Source | Retail Business Review On May 10, Aldi, the discount supermarket giant, opened its first store in Kunshan, attracting over 100,000 visitors and achieving single-day sales of 1.1 million yuan. This not only broke its own million-yuan record set in Wuxi but also stirred significant waves in the county-level retail market. Behind this achievement lies Aldi's precise positioning in China's lower-tier markets. Kunshan, a county-level city that has topped the national top 100 counties for 20 consecutive years, had a GDP of 538 billion yuan in 2024 and per capita disposable income exceeding 70,000 yuan, with consumption potential comparable to some provincial capitals. Kunshan's explosive performance is not an isolated case. In recent years, more supermarket brands have increased their presence in county-level markets, and a retail revolution centered on "community supermarkets" is spreading from first-tier cities to the heart of counties. The essence of this battle is the ultimate showdown of supply chain efficiency, product differentiation, and consumer mindshare.
Aldi's 'Chinese Evolution': From Boutique Experiment to Hard Discount Breakthrough
When Aldi entered China in 2019, it initially faced challenges due to its "high-end boutique supermarket" positioning. However, after five years of strategic adjustment, it has transformed from an "imported goods collection store" to a "affordable community supermarket." The key turning point came in 2023 when it streamlined its SKUs to 1,600 and increased its private label share to 90%. Currently in China, Aldi has developed 13 private label series covering major categories such as food, beverages, and daily necessities. For example, the "Super Value" series, which focuses on extreme cost-effectiveness, has successfully entered Chinese households' daily consumption scenarios with a 9.9 yuan price point. As of recently, Aldi offers over 500 products priced at 9.9 yuan or below, accounting for about a quarter of the store's total SKUs. Unlike Sam's Club and Costco, Aldi adopts a community store and small-format strategy, offering daily high-frequency items in stores of 500-1,000 square meters, without membership fees, serving daily shopping needs within a 3-kilometer radius. The effectiveness of this strategy is evidenced by its penetration in Shanghai: as of 2025, its 65 stores in Shanghai cover 14 administrative districts, achieving high market penetration. Global supply chain and localized restructuring are core competitive advantages. For example, at the Kunshan store, Aldi reduces costs for Australian grain-fed beef brisket through "direct sourcing from origin + full cold chain"; fresh products are delivered from sub-packaging to stores within 24 hours. With this efficiency, Aldi's store sales per square meter far exceed the industry average. Furthermore, localized innovation further consolidates its market position. Over 80% of Aldi's suppliers are local, with the Yangtze River Delta and Shandong as main supply bases, leveraging scale procurement and local direct sourcing for cost advantages. In the Jiangsu market, Aldi has established direct sourcing channels with Kunshan Tianfu Farm and Wuxi Taihu Aquatic Products Cooperative. This "regional supply chain loop" keeps its fresh food costs below the industry average, supporting its market reputation of "low price without low quality." In my view, Aldi's transformation confirms a trend: in an era of rational consumption, the perception that "low price does not mean low quality" is becoming possible, and vertical integration of the supply chain and regional loops are the core barriers of this model.
Giants Intensify Community Supermarket Layout, Escalating Competition
While Aldi expands rapidly, the domestic community supermarket sector is experiencing unprecedented fierce competition. Hema NB is densifying its presence in the Yangtze River Delta at a pace of over 20 stores per month, Walmart is piloting 300-500 square meter community stores, and traditional supermarkets like Yonghui and RT-Mart are accelerating format slimming. This trillion-yuan market is witnessing intense clashes between new and old forces. The rise of Hema NB is a phenomenal case in the industry. Hema NB stores are smaller and more flexible, leveraging their lightweight and high-efficiency advantages to become Hema's main format for exploring lower-tier markets and achieving deep community penetration. As of March 2025, Hema NB has over 200 stores, and some remain crowded even after 9 PM. In supply chain integration, Hema NB directly connects with source suppliers, reducing intermediate links. For example, the Tanghe factory in Kunshan, Jiangsu, achieves "production-to-delivery within 24 hours in Jiangsu, Zhejiang, and Shanghai." In terms of format stratification, 700-800 square meter standard stores focus on fresh and standard products, while 50-100 square meter pickup stores cover 3-kilometer communities. Walmart's new exploration of community stores also reflects its internal optimism about the community format trend. Walmart recently piloted 300-500 square meter community stores in Shenzhen, featuring "true low prices + full categories," with about 2,000 SKUs covering deli, bakery, meat, poultry, eggs, dairy, daily chemicals, and more. Walmart's community stores emphasize "everyday low prices," for example, the Xindejia Yuan store has clear signage stating "true low prices" and "no tricks, refund the difference if you find a lower price." Another feature is complete categories with selected items. Compared to other community store formats with limited space, Walmart's community stores basically ensure category completeness. It is reported that Walmart plans to further densify its community store network in Shenzhen, leveraging Meituan's ecosystem and Sam's Club resources to create a "1-hour living circle." If successful, this model could become a template for its national lower-tier market expansion. Currently, community retail competition has entered the "efficiency-driven" deep water zone. Aldi, Hema NB, and others are building moats by leveraging their respective strengths.
Battle for Lower-Tier Markets: Awakening of County-Level Consumption and Channel Restructuring
From the perspective of lower-tier market competition, Aldi's Kunshan store explosion reveals the tip of the iceberg of county-level consumption upgrading. According to Ministry of Commerce data, in 2024, total retail sales of consumer goods in county-level areas nationwide exceeded 22 trillion yuan, a year-on-year increase of 8.7%, with growth rates outpacing central cities for three consecutive years. The consumption power of second- and third-tier cities and county markets should not be underestimated. According to QuestMobile's "2024 Insights on Young and Middle-Aged Consumers in Small Towns," 80.4% of young and middle-aged consumers (under 40) in small towns spend over 1,000 yuan monthly on online consumption, with consumption vitality approaching that of first-tier cities. Their demand for "low price without low quality" has created new market space. County-level markets are becoming a must-win territory for community supermarkets. Giants like Hema and Pupu are accelerating their downward expansion, and competition is heating up. In 2025, Hema NB plans to add over 200 new stores, focusing on "billion-yuan counties" in the Yangtze River Delta, including Wuxi, Changshu, and Zhangjiagang, with over 20 stores planned in Wuxi alone. Pupu Supermarket is using a "regional warehouse + front warehouse" model to significantly reduce fulfillment costs and plans to expand to county-level cities like Changle in 2025. Despite the vast market space, community supermarkets face multiple challenges. According to the latest data from the China Chain Store & Franchise Association, in 2024, 38.2% of supermarket companies achieved positive sales growth, but less than 15% had net profit margins exceeding 3%. In our view, future competition points may focus on several dimensions. First, fresh supply chain upgrading. For example, Aldi significantly reduces fresh food costs through direct sourcing bases in the Yangtze River Delta. Second, omnichannel layout. For instance, Aldi's "offline stores + mini-program mall + third-party platforms" layout enables full coverage of consumption scenarios, relying on instant delivery systems to provide 30-minute delivery within a 3-kilometer radius, enhancing user experience and further reducing fulfillment costs. Third, differentiated product competition. For example, Aldi launches new "Super Value" series products weekly. Currently, China's retail industry is transitioning from "scale expansion" to "efficiency first." As county-level consumption power awakens and deep supply chains become standard, competition in community supermarkets is no longer a simple price war but an ultimate insight into and response to user needs, creating true value for consumers through supply chain optimization, product innovation, and service upgrades.