BESTORE, as the leading brand of domestic leisure snacks, recently announced that it will implement the largest price reduction in 17 years, with a maximum reduction of 45%.
The news sparked consumer concern and discussion, with some hailing that snacks are going to be cheaper, some worrying that the quality will decline, and others questioning that it is a marketing ploy. Why does BESTORE reduce its price? How does this affect their performance and brand? What are the issues and trends in the snack industry behind this? This article will analyze BESTORE's price reduction actions from multiple perspectives and reveal the truth behind it.
BESTORE's price reduction is based on the adjustment of its high-end strategy. Since 2019, BESTORE has proposed "high-end snacks" as the strategic development direction of the company, in order to distinguish itself from other snack brands that compete at low prices and improve the brand's premium ability and profit margins. However, this strategy did not achieve the desired effect, and instead led to problems such as declining sales, shrinking market share, channel conflicts, and consumer complaints. According to its 2020 annual report, BESTORE's operating income was 789.4 billion yuan, a year-on-year increase of 232%, well below 2097%；Net profit attributable to shareholders of the listed company was 34.4 billion yuan, a year-on-year increase of 095%, also significantly lower than the 42% in 2019. The proportion of revenue from its offline channels has declined, and the gross profit margin of its online channels is also lower than the industry average. In addition, BESTORE's accounts receivable and accounts receivable turnover days also increased significantly, reflecting the weakening momentum of its online sales and difficulties in collecting payments. It can be said that BESTORE's high-end strategy did not bring high-end performance, but instead put it in the predicament of low-speed growth.
BESTORE's price reduction is in response to fierce market competition and changes in consumer demand. Casual snacks are a highly fragmented and homogeneous market, with diversified and discerning consumer choices, and low brand loyalty and stickiness. In such a market environment, BESTORE is facing strong challenges from brands such as Three Squirrels, Baicaowei, and Miss You, as well as the impact from emerging sub-categories such as Internet celebrity snacks, imported snacks, and healthy snacks. BESTORE's high-end positioning has not formed an obvious differentiation advantage, but has caused it to lose some of the most sensitive and cost-effective consumers. In the minds of consumers, BESTORE's products are not worth buying, nor do they have enough brand appeal. Therefore, BESTORE stimulates consumers' desire to buy by reducing prices, improves the cost-effectiveness and market competitiveness of its products, expands its market share and coverage, and increases the popularity and reputation of its products, thereby enhancing its brand recognition and loyalty.
BESTORE's price reduction is to optimize its product structure and channel layout. While reducing prices, BESTORE is also increasing the research and development and promotion of new products, especially snack products for children, fitness, festivals and other segments of the population and scenes, so as to meet the diversified and personalized needs of consumers and improve the added value and profit margin of its products. BESTORE launched 38 new SKUs in 2020, of which the revenue of children's snacks, fitness snacks and other sub-categories reached 22.3 billion yuan and 10.8 billion yuan, showing good market potential. BESTORE clears inventory by reducing prices, making room for the launch and promotion of new products, improving the speed of product upgrading and market response, and enhancing the innovation and competitiveness of its products.
At the same time, BESTORE is also optimizing its online and offline channel layout to achieve omni-channel integration and synergy. In terms of offline, BESTORE had a net increase of 285 stores in 2020, of which 32 directly operated stores and 253 franchised stores were added to the total number of stores, reaching 2,941. In terms of store opening strategy, BESTORE takes the principle of "closing small stores, opening large stores, and entering business districts" to improve the scale, category and experience of stores, increase consumers' stay time and repurchase rate, and create a new retail image of "BESTORE Life Pavilion". In terms of online, BESTORE achieved an operating income of 40 percent from online channels in 20201.1 billion yuan, a year-on-year increase of 835%, accounting for 50% of the total operating income8%。BESTORE carries out refined operations in multiple channels such as e-commerce platforms, social e-commerce, and short ** platforms to improve the reach and conversion rate of users, increase the stickiness and activity of users, and create its own private domain traffic. BESTORE unifies the best online and offline strategies through price reduction, eliminates channel conflicts, improves channel collaboration efficiency, and realizes channel complementarity and win-win results.
To sum up, BESTORE's price reduction action is an adjustment of its high-end strategy, a means to respond to market competition and changes in consumer demand, and a means to optimize its product structure and channel layout. BESTORE's price reduction does not mean that it has given up the positioning of high-end snacks, but to better achieve the goal of high-end snacks. BESTORE's price reduction is not a marketing tool, but a strategic transformation, an attempt to seek breakthrough and development.
BESTORE's price reduction reflects the fierce competition and consumption upgrading trend in the snack industry, and also shows BESTORE's determination and ability to transform and innovate. Whether BESTORE's price reduction can bring the expected effect depends on its specific implementation and continuous optimization in terms of products, channels, brands, and marketing.
BESTORE's price reduction has also brought pressure and challenges to other snack brands, how to deal with the best war, how to maintain differentiation and characteristics, and how to improve user experience and loyalty, all of which are worth thinking about and exploring. The snack industry is an industry full of opportunities and changes, and BESTORE's price reduction is just one of the cases, and there will be more changes and innovations in the future, so let's wait and see.
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