Peter Drucker, in his book “Management Challenges for the 21st Century,” articulated a notion that resonates deeply with the current state of the CBME: “The greatest danger in times of turbulence is not the turbulence itself, but to act with yesterday’s logic.” This philosophy succinctly captures what the CBME aims to communicate to all professionals in the maternal and baby industry.
During December 4-6, 2024, CBME held a winter seminar and industry CEO summit in Xiamen, themed “Break and Remake.” In our changing environment, what exactly needs to break? Gu Xiaoyuan, General Manager of Informa Markets China (Hangzhou), guided us on this journey of “breaking through.”
01. What needs to break?
Breaking Products
Today’s consumers are aptly termed “super buyers.” Their primary characteristics can be categorized into four types:
- Hitting the consumer’s pain point and catering to their needs.
A typical example is Amazon’s Kindle, which transformed traditional reading habits. - Satisfying the consumer’s emotional value and social attributes to establish an emotional connection.
With its focus on emotional value, Pop Mart achieved revenue of 4.56 billion yuan in the first half of 2024, a 62% increase from the previous year. - Offering great value for money and quality-price ratio, utilizing the high-value attributes of products.
Laifen, positioned for “brand alternatives and extreme value for money,” broke through 530 million yuan in the 2024 618 sales, growing 60% year-over-year and ranking first in category sales nationwide. - Targeting a niche segment and innovating within it.
The coffee brand “Sandonhalf” saw its revenue soar from over 10 million to around 200 million yuan within two years after launching new concept coffee products.
Breaking Marketing
The pathways to break marketing are still divided into four categories:
- IP empowerment and cross-boundary synergy.
The commercial value generated from the IP boom is indisputable today. - AI technology, precision and efficiency.
The value of AI in enhancing quality and efficiency for businesses is becoming more apparent—a case in point is L’Oréal’s acquisition of ModiFace, providing virtual makeup trials to consumers, accelerating digital transformation. - Creative marketing and fun experiences.
Snack businesses, like “Snacks Busy,” have been innovating marketing strategies, launching store concepts dedicated to bulk packaging and spicier snack options, accurately capturing the changes in industry sub-markets and consumer needs. - Content innovation, resonating with the audience.
Sentimental and resonating copy has allowed the spirits brand “Jiangxiaobai” to break traditional sales channels, once creating a “miracle” of 1 billion yuan in sales growth for three consecutive years.
Breaking Patterns
More and more businesses are also revamping traditional operating models:
- Breaking the traditional pricing model.
The bulk-snack stores represented by “Le Er Le” are expected to exceed 60 billion yuan in annual sales in 2024 with their hard discount pricing model. - Breaking the traditional operational model.
Since 2021, Chando has ranked first among domestic brands in the Kantar BrandZ China facial skincare category for three consecutive years, utilizing an innovative operating strategy that combines “unified stock” and “cloud store models.” - Breaking the traditional business model.
“Adopt a Cow” has emerged as a new consumer brand dark horse, breaking traditional business models with its “cloud adoption,” “co-branded adoption,” and “real-name adoption.” - Breaking the traditional service model.
Hilti became a global construction tools giant by evolving its model from a product manufacturer into a service provider, offering innovative and differentiated products and solutions, achieving a 12.2% increase in sales even during the COVID-19 pandemic.
Breaking Organizations
It is particularly important now to dismantle traditional organizational structures and build robust organizational capabilities across multiple dimensions, including structure, process, mechanisms, and teams.
In recent years, more traditional retail systems have recognized the importance of “breaking organization,” including decentralizing warehouses, moving logistics staff to retail front-ends, and enlisting more young talent—specific manifestations of breaking the organization.
Breaking Mindsets
Of course, the genesis of all change is “breaking mindsets,” disrupting conventional thinking and boundaries.
Today, the concept of the “super buyer” applies not just to brands and consumers but also to channel dealers—you need compelling reasons why brands should collaborate with you and why consumers should choose your store.
02. What is the maternal and baby retail industry breaking?
In the maternal and baby retail channels, facing the contemporary mindset and changing needs of consumers, what should we break?
Based on surveys of 2,598 retail stores and 4,786 consumers, we observe the following phenomena:
The total number of maternal and baby retail stores in 2024 has seen a stable and slight increase, and the iteration of new enterprises, new stores, and new personnel continues.
In the 2024 fiscal year, we observed a steady and marginal increase in the total number of retail stores, with boutique maternal and baby stores and low-tier market outlets growing more significantly.
CBME, utilizing its own database, commercial registration information, Baidu Map data, and more, has found that there are currently around 180,000 stores. Of these, 28% of the researchers mentioned that they started their businesses or joined the industry after the pandemic.
Additionally, according to the data from the pre-registrations for the CBME International Maternity, Baby, and Child Expo as of July 10th, we also observe a growing number of young practitioners, with post-90s generation accounting for 50%.
This implies that the iteration of new enterprises, new stores, and new personnel is still ongoing.
In 2024, the sales and gross profit of maternity and baby stores rebounded, with an increasing focus on the operational health of mother and baby retail.
Operationally, the survey sample shows that store sales have rebounded in 2024, with more than 60% of stores maintaining or increasing their sales volume, an 8-13% rise from 2023. This indicates that as the industry rapidly evolves, the stores that remain are those with healthier operations and stronger profitability.
From a temporal perspective, those who entered the industry after 2020 generally perform better.
Another positive trend is that the rebound in gross margins in 2024 outpaces sales volume. According to the survey, 62% of stores have seen gross profit margins increase or maintain, compared to only 49% in 2023.
It can be seen that current maternal and baby store operators no longer focus solely on sales growth; they are equally concerned with maintaining profitability and ensuring more rational and healthy operations.
Store traffic is still declining in half of the stores, presenting a significant challenge to in-store footfall rates; non-store sales are key to new growth.
There’s no denying that footfall remains a major challenge for the maternal and baby channel. Only 51% of stores have seen an increase or stabilization in customer traffic.
However, the proportion of non-store sales is sharply increasing, averaging 22.9%, with new customers acquired through non-store shopping representing 18% on average. Notably, 34% of stores report that non-store shopping accounts for over 20% of their new customers.
This data suggests that stores are no longer confined to in-store sales; the boundaries between online and offline have become increasingly blurred.
As for non-store transaction channels, community groups and mini-programs have the highest sales proportion, pointing to the power of private domains. Public channels, including Douyin, group buying platforms, Xiaohongshu, Meituan/Ele.me, remain viable for prospecting and transactions for maternal and baby stores.
Currently, boutique maternal and baby stores and retail industry entrants post-2020 are more likely to utilize public domains like Xiaohongshu and Douyin.
The impact of consumer downgrading on product prices makes it increasingly important to add exclusive products and provide omnichannel services.
Amidst a general environment of consumer downgrading, the maternal and baby channel is also affected. The survey shows that 44% of stores report lower prices on their best-selling products compared to last year. To counter this trend, some stores are introducing exclusive products and offering omnichannel services—not limited to offline channels. Online channel product averages also fell in the first half of 2024 compared to the same period in 2023.
Product category structures still differ significantly online and offline, with nutrition products growing on both fronts.
Regarding product categories, the survey finds that there are significant differences between online and offline channels. For instance, the proportion of baby formula, children’s clothing, and nutrition products in stores has changed from 2023. Specifically, the overall share of formula milk has declined slightly both online and offline, while nutrition products have seen a relative increase. Moreover, the survey indicates that 65% of stores want to strengthen their portfolio for older children and whole-family products, with family nutrition being a priority, followed by daily chemicals, outdoor activities for families, and others.
Despite the ongoing consolidation trend, chains and single stores will continue to coexist for the long term.
In the current landscape with 180,000 maternal and baby retail stores, the top 100 chains only account for 25,000, meaning that retail concentration is not particularly high, and chains and single stores will coexist for the foreseeable future. However, consolidation among maternal and baby stores is accelerating. The survey results show that 15% of retail stores have already joined channel consolidation efforts.
For the stores participating in consolidation, “higher profits,” “exclusive products,” and “improved operational efficiency” are cited as the top reasons.
At the same time, many more retail stores remain on the fence, citing reasons such as skepticism, reluctance to change their store’s branding, high sales targets, and unwillingness to share data as barriers to consolidation.
“Breaking doesn’t mean merely changing the approach; establishing isn’t about starting from scratch. Overthrowing tradition requires effort in breaking products, marketing, models, and organizational structures, while enhancing core competitiveness is the crux of ‘establishing after breaking.'”
Gu Xiaoyuan emphasizes that ‘breaking before establishing’ is the essential business proposition for all practitioners moving forward. As a global leading maternal and baby omnichannel business matching platform, CBME has safeguarded the industry’s transformation with a full-dimensional media matrix, high-quality multi-themed conferences and events, in-depth content reporting and interpretation, high-frequency precise matching, and five major exhibitions.
In 2025, CBME will continue to support enterprises in ‘establishing after breaking’ from the perspectives of breaking mindsets, breaking products, and multi-dimensional linking, thus leveraging and driving new growth.
Keywords:
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