Over the past two years, Chinese retail companies have tried almost every mainstream retail format in the world: from Eataly-style 'retail + dining' premium supermarkets, to convenience stores that have left Japanese e-commerce powerless, to the membership warehouse club Costco that is all the rage in the United States. Any format that is well-known internationally can basically find its imitator in China. But there is one format that has not yet appeared in China: the discount store, represented by ALDI. As the epitome of discount stores, ALDI became famous for defeating Walmart in Germany. This grocery store model, with SKU counts between 600 and 1,000 and discount rates of 10% to 20%, has gradually become popular in the industry. According to historical experience, the more sluggish the economy and the more depressed the industry, the more discount stores like ALDI thrive. Let's boldly speculate: in 2017, will China see the emergence of discount stores like ALDI? "Third Eye Retail" believes that given the intense transformation of China's retail industry and the rapid pace of corporate transformation, the above speculation is not impossible. Perhaps the authentic ALDI is already planning its entry into the Chinese market. At the end of 2016, news about ALDI entering China surfaced again. An ALDI spokesperson said, "We have conducted feasibility studies on the Chinese market for several years. We have decided to launch retail operations in China, initially through a website that will sell 'non-frozen' groceries and wine, with most products coming from ALDI's suppliers in Australia." "We know that Chinese consumers have a strong demand for Australian-made products. Our aim is to provide consumers with high-quality, low-priced goods. Starting from 2017, we will begin selling a range of daily necessities to Chinese consumers through our online platform, with home delivery," the spokesperson added. A senior executive from a local retail company told "Third Eye Retail": The news of ALDI entering China is not unfounded. Previously, a Ministry of Commerce official was leading the effort, but with his job transfer, the matter was shelved. They have also been seeking to connect with ALDI headquarters, hoping to develop the Chinese market together with ALDI. Zhang Zhiqiang, a European and American retail research expert and executive director of the International Private Label Union, believes that so far, few companies have successfully learned from ALDI. In his view, some of ALDI's genes are difficult to replicate. For example, its strong packaged food focus. The "grocery store" nature of ALDI strengthens packaged foods while downplaying categories that require complex operations, such as fresh produce. Taking ALDI in the United States as an example, grocery sales account for nearly half of the entire store's sales, while fresh and refrigerated foods account for only 18%. For example, its cost control is embedded in its DNA. Data from a 1995 ALDI store in the U.S. shows that ALDI's gross margin was only 12%, but net profit could reach 2%. When all costs—product procurement, operations, management, employee wages, and building depreciation—are combined, ALDI's costs are only 10%. It's truly frightening to think about. Another example is its subversion of traditional procurement concepts. ALDI's buyers never bargain with suppliers; instead, they discuss what the cost of the product actually is, what the processing fees are, what the raw materials cost, and then derive the product price from that. In Zhang Zhiqiang's words, ALDI procures "production capacity" rather than "products." Although Zhang Zhiqiang believes that ALDI is a company that "whoever imitates it will die," this does not prevent the discount store format from taking root in the Chinese market. In fact, some companies have begun to explore the discount store format. On January 3, Carrefour opened an "outlet discount store" in Chengdu. The store covers an area of about 800 square meters and sells products at discounts of 3 to 7 percent, covering more than 3,000 items ranging from home appliances, daily necessities, personal care and household chemicals, to clothing. These products are mainly slow-moving inventory, delisted items, seasonal clearance of private label products, and products with damaged or outdated packaging, sourced from various Carrefour stores in Chengdu. Let's make a bold assumption: if Carrefour were to select 600 SKUs and turn them into a discount store like ALDI, what would the effect be? In Europe, Carrefour also has a mature discount store model. "Third Eye Retail" believes that China's retail industry is currently in a "Warring States period," with a hundred schools of thought contending and a hundred flowers blooming, as different formats compete for market share. Against the backdrop of declining traditional formats, this is precisely the opportunity for discount stores to emerge. So, in 2017, will "discount stores" take root and blossom in China?
Source: Third Eye Retail -END- ****Click the image to read directly FMCG Industry's Most Professional and Practical Knowledge Base [ Reply with the yellow numbers in the background to view the corresponding keyword content ] | 001 Excellent article selection | 002 Distributor market operations | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operations management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 First lesson for new salespeople | 015 Internet, brands | 016 Distributor B2B transformation |