China's ALDI, which has become an "Internet celebrity supermarket", is not adapted to the soil due to poor localization adaptation, and its business path is contrary to that of ALDI in Germany.
Author: Lv Xinyi Editor: He Xiang
出品：零售商业财经 ID：Retail-Finance
ALDI, which has the aura of "the originator of hard discounts", is in a hurry.
once bit the cost and did not do marketing, but set up a marketing department, invited "Aunt Xue" to appear in offline advertising space, and also Yin Yang Sam's "packaging is too big"; Playing the banner of "own brand", joining the low-price battlefield with a series of 9.9 yuan; even the positioning of the domestic market was changed from "international quality, community price" to "good quality, low price enough" in October last year, in order to weaken the sense of internationalism and the attributes of community boutique supermarkets, and release the signal of "low quality and low price......
In fact, ALDI's recent actions have shown that it is contrary to the way ALDI operates in Germany ("ALDI" stands for German stores and "ALDI" for Chinese stores).
At the level of business model, ALDI can be called the world's best "poor ghost supermarket", the most significant feature is "picking", and its "hard discount" model determines that it must pursue the ultimate cost (light decoration, simple personnel, no marketing). However, ALDI has a tendency to change to "soft discounts", whether it is exquisite and small store decoration, or the addition of new employee positions, or the frequent use of marketing methods such as huge advertisements to brush up on the sense of existence, the cost control is not "hard" enough.
In terms of brand positioning, ALDI is a "poor man's supermarket" in the community, located in areas with low rents, and is aimed at low- and middle-income people; ALDI's development in Shanghai was initially positioned as an "imported community boutique supermarket", and its location was not only near community-based commercial centers, residential areas, and subway transportation points, but also preferred to be stationed in shopping malls, radiating young white-collar workers and targeting the middle class.
The above two points are destined for China's ALDI to embark on a completely different development path from Germany's ALDI - from a "boutique supermarket" that does not meet the original intention, it has gradually evolved into an "Internet celebrity supermarket/check-in point" that can better cater to domestic consumer preferences.
Even though ALDI is playing a hand of "self-brand" to "return to low prices" and trying to re-embrace the "hard discount" logic of ALDI, but the self-brand accounts for more than 90%, ALDI is still facing a lot of internal and external pressure: first, the scale effect of domestic stores has not yet appeared, and it is impossible to release the advantages of the supply chain, which makes it difficult to practice ALDI's "hard discount"; Second, leading players such as Hema and Sam are constantly squeezing ALDI's living space with more flexible market strategies.
So, can this "chaotic punch" made by ALDI shatter the "panic" in his heart? Perhaps before shouting the slogan of "big brand disenchantment, self-brand upward", ALDI still needs to "add charm" to its own brand.
01 ALDI in Germany ≠ ALDI in China
Throughout the development of ALDI is to "remove a series of unnecessary costs", and its internal production and sales are split into 4 links to build "4 1s", that is, the purchase price, operating costs, tax costs, and corporate profits are all 1 yuan.
"Picking" to the extreme, is the biggest "hero" of ALDI's strict control of costs, and also forges the "originator of hard discounts" established for more than 100 years, but it is difficult for domestic ALDI to adapt its unique business philosophy.
On the store operation side, ALDI almost gave up the store decoration link, and even the necessary shelves were changed to carton display, saving the cost of shelves and the labor cost of sorting out the shelves.
Pictured: ALDI store in Germany
On the contrary, ALDI pays great attention to the style of the store, not only adding shelves, but even inviting young artists to paint in the store, which is closely related to its brand positioning aimed at high-income and high-educated customers.
Pictured: ALDI store in Germany
In addition, the number of employees in ALDI stores has also been reduced to the extreme, with only 4-6 employees in hundreds of square meters of stores, each employee is a "generalist", and early employees can memorize all product prices, so as to save the cost of "price tag". However, ALDI has a dedicated user experience expert (CEE), whose job content is to introduce product features, recruit new members, and increase customer loyalty, etc., and make a fuss about the user shopping experience.
On the product side, ALDI mainly focuses on rigid demand categories such as personal care, rice, flour, grain and oil (accounting for about 50%), supplemented by fresh food (accounting for about 36%). However, ALDI's fresh and ready-to-eat categories account for nearly 50%, pushing up the proportion of fresh food, in addition to the increase in warehousing and logistics costs, fresh food loss will also further affect operating costs.
The most "deviant" is the marketing side, ALDI hardly touches any publicity, in their opinion, advertising will increase the price of goods in disguise. However, ALDI not only invited Aunt Xue to sit in the battle, but also strengthened the brand awareness through many marketing methods such as porcelain marketing, advertising buses, and milk carton dolls.
Source: Internet
ALDI, which focuses on decoration, experience and marketing, has transformed from an "unpretentious" hard discount supermarket into a boutique supermarket with a "petty bourgeoisie" taste.
It's no wonder that industry insiders evaluate ALDI as a "hard discount" supermarket in the guise of "ALDI".
In the second half of last year, ALDI changed the brand tone from "boutique supermarket" to "affordable community supermarket", which is behind its localization adaptation based on the domestic market environment.
The so-called "adaptation" refers to the "appropriate situation", when ALDI first entered China, it was catching up with the "100 million new middle class" to become the "sweet and sweet" of retail enterprises, and ALDI chose to raise its own price and open stores in the community to meet the needs of the middle class for quality products in community boutique supermarkets.
The deep-seated reason for ALDI's "focus on the middle class" is that it has not yet formed an absolute price advantage in China.
ALDI's overseas market development relies on the aura of the world's most bullish "poor ghost supermarket", but there are different survival soils in local and foreign lands, and ALDI, which has only been deployed in Shanghai for 5 years, is difficult to compete with retail companies such as Hema and Dingdong that are deeply involved in Shanghai, regardless of store size, brand mentality, or local supply chain strength, even if it has global supply chain capabilities, but due to higher procurement and transportation costs, it is not an overnight task to "remove a series of unnecessary costs" in China.
This is also the underlying reason why ALDI has shifted to "soft discounts" in China.
Nowadays, ALDI, which frequently relies on marketing to get out of the circle, can hardly hide its development anxiety. After entering 2023, the "quality-price ratio" has become a new consumer trend, and the head retail players represented by Hema have rolled up to discounts, and through in-depth upstream actions such as building vertical supply chains, the whole link "squeezes water", and the terminal price has been reduced again and again.
It is undeniable that the current Hema is more like ALDI than ALDI at the commodity level. In the face of competitors in the limelight, ALDI can only make a "decision against the ancestors", test the level with marketing, and "save respect" for itself through building momentum.
02 Big name disenchantment, self-card upward, true or false proposition doubts
Localization adaptation is the "solution" for ALDI to take root in the domestic market, but the previous path is no longer applicable to the present, and under the trend of "quality-price ratio", sticking to the "boutique supermarket" will only make ALDI face the situation of not advancing or retreating.
How to be invincible? After thinking about it, ALDI played its own brand, cooperated with local suppliers to develop its own brand products, controlled the price and cost from the production side, and launched a number of private label product lines, including the "value-for-money" series, covering fresh food, baking, snacks, daily chemicals and other daily necessities.
When ALDI's "self-brand" debuted, it was bound with the slogan of "good quality, low price enough". For example, the recently popular 500ml strong aroma liquor, which has a traditional solid-state fermentation process and an alcohol content of 52 degrees, has been sold out since its launch on June 5 and is currently being actively restocked.
The price of the wine is 9.9 yuan per bottle, and the foundry is Qinyuan Spring Distillery. The author found that the same specification of liquor (52 degrees, 500ml, strong flavor type) from the same distillery is priced at 188 yuan on Taobao.
Source: Taobao on the left, Xiaohongshu on the right
It can be seen that ALDI has pushed the price of solid-state fermented liquor to a new low. The staff of Qinyuan Spring Liquor explained to the media the reason for the price reduction: by shortening the fermentation time to 30 days and using a lower grade of graded storage, the production cost was effectively reduced.
Although this liquor has become a representative product of high quality and low price promoted by ALDI as its "own brand", not all of ALDI's products have the same quality and price power as 9.9 yuan liquor.
Taking ALDI facial cleanser, which is also priced at 9.9 yuan, as an example, consumers found that it was in the name of amino acids, but in fact, the ingredients were still soap bases. Among the products in the same price range on other platforms, there is no shortage of real amino acid facial cleansers. In addition, the commercial power of ALDI dish soap products is also questionable, with some consumers finding that its foundry is a small enterprise with a total risk of 27 cases.
Source: Taobao on the left, Xiaohongshu on the right
More importantly, in social media, some consumers found that the "multi-grain cranberry whole wheat toast bread" sold by ALDI contains sodium dehydroacetate, which is a preservative, and a number of studies have shown that long-term intake can cause liver and kidney damage. At present, the United States, the European Union and other countries have abandoned the ingredient, and the mainland is gradually implementing the ban on sodium dehydroacetate from 2021.
A well-known supermarket from the European Union has added ingredients banned by the European Union to its products produced in China. ALDI's so-called "good qualities" seem to have a huge question mark.
Source: Little Red Book
The private brand is undoubtedly the starting point for ALDI to consolidate its price power, but its overall presentation is high-quality and low-cost products, and when ALDI promotes its "own brand", it touches the "big brand" on the basis of high quality and low price, and shouts the slogan of "big brand disenchantment, self-brand upward". The publicity method of stepping on the "big brand" will inevitably hurt the trust relationship between ALDI and the "big brand" by mistake, and lose the opportunity for the brand to settle in.
The author found that on the shelves of ALDI's own dairy product "Youbai", there was a clear hanging "Don't lose next door, come and try it!" Next to Yohaku's is Meiji milk, which is popular among consumers. One is a private label that "pushes itself" and the other is a well-known brand that is well-known around the world, and consumers will naturally "vote with their feet".
Source: Little Red Book
After all, behind the big brands, it is not only the "big" popularity, but also the brand's absolute control of quality and taste.
From the perspective of the above products, how can ALDI tell the story of "self-brand upward" by using small factories with hidden risks and using preservatives abandoned by the mainstream?
If you want to remove the filter of "big brand", when ALDI shouts the slogan, you need to ensure inward that your own brand has a quality and price advantage. Not only that, ALDI's "self-brand power" is also facing a "differentiated" battlefield.
Behind the development of its own brand, it is relying on the advantages of the supply chain, producing products with lower costs and more distinctive characteristics, and bringing differentiated competitiveness to its own brand with "exclusivity". However, the "China Private Label Development Research Report (2021)" pointed out that each supplier serves an average of 4.65 channels, and the private label products developed by each retailer often come from the same supplier, which is one of the reasons for the lack of private label innovation.
Take the sea salt soda biscuits launched by ALDI as an example, the same size and taste, Sam's and METRO's own brands are selling. When many friends and their own products are produced, ALDI's "self-brand" will also be weakened.
Most of the retail enterprises to do their own brands choose products with categories and unbranded products, and while the industry has not yet jumped out of the quagmire of homogeneous competition, ALDI is also facing more difficult problems.
According to public information, ALDI (data released to the public) accounts for more than 90% of its own cards, and Sam's indicator is 30%-40%. The ultra-high proportion of self-brand shows that ALDI has the production capacity of all categories, has the supply chain resources of all categories, and has the maximum price advantage. But when a retail company's own brand covers almost all the shelves, is it positioned as a brand or a channel?
Compared with the cost reduction brought by self-branding, high quality, differentiation, emphasis on refinement rather than many, wide SPU, narrow SKU (each category only provides 1-3 product options), is the best solution to meet the current consumer demand.
03 ALDI is no longer "just a sheep"
In the second half of 2023, ALDI will change its positioning and gradually accelerate its layout in China. At that time, Roman Rasinger, Managing Director of ALDI China, revealed that he would continue to increase the Chinese market and continue to open stores.
ALDI's "change of tone" is quite "forced". At the same time, Hema fired the first shot of "discounting", and Sam's also accelerated the layout of stores in the Shanghai market. Aldi, which is deeply rooted in Shanghai, is forced to face more fierce competition, and the strength of competitors should not be underestimated.
As a result, ALDI's marketing offensive and self-brand "defense war" have been created. ALDI, which cannot "only herd a sheep", is eager to release the "flywheel effect" in the domestic market.
The focus and simplicity of "herding only one sheep" is the magic weapon that ALDI uses to overcome "complexity". ALDI's success story also reveals ALDI's predicament.
After ALDI enshrined "low price" as the decision-making factor of the whole link, it cut all links, even the delivery vehicles have modified the tilt angle of the windshield to reduce wind resistance and reduce fuel consumption.
Source: Internet
Under the concept of "price first", ALDI streamlines SKUs, expands stores, increases scale advantages, obtains lower prices from suppliers, attracts more customers through lower prices, brings higher sales, and then feeds ALDI to increase bargaining power. A "flywheel" with low prices as the core will release commercial effects.
However, ALDI has not implemented the ALDI concept since it entered China. When it is positioned as a "boutique supermarket", it means that price is no longer its "first principle", and when necessary, price can make way for refined style.
ALDI wanted to "adapt" for localization, but it was not adapted, and the space left for it to break through became narrower and narrower.
At present, ontology retail enterprises are exploring the "hard discount" model that is more suitable for the Chinese market on the basis of tracing the source and learning from ALDI's "hard discount" concept. For example, Fat Donglai's own brand has covered a full range of goods, with the same simple packaging, both price and quality. More importantly, as a retail enterprise grown from Chinese soil, Fat Donglai has more suitable product tastes and product categories for the consumption preferences of Chinese people when developing its own brand.
It is worth mentioning that Freshippo's own brand products not only have fast new speed, high quality and strong price power, but also embarked on the overseas route, winning a number of "sales crowns" in American supermarkets, and also bringing a "shock" to Chinese retail enterprises in overseas markets.
Domestic retail enterprises have experienced a transformation journey from learning to imitation to transcendence, and have gradually possessed the qualifications and strength to "wrestle hands" with global retail giants such as ALDI. Obviously, there is not much time left for ALDI to become ALDI.