Aldi gets physical in China
Although Aldi is said to want to proceed cautiously during the pilot phase, we expect 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 upmarket proposition than at any of its other nine foreign operations. The convenience-oriented assortment will apparently feature many import goods from Europe, including the dairy products and cosmetics much loved by Chinese consumers.
This represents a major departure from long-established company practice. The move is also counter-intuitive as the Chinese are also known for their frugality.
It was doubtless inspired by insights into local customer preferences gained from the online shop established by Aldi on Alibaba's e-commerce platform in April 2017. To date, China is the first country Aldi has ever entered without any physical stores.
Insiders also maintain that fruit & vegetables will be supplied by local producers, which is certainly credible from a logistics standpoint.
The first of 70,000 stores in China? (photo: LZ)
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.
The potential for Aldi in the Middle Kingdom is obviously vast. Economists expect the country to overtake the US as the world's largest grocery market within the next five years. And, if Aldi ever gained the same level of penetration in China as it already enjoys in Germany, then the company would have a network of 70,000 stores!
Meanwhile, archrival Lidl has obviously shied away from the People's Republic. 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. Now does one call that wisdom or lost opportunity?
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