Aldi in Shanghai Chinese Convenience

von Mathias Himberg
Donnerstag, 23. Januar 2020
There are few parallels between Aldi in China and Aldi in the rest of the world. The variety of convenience can be described as downright revolutionary.
There are few parallels between Aldi in China and Aldi in the rest of the world. The variety of convenience can be described as downright revolutionary.
German discounter Aldi has completely reinvented itself in China: with high-quality imported goods, elegant design, snacks, instant consumption, payment by smartphone and delivery service. Observers predict success for the format - if it focuses even more strongly on private labels.

It's hard to believe, but it's actually an Aldi branch. The well-known logo is prominently displayed on the façade of the Putuo district of Shanghai, visible from afar. However, the 369 square metre site is not home to a discounter, but a mixture of convenience store and mini-market. Among 1300 articles there are hundreds for immediate consumption.

At a snack station, employees prepare hot meals in front of everyone. There is a transparent bakery and a consumption area. And the noble design with wood and brick look, trendy graphics and accentuated lighting signals to the customer: Here you will find valuable goods from the West.

The location, which opened in October, is one of six pilot stores that Aldi has now opened in the mega-metropolis. The first went online last June, the latest in January. This means that the Mülheim-based company is still a newcomer. And the competition among the small formats is enormous: internal giant Alibaba is sending "Hema fresh" into the race, French retailer Carrefour its mini format "Easy". There are also local heroes such as Lianhua and Suning as well as countless small stores and kiosks.

"Aldi comes late, the brand is little known," says Hans-Peter Edelbluth, China managing director of the European confectionery manufacturer Perfetti van Melle. "With high operating costs and a small filal network, it will take them a while to build awareness and frequency." Aldi country manager Christoph Schwaiger, on the other hand, is highly satisfied with the development. "We are very pleased with the performance of our pilot markets," he says. Chinese consumers would find high-quality articles at affordable prices at Aldi.

Unique selling proposition price

In fact, as in the domestic market, the unique selling point is probably the price - even if Aldi sells imported goods instead of discount goods in China. "The price level is very competitive," confirms Andreas Tank, Managing Director of the consulting company "China Competence".

The low prices are astonishing, especially for fresh produce, as many items from the product groups fruit and vegetables, milk, meat and sausage products are imported from Australia, where Aldi operates a successful national subsidiary. Although this is cheaper for Aldi than procuring goods in China, Chinese trading giants buy cheaper in their own country.

With western branded goods, Aldi has the advantage that all dealers have to import them at a relatively high price. And unlike its Chinese competitors, the discounter can rely on its powerful purchasing in Europe. Things get really interesting with European private labels. Many Chinese people consider them to be as high quality as A-brands simply because of their origin and see no difference between Lavazza and Amaroy. Here Aldi can fully exploit its price advantage.

Own brand success factor

"Aldi's success in China also depends on how many of their private label products they can register," judges Elena Gatti, who as Managing Director of Azoya in China sells European brands. Currently, imported food products are in great demand, but still expensive. "If Aldi imports its private label products in large quantities and passes the savings on to its customers, this could be a great success.

At Putuo's branch, however, branded products still dominate the picture at present. Hennessy and Jack Daniel's dominate in spirits, Guinness and Corona in beer. But the private label is on the advance. The confectionery shelves are stocked with products from Ferrero, Storck and Mars as well as a wide range of the private label Choceur. Karlskrone beer was on offer at the opening, and the Expressi coffee machine was not missing either.

The Chinese customer loves immediate consumption. So a round piece of furniture in the middle of the market presents convenience products from salad to ready meals. This is downright revolutionary for Aldi. In addition, there are Western products such as croissants or pretzels from the baking station and coffee specialities such as latte coconut from the snack bar. Not to forget German-Chinese creations such as the "Berlin Bao", a steamed dumpling with sauerkraut and sausage.

Aldi Shanghai-Putuo

Adresse: Changshou Road 396, Jingsha Financial Square, Shanghai
Eröffnung: 13.10.2019
Verkaufsfläche: 369 qm
Sortiment: 1300 Artikel
Kassenplätze: 5 Self-Checkouts, App
Parkplätze: 0
Ladendesign: Landini
ÖZ: Mo-So 7.30 -22 Uhr

The freshness is well sorted. This is also important for Chinese people - and shows that Aldi adapts with sensitivity to local preferences. "Local knowledge leads to good adaptation to the market," says consultant Tank. That is why Aldi also offered suitcases and gift sets for the Chinese New Year. Millions of Chinese then travel to their home cities and give presents to their relatives.

The fact that Aldi has been testing its product range in flagship stores on Alibaba's online platforms for two years now also helps with the product range design. What goes well there is presented in the market on a broad basis - for example baby products, cosmetics and wine.

Multichannel and mobile payment is a trend in China, so Aldi offers its customers exactly that. In the market, signs indicate that goods are delivered within an hour within a radius of 3 kilometres. "The omnichannel idea is very important in China and a good way to succeed," confirms Gatti. The delivery costs in densely populated Shanghai with its comparatively low wages are much lower than in Europe. In addition, industry insiders believe that Aldi could work with local delivery service providers that combine deliveries from different dealerships.â

No stationary cash registers

Customers can also order and pay online at Aldi via the ubiquitous Wechat Internet platform, where Chinese people chat and shop. The mobile phone app "Scan and Go" is also based on their technology. With it, stationary Aldi customers scan and pay for their purchases without having to stand in line. For less mobile phone affine customers there are five self-checkouts - but not a single traditional checkout.

The high-quality store design supports Aldi's claim to sell western foods for an upscale clientele. With illuminated lettering, graphics and motif images, it conveys an atmosphere of modern urbanity. "Messages and illustrations help Aldi to communicate its brand values: Freshness, value for money, quality and trust," praises British trend scout Matthew Brown. "The design should show and celebrate product quality," confirms Mark Landini, creative head of the design agency Landini Associates, which has already helped Aldi with the relaunch in Australia.

These messages are supported by active, country-specific marketing at Chinese sales events such as New Year or Singles' Day and at German events such as the Oktoberfest. There are also competitions and a membership card with benefits and offers. "Constant customer contact is important in China to remain relevant in the highly competitive market environment," explains consultant Tank.

The China expert believes in the concept - precisely because it does not attempt to transplant the German discount to China, but rather presents the product range in line with market requirements. "Aldi is on a very good path at high speed," he thinks. Others consider market entry and expansion to be more difficult. But Perfetti manager Edelbluth also suspects "that Aldi has the patience and foresight to gain a foothold in what is currently the most fascinating consumer goods market in the world".

This text was originally published in German and machine-translated into English.

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