from frugality to luxury, but difficult to go from luxury to frugality." Whether it is actively or passively improving the consumption level, ordinary consumers are still more willing to accept and choose high-quality goods psychologically, so "discarding quantity to preserve quality" has become the core demand of some ordinary consumers.

In addition, the wealthy group, who are different from ordinary consumers, have not been significantly affected by the epidemic due to various factors such as income structure and asset management. The "2021 Hurun Wealth Report" shows that China's "wealthy families" with a total wealth of RMB 6 million increased by 1.3% from 2020 to 5.08 million; "high net worth families" with a total wealth of RMB 10 million increased by 2% from 2020 to 2.06 million; and "ultra-high net worth families" with a total wealth of RMB 100 million increased by 2.5% from the previous year to 133,000.

The "Research Report on the Values ​​and Lifestyles of High Net Worth Individuals 2022" also released by Hurun Research Institute shows that after the epidemic, the "personal daily expenses" of high net worth individuals accounted for only 21.5%, while "personal luxury expenses" accounted for 17.5%. Specifically in terms of consumption concepts, high net worth individuals still "pay attention to quality and function" and "choose well-known brands" to maintain their current living standards, and still maintain a high consumption interest in new things.

Therefore, the current trend in the consumer market is not consumption downgrade, but consumption stratification. The challenge facing merchants is how to provide differentiated services to consumers with different needs while ensuring quality.

The advantage of "exquisite mass merchandising" is that it can continue to maintain the quality of products or services while lowering the consumption threshold to meet the needs of more ordinary consumers for a better life. In addition, "exquisite mass merchandising" also opens up new business ideas for merchants, that is, through "small quantities of high-quality" new products, it continuously brings freshness to consumers at both ends of the market and creates a better life experience, thereby stimulating the generation of consumer behavior and the growth of brand revenue.

In short, reducing the quantity should not be a means for businesses to maintain operations, nor is it the purpose of "exquisite mass merchandising". At any time, consumers will have the demand for a higher quality of life, and the value of businesses is to always provide consumers with the right to choose a better life regardless of the market environment.

Author: Bai Lu

Source: WeChat public account "Jingzhe Research Institute (ID: jingzheyanjiusuo)"