Aldi Süd to expand store network in China

Date : 16 August 2022

Dan Butler

Analyst

The German retailer has announced plans to open hundreds of shops in Shanghai and wants to expand into other Chinese cities.

Major expansion plans revealed

Aldi Süd plan to expand its physical store network in China into the hundreds, with Shanghai its first major target. The retailer has 26 stores in the city, following its entry into the physical market in 2019. Cities in the Yangtze Delta have also been identified as potential areas for new stores.

Aldi Süd see there being great opportunities in the Chinese grocery market, which is expected to be worth over $975 bn in 2025. CEO Roman Rasinger believes; ‘China is and remains one of the most interesting markets in all areas and the rapidly increasing size of the middle class leads to enormous potential in the food market’.

Source: Aldi Süd

Adapting its strategy to win in the Chinese market

Aldi Süd first entered the market in 2017 with an e-commerce operation and now partners with quick commerce providers. Stores were introduced in Shanghai in 2019 and numbers in the city have slowly grown as it gained traction in the market.

As with other markets, the main aim in-store is to convey product quality and value. However, several differences can be noted in the store designs. They are more in line with Chinese shopper habits, where the preference is to visit multiple small shops in a week. The store format is much smaller than in other markets and has an emphasis on fresh produce and ready meals.

There is a premium design to offer a supermarket shopping experience, unlike its traditional discounter feel. Stores also offer an on-site Food Station, where shoppers can either dine in or take away. Shoppers benefit from being able to scan on the go and pay using the WeChat mini-program, which also operates as a loyalty scheme.

In the past several foreign retailers, such as Tesco and Dia, have tried and failed in the competitive Chinese grocery market. Aldi Süd heavily relies on customer insight to adapt its products and in-store offering to gain relevance in the market.

If Aldi Süd is successful with its plans and uses its time wisely to learn from the market, these learnings could be beneficial in developing its operation in other markets.

 

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