Aldi To Enter The Chinese Market

Friday, May 31st, 2019 | 1608 Views

Aldi Süd has revealed it will open stores in China, with the first one opening on the 7th of June in Shanghai. China will become the 11th market where Aldi Süd operates standalone stores, strengthening its position as a global retailer.

Nick Miles, Head of Asia-Pacific at IGD analyses this news:

“Although Aldi Süd has been testing the Chinese market for some time, having launched on Alibaba’s Tmall Global platform in April 2017, China will be a new challenge for the discount retailer.”

“Aldi currently operates stores in Europe, Australia and North America. Trading in Asia, and particularly China, will be very different. Many international retailers have entered this market over the past 20 years and not succeeded, while discount is a grocery channel that doesn’t currently exist in China – or Asia – in any meaningful way. Discounter Dia sold its business in China in April 2018, while Lidl has recently pulled back from selling products via online platforms in the market.”

“China is an incredibly dynamic country, with varying consumer preferences and differences to navigate. Brands are king in China, while Aldi relies heavily on its private label ranges. Meanwhile, online grocery retailing and digital technology in retail is exploding in the market, while Aldi operates through physical stores and its model is based on retail efficiencies.”

“Aldi will be aware of all these challenges and more but plans to position its stores so that they appeal to China’s rapidly growing middle class and their desire for high-quality, imported products. It has ambitions to open 50-100 stores in the medium term and will be aware to not spread its operations too wide – a mistake other retailers have made in the past.”

“IGD forecasts China to overtake the US and become the world’s largest grocery market by 2023. The opportunity for Aldi to be present in the market is therefore clearly significant, but it will not come without its risks.”