Aldi China
The discounter empire of Aldi North and South does not only extend to Germany. Both company sisters have over 10,000 branches worldwide.
Foreign business, especially the USA, are increasing growth drivers in sales, as business in this country is already largely saturated.
Depending on the region, Aldi appears differently abroad. In China, for example, Aldi is more of a premium brand than a pure discounter.
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In Germany, the so-called “Aldi Equator” divides the realm of the discounter empire. The border, which decides which regions belong to Aldi Nord or Süd, runs across the Ruhr area to the east and divides the country into a north and a south kingdom. But there is also an Aldi border abroad, which divides the different markets, but it does not run so clearly between north and south. The more than 7,000 branches abroad on four continents contribute more than two thirds to the total gross turnover of a good 100 billion euros.
Aldi Nord is represented in a total of nine European countries, in Belgium, Denmark, France, Luxembourg, the Netherlands, Poland, Portugal and Spain. Aldi Süd got Great Britain, Austria, Ireland, Switzerland, Slovenia, Hungary and Italy – but also Australia, China and the USA. Although the Aldi principle of good quality at low prices is almost the same everywhere, the strategy of the discounter empire differs in some markets – especially if these are on other continents.
In China, Aldi presents itself as a premium dealer
While Aldi in Germany stands for little frills and the cheapest prices, the grocer in China positions itself as a kind of luxury discounter with German quality standards. Chinese consumers consider Aldi to be a kind of Mercedes among supermarkets. Since many products in the country are already very cheap anyway, so Aldi hardly has a unique selling point at this low price level, the discounter has to act differently here. According to the business development agency Germany Trade and Invest, the Chinese still associate Germany primarily with quality, reliability and security.
That is why Aldi branches in Shanghai are very modern, the goods are neatly arranged on elegant wooden shelves, not like they were once in a box in Germany. Product highlights are German classics such as Paulaner beer and fried potatoes, but also other imported goods such as wine from Bordeaux or beef from Australia. There is even a German pork knuckle sandwich in a café at the entrance.
aldi china
Since the opening of the first pilot branches in China in June 2019, Aldi Süd has expanded continuously in China and opened 17 branches in Shanghai within two years. For comparison: The US supermarket Walmart has 400 branches in the country and wants to more than double these in the future. In addition to the shops, customers can also order via the messenger service Wechat or the online platforms Tmall, Ele.me, Meituan and JD Daojia. The Chinese e-commerce analyst Li Chengdong told Wirtschaftswoche, for example, that this is important for the Chinese who are above average internet savvy in order to survive here in the long term.
In the USA, Aldi Süd and Nord compete
The USA is also important, the only market in which both Aldi sisters are represented at the same time. Aldi Nord, however, only through its more than 500 Trader Joe’s branches, Aldi Süd since 1976 with around 2000 stores of the main brand. Only last year, Aldi Süd opened the 2000th Aldi store in the United States. However, this went without a lot of words, as the “Wirtschaftswoche” reported. Unlike in China, where every new store opening is prominently announced on the website.
An Aldi store in California.
picture alliance / Newscom | Hutchins Photo
Trader Joe’s is a kind of mixture of delicatessen and health food store, the branches with their employees in Hawaiian shirts and the small painted signs and shelves are more reminiscent of a farmer’s market than an Aldi discounter. Aldi sells healthy gourmet and organic food there. They are a bit more expensive, but on average they are still cheaper than other grocery chains in the USA. The business principle is the same as at Aldi in Germany: the highest possible quality at the lowest possible price.
Because the supermarket density in many US regions is not as high as in Germany, the price level in the world’s largest food market is correspondingly high. Products are accordingly a little more expensive than in Germany, even with the main Aldi brand in the USA. Compared to its competitors Walmart, Costco and Target, however, Aldi is cheaper. This is also due to the fact that the branches and the range are significantly smaller than those of the oversized “super stores” from Walmart and Co. With this “Aldi principle” and the focus on the essentials, the discounter has always saved costs. He passes these cost advantages on to his customers with low competitive prices. Aldi can thus score points in crisis situations such as the current corona pandemic, as consumers have to save.
Aldi could soon become more successful in the USA than in its home market. According to a forecast by the market research institute Edge by Ascential, Aldi in the USA could make more sales this year than Aldi Nord and Aldi Süd in Germany combined. In 2020, sales in this country were estimated at 31.1 billion euros, in America at 30.1 billion euros. According to calculations by Boris Planer, chief economist at the market research institute, sales in the USA will even rise to 32.4 billion euros in 2021, thus exceeding the expected German sales of 31.5 billion euros. The figures show: The USA is the most important growth engine for the discount store empire. By the end of 2022, Aldi Süd wants to have around 2,500 branches in the USA, making it the third largest food retailer in the country in terms of the number of branches. As the “Manager Magazin” reported at the beginning of last year, Aldi Süd intends to invest five billion dollars in the next three years to secure the profitable US business against its largest competitor Lidl.
Europe: “Scan & Go” and frozen shrimp for self-portioning
While Aldi has long been able to order via messenger in China, Aldi is slowly adapting to the digitization of shopping behavior in its European branches. In some shops in Portugal, France and Switzerland, for example, the discounter already offers the option of using “Scan & Go” to scan and pay for the items directly via an app on the smartphone. Despite the largely uniform system, Aldi also adapts to regional differences and consumer needs. “We try to take local habits into account in our range and in our advertising and marketing,” says the Aldi-Nord spokesman. In France, for example, the regional range of cheeses is significantly larger, in Spain consumers expect around at least five different types of olive oil and in Portugal customers can weigh frozen king prawns individually with scoops on a per kilo basis.
The largest takeover in the company’s history took place in France last year: Aldi Nord bought around 600 leader-price stores and three warehouses for 717 million euros from the French supermarket group Casino. The integration of Leader Price to Aldi is currently being carried out, according to the company.
“In addition to France, we are currently also focusing on Spain,” said a company spokesman for Aldi Nord to Business Insider. The Spanish market is a “success story” for Aldi, the discounter recently opened a new market there every week. In April, Aldi Nord had just opened a total of 5,000 branches on Mallorca, and markets on the Canary Islands are to follow next year, the company says. But Portugal and Belgium are also important countries for Aldi Nord despite their small size. In Belgium, the grocer has had a higher market share than in Germany for years.
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