Local supermarkets may not dare, but foreign companies might. Currently, there is such a company: private-label products account for up to 90%, and it has captured the hard-to-please "Shanghai citizens" through OEM, while frequently achieving excellent results in the East China market. That is the German hard-discount supermarket—ALDI. On May 10, ALDI's third stop outside Shanghai, in Kunshan, Suzhou, officially opened. On the first day, sales exceeded 1.1 million yuan, and foot traffic reached as high as 100,000, setting a new single-day sales record for ALDI in the Chinese market. In the first year of expanding beyond Shanghai, ALDI has opened stores that are all hits. Wuxi set a sales record of 1 million yuan on its opening day, and then Kunshan broke that record, exceeding 1.1 million. What is the logic behind this explosive popularity? Out of curiosity about ALDI, the author visited Kunshan for an on-site investigation.

ALDI Has "Figured Out" Chinese Consumers

"If the quality is similar to ALDI, ALDI's price is lower; if the price is similar to ALDI, ALDI's style is higher; if the price and quality are the same, then you need to pay a membership fee." This is a comment the author heard recently, which is a very high evaluation of ALDI. The author visited the Kunshan store on the fifth day after its opening, a Wednesday. Unlike ALDI community stores, the Kunshan store is located on the basement level of the Golden Eagle Shopping Mall, and it is noticeably larger than the community store format. The author has also visited ALDI community stores in Shanghai several times. Community stores are smaller, so the traffic flow is more strictly planned: aisles are separated by fruit and vegetable shelves, with the entrance on the right and the exit on the left. In contrast, the mall store feels much more spacious. Unlike traditional supermarkets that place the fresh food section at the back of the store, ALDI places the vegetable and fresh food section at the entrance, whether in community or mall stores. Along the walls are freezers with pre-packaged fresh meat. During the initial opening period, signs promoting "Spend 200 yuan cumulatively this month to get free eggs" were visible everywhere. It is clear that ALDI has a thorough understanding of the Chinese saying, "Each generation has its own egg essentials." Further inside are the snack and seasoning areas. Most standard products on the shelves are private-label, with relatively small specifications. They use cut-case displays for easy stocking. To cater to the Chinese habit of consuming food within the day, ALDI offers small packaging for fresh meat and standard products alike. On one hand, consumers do not have the worry of having to consume stored goods; on the other hand, it increases the frequency of daily store visits, which fits the East China people's demand for fresh ingredients. Moreover, with the increase in people living alone, "financially strained but stylish" young people want a better quality of life but also feel regret over large packages that they cannot finish. In China, the idea that larger packages are more economical is deeply rooted, but ALDI has quickly captured Generation Z with its image of small packages that are also great value. At the end of 2023, ALDI proposed the concept of "Good Quality, Low Price" and implemented widespread price reductions. According to media reports, hundreds of products were discounted, and SKUs priced below 9.9 yuan accounted for a quarter of the assortment. At the beginning of this year, ALDI launched another round of price cuts. More than 200 products were reduced, covering essential items such as meat, vegetables, eggs, and dairy, with reductions of up to 45%. Quality and low price are one of the main means by which ALDI quickly captures Chinese consumers. In addition to developing product strength, ALDI also understands the omnichannel game in China. On one hand, it has developed its own mini-program; on the other hand, it has launched on multiple third-party e-commerce platforms to achieve full coverage of consumption scenarios. It offers 30-minute delivery within a 3-kilometer radius. Omnichannel operations make it easier for the brand to accurately detect user needs, thereby providing stronger data support for product selection and delisting. Whether in products or channels, it is evident that ALDI's insight into Chinese consumers has surpassed many local companies.

ALDI Has "Figured Out" Chinese Suppliers

For ALDI, the confidence to expand beyond Shanghai is also inseparable from breakthroughs in localized supply chains. Over the past year, it is not hard to notice that many retail companies are building private labels. Whether it is "Super Value" or "Super Save," private labels seem to have become a key factor for retailers to build competitiveness. In the store, the author carefully observed the manufacturers behind ALDI's products. Jinluo's ham sausages, Haitian's light soy sauce, New Hope's yogurt, Yanghe Town's liquor, Yihai Kerry's wheat flour, Haoxiangni's gray dates—these are all suppliers for ALDI's private-label products. By deeply integrating the supply chain, reducing intermediate links, and directly cooperating with quality suppliers, ALDI can ensure both competitive prices and quality. Take the private-label light soy sauce produced by Haitian as an example: in ALDI stores, a 1.9L bottle with quality grade three is priced at only 9.9 yuan. In another discount channel, the same quality and price only gets you a 1.28L bottle. Through this case, I believe everyone can understand where ALDI's "great value" lies. When it first entered China, ALDI established relationships with many small emerging suppliers, even investing or providing equipment support. Currently, it has formed strategic partnerships with over 83 local suppliers, with local procurement of fresh products reaching 75%. It locks in low prices through large order volumes and strictly controls quality. Why are these brands willing to cooperate? In fact, a closer look at the products on the shelves reveals that due to streamlined SKUs, each category in ALDI stores has only 2-3 options. Take light soy sauce again. In the store, for large packages over 1L, besides ALDI's "Super Value," there is only Haitian's own brand. In other words, in today's market, if you do not do it, someone else is waiting to do it. Moreover, in recent years, many brands have been using retail stores as endorsements to promote themselves and increase their influence. Therefore, cooperating with excellent retail companies can also enhance their own image of good quality. Behind ALDI's quality and low prices is its breakthrough from 0 to 1 and then to 100. Through highly integrated supply chain control, it cuts costs from factory to store: no middlemen, self-produced and self-sold private labels, and meticulous logistics operations, achieving "quality and low price" at the supply level.

Why Is ALDI Expanding Beyond Shanghai Now?

It is not hard to see that ALDI has been in China for six years, but it is only since last year that it has gradually become more well-known in China. As the pioneer of hard discount, why did ALDI take six years to leave Shanghai? And why now?

  1. Finding its unique positioning in China In the early days, ALDI tested the Chinese market through e-commerce, then entered offline with a premium supermarket image and simultaneously established online operations. With the brand concept of "International Quality, Community Price," it opened stores in convenient locations such as residential areas, apartment complexes, and commercial streets. Imported products accounted for over 60% of the assortment, and the average transaction value once reached 200 yuan. With the rise of the "discount revolution," ALDI gradually returned to its main hard-discount format and found its unique vertical positioning in China—a community supermarket with low prices and high-end style.
  2. Increased public acceptance of private labels In earlier years, consumers only had the impression that private labels were cheap and of poor quality. But after Sam's Club and Pangdonglai became famous for high quality, public acceptance of private labels gradually increased. Coupled with the "crazy" "X.9 yuan" prices and high-style, textured product packaging, people are willing to pay for trust. In the author's view, this is one of the main factors why ALDI has become popular and expanded beyond Shanghai in the past two years.
  3. Extreme efficiency has been proven in China "Extreme efficiency" is a concept many companies uphold, and ALDI, with its German DNA, treats it as a golden rule. The self-checkout in traditional hypermarkets in recent years and the cut-case displays in discount stores have undoubtedly done a great job of consumer education. Although these operational methods were more or less related to German ALDI, if it had tried to fully promote this model in China earlier, it would have incurred huge costs. Therefore, the successful operation of extreme efficiency is also the confidence behind ALDI's expansion beyond Shanghai. Final Thoughts Traditional hypermarkets are declining, and community small stores with higher sales per square meter are becoming the darling of retail companies. In the past six months, various community supermarkets have experienced a "Renaissance." From ALDI, Hema NB, and Lianhua Fude in East China, to Zhongbai Community Supermarket in Central China, to Walmart in South China, and even many money-saving supermarkets in lower-tier cities, all are adding to this format. Community stores are not a new format in China, but how to calmly build a true business moat in this era of "rapid expansion" often lies in the "slow efforts" that require time to accumulate. For ALDI, it is these "slow efforts" that give them the confidence to expand in China today. I believe that in the future, ALDI's concept of "Good Quality, Low Price" will surely drive the retail industry to new heights. 🔺Scan for ticket inquiries🔺