German discount retailer Aldi is examining market conditions for a potential launch in China, reports German business monthly Manager Magazin.
Details as to when are unclear, but moving to China would add a fourth continent to Aldi’s network of operations, after Europe, America and Australia, according to analyst Planet Retail.
“Deciding on an emerging market like China is a first for the 100-year-old German discount operator,” Matthias Queck, research director at Planet Retail, said in a press release.
The move is understood to be part of the wider strategy change at the world’s leading discount store operator. This includes opening up to a more supermarket-like way of thinking, such as the listing of selected brands and more promotional and marketing activities, among others.
China will not only have been picked because of its size and growth outlook but also the business-friendly government and its credible fight against corruption, Planet Retail said.
“As a conservative, family trust-owned retailer, Aldi puts particular emphasis on a stable and reliable economic environment,” Queck said. “Aldi thinks in decades rather than years, so the general conditions and the long-term outlook with higher single-digit growth rates in real terms look promising.”
It is likely that Aldi will first enter the major conurbations of cities where per capita spending is several times higher than the national average.
However, in China, discounters still have not taken off yet, said Yujun Qiu, Planet Retail’s Analyst for China.
Largest in the sector is domestic retailer Shanghai Nonggongshang, followed by Spanish grocer Dia (formerly part of French Carrefour).
Both are price-aggressive neighbourhood supermarkets rather than Aldi-like hard discounters.
“The big challenge will be how Chinese consumers will react to Aldi's private label-focused ranges, “ Qiu said. Chinese consumers still are sceptical when it comes to retailers’ own brands and prefer the well-known manufacturer brands instead, Qiu said.
