Aldi Süd-Can the Retailer decode the Chinese Puzzle?
| Case Code: BENV048 Case Length: 17 Pages Period: 2017-2021 Pub Date: 2023 Teaching Note: Available |
Price: Rs.400 Organization: Aldi Süd Industry: Retailing Countries: China Themes: International Business, RetailTech |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
International Ventures
Aldi’s international foray began in 1967 when Aldi Süd entered Austria, taking over the local grocery chain Hofer. It was Aldi Nord’s turn next. It ventured into Belgium in 1973. Then Aldi Süd entered the US in 1976 and by 2019 it had 2000 stores in the US. Aldi Nord also had a presence in the county through its acquisition of Trader Joe’s in 1979. After the iron curtain fell in 1989, both the companies expanded rapidly and as of 2020, Aldi Nord had 2,249 stores and Aldi Süd operated through more than 1,900 stores. Aldi Süd entered the UK in 1990 and become one of the fastest growing supermarket chains in the country with 890 stores by 2020..
Climbing ‘the great wall’
Both Aldi Nord and Aldi Süd made major decisions like entering into new markets or introducing new format of stores, strategies to follow in different markets during the Company Committee (called Aldi Unternehmensausschuss) meetings. In December 2014, German publication, Manager Magazin, reported that during the Aldi-Unternehmensausschuss meeting in November 2014, it was decided by both the entities that Aldi Süd would enter China. The two parts of Aldi had the practice of splitting the foreign markets among themselves. As China, a large market, had gone to Aldi Süd, Aldi Nord would get to choose the next two countries to expand into..
Testing The Chinese Waters
Aldi finally decided to enter China in 2017. In Chinese, Aldi was called Ao-Le-Qi (means Standing Proud). Aldi’s entry into China marked the group’s entry into the fourth continent in the world – Asia. It was the eleventh country in which Aldi Süd had a presence. Entry into China posed a new set of challenges for the company. Till then, both Aldi Nord and Aldi Süd had only operated in developed countries. Planet Retail research director Matthias Queck pointed out..
The Stores Are Open
In 2018, Aldi decided to open its stores in China and started building the team. It started looking for managers who had already worked with European retailers in China. Aldi chose Shanghai to start its first brick-and-mortar store in China. Shanghai had a population of 26 million, was well connected by sea and air, and was a major global logistics hub. It offered Aldi several opportunities to expand. The inhabitants of the city were highly aspirational and upwardly mobile, and had a taste for fine products and imported goods..
Localizing For China
The Chinese stores of Aldi were very different from the ones in other countries. Compared to the other countries in which Aldi operated, in China they offered a more upmarket proposition. An observer said that Aldi’s approach to China was different as it focused on high quality, modern retail and convenience. Analysts also pointed out that “that the global discount pioneer offers a more upmarket proposition in the Middle Kingdom than at its other foreign operations.”..
Further Expansion
In October 2019, within four months of the opening of its first two stores, Aldi opened more stores in Shanghai’s Putuo, Baoshan and Xuhui districts. By December 2019, Aldi was operating seven stores. In these stores, Aldi stocked different types of products based on customer feedback and demand..
Exhibits
Exhibit I: Western Retailers in China
Exhibit II: 2021 Top Global Retailers
Exhibit III: Retail Business Environment in China
Exhibit IV: Aldi on Tmall
Exhibit V: Difference between Aldi and Hypermarkets
Exhibit VI: List of Aldi Stores in China*
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