Aldi gets physical in China
In only days from now Aldi will be starting business in the People's Republic of China. The German discount giant's first store will open in Shanghai on June 7. According to information obtained by Lebensmittel Zeitung, a further nine outlets will follow there soon. The first two sites, one of which includes a tenancy in the Jingan Sports & Fitness Center, are in noticeably prosperous neighbourhoods.
Upmarket location: Aldi is celebrating its debut in
China as a tenant at the Jingan Sports & Fitness
Although Aldi is said to want to proceed cautiously during the pilot phase, our newspaper expects the medium-term store count to reach 50 to 100 in order to obtain the necessary economies of scale. Persons who claim to be familiar with the concept describe it as "more modern than company stores in Europe".
Under the slogan "Everyday value – Handpicked for you", the global discount pioneer will be offering a considerably more up-market proposition than on any of its other foreign markets. The convenience-oriented assortment will apparently feature many import goods from Europe, including the dairy products and cosmetics much loved by Chinese consumers.
It was doubtless inspired by insights into local customer preferences gained from the online shop which Aldi established on Alibaba's e-commerce platform in 2017. To date, China is the first foreign market Aldi has ever entered without any physical stores.
This represents a major departure from the company's long-established practice.
Insiders also maintain that fruit & vegetables will be supplied by local producers, which is certainly credible from a logistics standpoint.
An initial indication that Aldi China, run by CEO Christoph Schwaiger, wanted to do more than just dip its toe into local cyberspace was seen last autumn when the low-profile retailer quietly increased headquarter staff in Shanghai.
Aldi in Chinese: The discounter's first store in Shanghai
Aldi Süd (Aldi South) is said to have become increasingly interested in entering the vast Chinese market through its thriving subsidiary in Australia. The growing business contacts between these two countries mean that the no-frills retailer can also draw on Australian suppliers with considerable experience in exporting to China.
The decision to expand in Shanghai is clearly motivated by the sheer purchasing power of its 30 million highly aspirational and upwardly-mobile inhabitants. The historic metropolis is also a major global logistics hub easily accessible by both sea and air.
Meanwhile, arch-rival Lidl has obviously shied away from the Middle Kingdom. Plans to set up an online shop of its own in summer 2017 were first put on hold and then quietly dropped earlier this year.