The challenge that many consumer stocks will face in the future is that if the products that have been raised in price under the guise of consumption upgrading in the past cannot meet people's high-level needs, they will not be able to establish core competitiveness, and they will not be able to achieve differentiation and brand premium.
The special author of this journal is Minghui.
In 2023, there will be a serious differentiation in the e-commerce industry of Chinese concept stocks, with the stock prices of e-commerce platforms that focus on cheap and cost-effective prices soaring, and the stock prices of e-commerce platforms known for their quality plummeting.
On November 29, BESTORE launched the largest price reduction in the 17 years since its establishment, with an average price reduction of 22% and a maximum price reduction of 45% for more than 300 products, mainly focusing on snacks with cost optimization but no impact on quality and high repurchase rate. Yang Yinfen, the company's new chairman and general manager, has only been in office for three days, and it seems that it is no coincidence that BESTORE has continuously announced "change of leadership" and "price reduction" in a short period of time. Yang Yinfen bluntly said in an open letter to all employees: "At present, what is in front of us is not only the problem of living a difficult life, but the problem of whether we can live. This move undoubtedly caused a shock in the snack industry.
It can be seen that in the stage of rapid economic development, along with inflation, many consumer goods enjoy excessive brand premiums, and these premiums also contain a lot of bubbles. What happens when the tide goes out?
The essence of consumption upgrading
Consumption downgrade is a word that was once popular in 2018, which caused heated discussions. In 2023, the concept of consumption downgrade will become popular again. Obviously, the core factor behind this is the economic cycle.
Nowadays, real estate, ** and other assets have shrunk, and consumption, especially non-essential goods, is destined to be affected in a visible way;And many companies are cutting jobs and wages, expectations for future revenue growth have fallen, and many high-premium bubbles for consumer goods also need to be squeezed out.
In fact, the upgrading of consumption is not reflected in the level of the first, but the upgrading of quality - the improvement of the value of consumers, the essence of which is people's yearning for a better quality of life, is to let the general public enjoy the convenience brought by social development and scientific and technological progress.
For example, Zhang Liaoyuan, chairman of the Three Squirrels Company, responded that many people asked us about our strategy since the price reduction of good products, but in fact, we implemented the "high-end cost-effective" strategy as early as a year ago. What is the high-end cost performance of snacks?In terms of business model, it is the premise of total cost leadership to achieve high-quality and differentiated goods, and the best way to achieve all this is its own brand, because only its own brand can solve the customization of goods and the optimization of the whole link, which is not only the cost optimization of the intermediate link, but more importantly, the optimization of commodity raw materials and formulas, which is the biggest difference between the private brand model and the procurement and retail model, of course, the more flexible procurement and marketing model is one of its core advantages;For consumers, it is a "different, rich and optional" snack under the premise of low price, low price is the general basic demand of consumers, but the first characteristic of people's demand for snacks is delicious, and to solve the characteristics of delicious, from the perspective of retailer supply, it is necessary to achieve "high quality, differentiation and richness", which is the underlying demand of people, people do not need a snack to solve the delicious, but need a variety of different carriers, different tastes, and constantly alternative snack solutions;From a strategic point of view, you can imagine something like "Sam's and Costco", which are essentially high-end value for money.
It can be seen that most of the bulk consumer goods that cannot be differentiated are difficult to establish long-term stable high premiums, and eventually return to the average profit margin of the society. For example, products such as nuts, ice cream assassins, and milk tea cannot be maintained for a long time. BESTORE enjoyed a high premium when the economy was developing rapidly and people's expectations for future income were high, and now it has to pay it back by reducing prices when the economy returns to the new normal.
Therefore, this is a challenge for many consumer stocks in the future, in the past, under the guise of consumption upgrading, the price of products that have been constantly raised, if they cannot meet people's high-level needs, they will not be able to establish core competitiveness, and they will not be able to do differentiation and brand premium. Many of the so-called well-known brands in the past have to move down to the white label, and the ceiling of the industry has shrunk.
The typical case is Arowana, the core grain and oil product is a bulk consumer product, it is difficult to make differentiation, and it was hyped to 120 times PE in 2021, with a market value of more than 780 billion yuan, but since then it has opened a long road, and the market value has now fallen to 170 billion yuan, and the valuation is still very high.
The division of the consumption era
The Japanese writer Miura Zhan has two famous books on consumption: "The Lower Society" and "The Fourth Age of Consumption", in which he divides the age of consumption into four stages. To put it simply, the first era of consumption: in the era of hunger and cold, the ideal is food and clothing;In the second era of consumption, in the era of food and clothing, the ideal is to be well-off;The third era of consumption: in the era of moderate prosperity, the ideal is prosperity;The Fourth Age of Consumption: In the era of prosperity, the ideal is simplicity.
In the second consumer society, people have just escaped poverty from the first consumer society, and they want to live a well-off life, and the representative standards of the well-off are the three major artifacts (washing machine, TV, refrigerator) and the later 3C (air conditioner, car, color TV). The consumption habits of individuals are bigger and more, the better, and the overall consumer society is characterized by family (family-based consumption) and privatization (I also have what others have).
With the further development of the economy, people have the need to be "different" and try to reflect their own characteristics through their own consumption;In order to sell more products, companies have also played the slogan of "differentiation" to adapt to the needs of consumers. As a result, consumers and businesses have joined forces to create a third consumer society – personalization: young people do not need to pay for their own households, they earn their own money and spend it themselves;Branding: Only such a brand can represent me, I don't want something that everyone else has.
And the trend of "self-pursuit" consumption has become stronger and stronger in the middle and late stages of the third consumer society. Everyone is "chasing the self", trying to express themselves in every consumption, and many companies also advocate "pursuing the self" in the same way. Consumption becomes excessive, becomes consumption, and the author points out that "the 'different' self is a kind of illusion, because as long as one aspect is different, it can be different, and in each aspect there will be new consumer goods, so the search for the 'self' through consumption is an endless ......."Consumption once brought happiness to people because it met people's needs;Now, because people don't know what they need, people and companies are complicit in each other's activities, constructing a consumption trap of 'self-pursuit' and falling into it, and the marginal benefit of happiness in consumption is diminishing, or even fleeting, making people feel empty in the moment they get. ”
It is also the truth that the extreme of things must be opposed, and "Muji", as the representative of the fourth consumer social enterprise, was born at this time. As the author reminds, several consumer societies overlap with each other, not separate and independent. From another point of view, people with different income levels have different economic pursuits, and they also have different consumption habits and conceptsIt is not a universal consensus to leapfrog from one stage to another.
China is entering the fourth consumption era
At present, with the gradual slowdown of the economic base increase, the extremity of things after the prosperity of consumerism is bound to reverse, and Chinese society is also entering the fourth consumption era.
Fourth, the values of the consumption era are not simply "thrifty" and "desireless". The fall from luxury models back to economy models (or light electric vehicles) is not so much a "downgrade in consumption" as a "return to rationality". The difference can be used to invest in more personal hobbies, or to spend less time with your family. They want to pursue "happiness at a reasonable price", not "happiness without money", but more correctly "happiness free from unnecessary consumption".
It's a reflection of society's progressive development, from Apple's Steve Jobs to Facebook's Zuckerberg, for example, the top people of this era always seem to wear the same clothes every day. People who wear the same clothes every day look more refined and attractive than they do every day. They give the impression that they have their own backbone and will not be led by the so-called trends. At the same time, they also have a bigger stage to realize their own value, and they do not need to emphasize their worth through clothing, and the definition of successful people has changed.
At the same time, the desire for material things is reduced, and the attitude of cherishing things can be used for a long time, and you can feel rich by owning good things in moderation. The psychological pursuit of consumers has changed from a "sense of self-expansion" to a "sense of self-affirmation". The former is pleasure through the purchase of larger, higher-class things, which used to be a common value in times of rapid economic development;The latter pursues comfort, likes a leisurely life, and tends to buy a car that is comfortable to drive and not so fast.
In such a consumption shift, the valuation of most consumer stocks listed on A-shares and H-shares will face greater downward pressure, and many consumer stocks will turn to dividend yield pricing, such as Yangyuan drink, whose valuation can be as low as 9 times the price-earnings ratio, and the center is also around 14 times, with a dividend yield of as high as 9%.Master Kong Holdings, the valuation has been maintained at 30 times the price-earnings ratio for a long time, and now it has gradually moved down to about 14 times, with a dividend yield of 57%。Many light luxury brands may have a long-term shrinking market, and even if these companies are very cheap, they may be value traps. Most liquor brands, especially third- and fourth-tier brands, will also face the possibility of dividend yield pricing in the future. A glass of 8The promotion effect brought by 8 yuan American coffee is the same, so there is no reason to consume a cup of concept coffee of 20 yuan, so the unit price of Luckin coffee may not be convenient to increase for a long time, which is completely different from the resonance logic of the past food and beverage stocks rising in volume and price.
In Japan, Nissin Foods peaked in 1987, fell by 70%, and the stock price was low for a long time, and it took 27 years to hit a record high after the first economics workedIt took 19 years for the well-known condiment company Kikkoman to return to its former high, referring to Haitian Flavor's crazy valuation in 2020, and it is worth being wary of the risk of long-term compound interest damage after the bursting of the high-valuation bubble.
Material desires will decrease, spiritual needs will increase accordingly, many young people will save money to watch a concert of thousands of yuan, **literature, games, **short dramas, animation and other consumption will continue to flourish. In 2022, the total number of barrage publications of Tencent** animation IP will be 51.81 million, and the total number of interactions will reach 24.7 billion is indeed a convincing reason. Among them, young users aged 18-29 account for the largest proportion, with nearly 70%, which fully shows that animation has become a mass-oriented content category that "grows together" with young users. The study found that funny, daily life, game competition, film and television were the most popular among young netizens and received the highest recognition: Funny** showed the emotional release of young netizens;Daily life** shows a diverse lifestyle;Online games are an important product for the spiritual demand of young netizensFilm and television meet their spiritual and cultural needs.