--- title: "Another Giant Joins the Price War Against Hema and Sam's Club" description: "In 2024, the low-price 'war' among retail stores continues fiercely. ALDI, currently only operating in Shanghai, has launched subway ads directly targeting Sam's Club and Hema's popular products, offering smaller packages at lower prices. A comparison of ALDI's 'Super Value' series, Hema's 'Move Mountain' series, and Sam's Club reveals that ALDI is cheapest per unit, with the highest proportion of private-label products, while Hema offers more variety, especially in fresh food, and Sam's focuses on large-pack, high-value items." author: "关注零售的DT" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2024-01-12" language: "en" canonical: "https://xinjignxiao.com/en/articles/another-giant-joins-the-price-war-against-hema-and-sam-s-club-81526d9a/" markdown: "https://xinjignxiao.com/en/articles/another-giant-joins-the-price-war-against-hema-and-sam-s-club-81526d9a.md" original_source: "https://mp.weixin.qq.com/s/MaS7NDtYW8_gexYu7_YnAg" translation: "https://xinjignxiao.com/zh/articles/%E8%B7%9F%E7%9B%92%E9%A9%AC%E5%B1%B1%E5%A7%86%E5%95%86%E6%88%98%E7%9A%84%E5%B7%A8%E5%A4%B4-%E5%8F%88%E5%A4%9A%E4%BA%86%E4%B8%80%E4%B8%AA-81526d9a.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/another-giant-joins-the-price-war-against-hema-and-sam-s-club-81526d9a/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Another Giant Joins the Price War Against Hema and Sam's Club > In 2024, the low-price 'war' among retail stores continues fiercely. ALDI, currently only operating in Shanghai, has launched subway ads directly targeting Sam's Club and Hema's popular products, offering smaller packages at lower prices. A comparison of ALDI's 'Super Value' series, Hema's 'Move Mountain' series, and Sam's Club reveals that ALDI is cheapest per unit, with the highest proportion of private-label products, while Hema offers more variety, especially in fresh food, and Sam's focuses on large-pack, high-value items. Zhang Chenyang, Zheng Xiaohui 2024, the low-price 'war' among retail stores continues to rage. People don't even need to step into a supermarket; just commuting by subway can give them a close-up view of this unpretentious battle. (ALDI's billboard at a subway station / Photo by DT Business Observer) As seen in the image, ALDI has successively placed two versions of ads at Shanghai's Jing'an Temple subway station (currently ALDI only has stores in Shanghai). The first version directly targets Sam's Club and Hema's popular products: "Exaggerated! The neighbor's Swiss roll expired before they could finish it. Luckily, ALDI's small packages are cheap whether you buy more or less." The image prominently displays "Milk & Chocolate Hazelnut Duo Swiss Roll Cake, 11.9 yuan / 4 pieces." Of course, ALDI is not the first to join the price war. Since August 2023, when Hema fired the 'first shot' with a 99 yuan/kg durian mille crepe cake, the melee began. So, which of Hema, Sam's Club, and ALDI is cheaper? What are the differences in products? And how do their strategies differ? After comparing 71 items from ALDI's 'Super Value' series, 156 items from Hema's 'Move Mountain' series, and using Sam's Club's same or similar products as a control, we found the following, with analysis under each point. **Unit Price: ALDI is Cheapest, with the Highest Proportion of Private-Label Products** We listed common products from ALDI, Hema, and Sam's Club and compared their per-gram prices. We found that except for eggs (where Hema is cheaper), ALDI's 'Super Value' series wins on all other items. For example, Sam's Club's daily fresh orange juice, 2 liters for 22.8 yuan, averages 11.4 yuan per liter. Hema directly competes by offering a smaller size but at 11 yuan per liter for 100% orange juice. ALDI goes further down, offering 1 liter of 100% orange juice for just 9.9 yuan. A key reason ALDI can win on price is that all products in the 'Super Value' series are ALDI private-label brands. In contrast, among Hema's 156 'Move Mountain' items, private-label products account for 57.1%. Private-label means products produced in direct cooperation with factories. For instance, ALDI's water brand is 'Xunlu' and dairy brand is 'Youbai' (Westcare), all labeled 'ALDI exclusive.' Producing private-label has many benefits: retailers can intervene in every link of the supply chain, customize products exclusively, reduce costs by eliminating intermediate distribution, and lower prices. Additionally, there's no need for extra advertising because 'ALDI' itself is the brand. (ALDI's subway ads promote the cheap 'Super Value' series / Photo by DT Business Observer) On this point, ALDI, Hema, and Sam's Club share a common goal: to expand the proportion of private-label products as much as possible. But each may have different focuses or outcomes. ALDI clearly has a price advantage due to its high proportion of private-label products. Hema and Sam's Club may lean more towards not just low prices but also exclusivity. In 2020, Hema CEO Hou Yi stated the goal for private-label: "50% of products should be unavailable elsewhere, truly developed exclusively from the consumer's perspective, leading in quality and fashion." **Product Categories: ALDI and Sam's Club are More Minimalist; Hema Emphasizes Fresh Food** In terms of price, ALDI indeed wins. However, in terms of product variety, the 'Super Value' series is far less extensive than Hema's 'Move Mountain' series. ALDI's 71 'Super Value' items cover 9 categories, half of which are fresh food (fruits, vegetables, meat, eggs, and aquatic products). Hema's 'Move Mountain' series includes 13 categories, adding deli, baby products, health products, and flowers. Although the low-price series is only a part, it reflects the overall strategies of the three companies. Take fresh food as an example. ALDI's 'Super Value' series meat products include only chicken, pork, and frozen basa fish. Compared to beef, lamb, and seafood, pork and chicken are indeed the most consumed meat products in China. (In 2022, China's pork consumption was about 59 million tons, poultry about 24.624 million tons, beef about 10.149 million tons, and lamb about 5.54 million tons.) Even beyond the 'Super Value' series, ALDI does not have a live seafood section, only freezers for chilled/frozen products. This aligns with ALDI's philosophy. The book "The Simple Way: ALDI's Management Method" mentions ALDI's business principles, with the top two being: > 1. Only operate a limited range of daily consumer goods; 2. All items must be easy to handle on-site. In other words, ALDI only offers the most needed or common products. Sam's Club, like ALDI, also abandons live seafood. Its public explanation: "Live seafood is prone to death and contamination during transport and temporary holding, making it hard to guarantee nutritional value and flavor." Of course, this is also for cost control; maintaining freshness requires huge logistics costs, plus losses from deaths, all of which ultimately add to the price consumers see. But Hema is different. Its 'Move Mountain' series includes not only pork and chicken but also various beef, fish, shrimp, and even 'live abalone.' Many may remember a 2017 photo: Ma Yun holding a king crab in front of a seafood tank, looking happy surrounded by people. That was Hema's signature 'live seafood area,' with 'hanging chains' and 'seafood tanks' becoming iconic features. Although high-end items like king crab and lobster have been de-emphasized, and high-frequency, essential aquatic products are now Hema's focus, compared to ALDI and Sam's Club, Hema still aims to strengthen its differentiated competitiveness in the fresh food category. **SKU Count per Category: ALDI and Sam's Club Follow a Big-Item Strategy; Hema Offers More Choices** Take fresh eggs as an example. Hema offers a total of 10 SKUs, including the 'Move Mountain' 'antibiotic-free fresh eggs,' with unit prices ranging from 0.7 to 3.1 yuan, covering fresh eggs, grass eggs, native eggs, and even raw-edible eggs, in packages from 2 eggs to gift boxes of 45. In contrast, ALDI, including the 'Super Value' 'nutritious grain eggs,' has only 5 SKUs. Sam's Club has even fewer, only 4, focusing on large packages with high cost-performance. In this regard, Sam's Club and ALDI are similar: in most categories, they offer only a single-digit number of choices (usually no more than 5, sometimes just 1), even if it means losing some customers who want variety. But from a procurement perspective, a single factory supplying a few big items can achieve economies of scale, ensuring each product is high-quality and cost-effective. Notably, Hema is also aggressively cutting SKUs in other categories. Since October 2023, Hema has fully launched its 'discount transformation,' reducing standard store SKUs from 8,000 to 5,000, while maintaining 2,000 SKUs in fresh food. But Hema faces a challenge: to maintain cost-effectiveness while drastically reducing SKUs, there are only two paths: first, ask suppliers to lower prices, which disrupts the channel pricing system; second, like Sam's Club and Costco, vertically integrate the supply chain by building their own factories and procurement systems. However, Sam's Club and others have membership fees as support, while Hema, which announced in December last year that it would temporarily abandon membership, has lost that support. **Per-Unit Price: Even with Smaller Portions, Hema is More Cost-Effective than Sam's Club** We found 120 'Sam's Club equivalents' in Hema's 'Move Mountain' series and calculated per-gram prices. We found that for 90% (108 items), Hema is cheaper than Sam's Club. Some are their own private-label products like bakery, fresh food, and beverages; others are introduced brands, including beauty and snacks. But even with smaller quantities, Hema's per-gram price is cheaper. For example, Australian fat beef rolls: Hema's price per kilogram is 99.9 yuan, while Sam's Club is 107.3 yuan. Beef is not only one of Hema's many 'low-price' items but also the main product in Hema's 2024 'Move Mountain' price campaign. According to Jiemian News, Hema launched the 'Move Mountain Beef' project in early December 2023, "conducting a full industry market survey during pricing to ensure cost-performance and quality." Where Hema cannot beat Sam's Club on price is more evident in seafood: among the 12 items in Hema's 'Move Mountain' series that are more expensive than Sam's Club, 3 are seafood: salmon, ground abalone, and black cod fillets. Hema's advantage in promoting smaller portions is clear: it suits China's current single/two-person households, has lower wastage rates, and can at least be consumed before expiration; the total price is lower, requiring less expenditure each time. ALDI also has this characteristic. Of course, for Hema, the more realistic issue behind this may be that the large-portion strategy is not easy to implement. On one hand, judging from discussions on social media like Xiaohongshu, Hema's past positioning in consumers' minds is not 'big and cheap' but rather regularly offering novel, trendy products to try. On the other hand, due to differences in customer base and positioning, large packages at Sam's Club target middle-class families with more members, facilitating bulk purchases, but this may not work well for Hema. Moreover, "compared to small packages, large packages have deeper discounts and greater profit margin compression, which Hema must bear." The 99 yuan/kg durian mille crepe that started Hema's 'Move Mountain' price war, after several rounds of competition with Sam's Club, dropped to 88 yuan at its lowest, and a 470g version was introduced at 39.9 yuan, with sales in Shanghai alone surging 26 times. But now, Hema has removed both products. **Final Thoughts** From 2017 to 2019, ALDI entered China through Tmall and opened its first offline store. During the same period, Hema Fresh, Hema Cai Shi, Hema MINI, and other formats opened successively, conducting various experiments. At that time, coinciding with China's consumption upgrade wave, concepts like 'community premium supermarkets' and 'high-end supermarkets' targeting the middle class attracted attention, and consumers were willing to pay for novelty, high-end, unique, fresh products and experiences. Now, consumption has become rational, with a preference for high cost-performance quality products in daily consumption. ALDI and Hema are following the trend, either returning to or embarking on the path of hard discount. On the surface, this is a low-price-led 'price war,' but from actions like Hema and ALDI building private-label brands and establishing joint ventures with local suppliers, it's more about how retailers will solve supply chain, product quality, and cost-performance challenges in the future. Discounting is not just about price; it's about product value and consumer needs. To get consumers to buy private-label products, Hema and others must not only integrate supply chains and reduce markups from distribution to pass savings to consumers but also launch good products that truly meet consumer needs and hit their pain points. From this perspective, Hou Yi's understanding is correct: the discount model is not about selling cheap goods but selling good goods cheaply. But Hema and others need to speed up. **March 14-16, 2024, the 9th China FMCG Innovation Conference & the 2nd China FMCG Hard Discount Conference & the 2nd China FMCG Distributor Conference will be grandly held in Chengdu!** This conference will focus on the theme **'Supply Chain Revolution'**. Over 3 days, with 1 main forum, more than ten sub-forums and closed-door exchange meetings, we will gather with thousands of FMCG brand owners, distributors, retail transformers, and industry service providers from across the country in Chengdu to discuss the challenges and opportunities, changes and solutions in the era of supply chain revolution. In this era of supply chain revolution, a new business era will be born. We hope every participant will still have a place in this wave, and we believe this will be a worthwhile meeting! **🔺Scan for ticket inquiries🔺** --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671