ALDI China

ALDI CHINA
Student’s Name
Course + code name
Professor’s name
City, State
Date of Submission
ALDI China
Introduction
Western supermarkets chains such as ALDI are trying their best to fit into the Chinese retail market. The Chinese people are believed to develop an increasing interest in imported food. The high interest is being motivated by the high population of middle-class in China, the high rate of Chinese people traveling to western countries and the concerns the Chinese have about the quality and safety of the local products. Various research conducted on China’s retail market has identified the Chinese retail environment to be a challenging field of business predominantly for the “big-box stores.” Business in China mostly for the supermarkets has reached the level of being conducted on “online-only.” Significant supermarket entrants in China are focusing on attracting their consumer’s attention to shop via online methods (websites) only on online (Cahill, 2017). Costco is the most recent major supermarket to adopt the online shopping methods; it has been practicing online sales since 2014 and has managed to gather consumers from various locations. However, the idea of online shopping is a practice that confines investments and risk but does not necessarily guarantee big sales (Chatterjee, 2017).
China is known globally as the most extensive e-commerce market in the world. China’s citizens who are considered as consumers in the chain of retail business are bombarded with various choices when selecting their products.

For brands and retailers to reach a significant percentage of Chinese online shoppers, the organization is obligated to put a lot of effort, determination, and recourses at stake (Hughes, 2015). Major brands such as ALDI have difficult but possible tasks to be accomplished for them to attract the attention of a large percentage of China’s population. ALDI being an online supermarket offering discounts on its variety of groceries, wine, and breakfast products among other food staffs, has made a big a push in the United States and has attracted more than half of the population on online shopping for food commodities and other households.
The Germany concession supermarket chain, ALDI, developed plans for starting online sales in China having the hope to appeal to China’s citizens who have generated an interest in brands from Germany such as the selection of wine, breakfast products and snacks (Jenkins & Williamson, 2015). However, it can be surprising to note that ALDI is not very famous in China as compared to other countries such as Australia. With ALDI being introduced into China’s retail market, it is obligated to take dramatic steps and apply super strategies that will be memorable to the consumers to achieve the attention of the Chinese and encourage them to talk about their brand (ALDI). ALDI online supermarkets will sell its brand products to the Chinese through an online platform known as Tmall Global which is operated by Alibaba.
Stakeholder
Alibaba has proved to be one of the stakeholders who will offer a platform for the supermarket chain, ALDI, to advertise, sell and market its products to the Chinese consumers directly via online means. Alibaba is globally known for its production in media activities and online procedures in Asian countries. Being the leading producer of media actions, film and the most prominent online marketing brand in Asia, Alibaba has gained popularity in China and will act as proper stepping for ALDI to reach its target consumers (Metzger, 2014). Most recently Alibaba offered a partnership with various western brands and opened a marketplace for the foreign retailers. It is believed that the online retail giant Alibaba provided the United States different measures on how they can sell their products to online shoppers in China. Alibaba also presented a platform for the UK’s chain supermarket Sainsbury; a field for it to conduct sales on China’s Tmall Global (Jakubovskis, 2017). Alibaba has also partnered with various organizations both private and public such as SAIF, Irish Wholesaler and retailers from the United States. Alibaba’s Tmall is already selling Woolworths products from Australia and UK based Waitrose and Sainsbury (Han, Yoo & Jeon ,2015). It is evident that for ALDI to achieve its goal of capturing the attention of most of the Chinese and convince them to trust and rely on ALDI’s products. It is hence, obligated to create a partnership relationship with Alibaba and its platform Tmall. The rising number of middle-class Chinese consumers is seen to generate interest in accessing high-quality international food brands (Miao, 2016). ALDI is assuring to fulfill all its consumers’ needs and demand through meeting their “concerns for excellent quality and high value for money.”
ALDI is divided into two chain supermarkets separated both economically and legally (ALDI Sud and ALDI Nord). ALDI Sud being the branch that has developed the interest in venturing into the Chinese retail market runs significant stores in the United States (US), United Kingdom (UK) and Australia. ALDI Sud has proven to have the capability to manufacture various private label products that many Chinese prefer over commonly branded/ traditional labels. The chain supermarket working with Alibaba and its China’s Tmall online shopping platform promised to provide products that have better quality and are sold at a significantly low price (approximately 30% to 50% off) (Mortimer, 2016). Alibaba which is acting as the leader of development of online shopping in China has made a step of pursuing “cross-border” commerce as one way of upgrading the retail offering for the Chinese middle-class population.
The cross-border online marketplace was launched in 2014 as “Tmall Global” by Alibaba. The online marketplace was developed with the aim of creating a space for foreign brands and merchants, offering them a platform for selling their products directly to Chinese consumers. It is noted that the cross-border feature does not obligate merchants to have a legal entity in China’s market or to hold their stocks in China (Ododo, Mulholland & Turner, 2015). Tmall has gradually flourished since its formation having that at this current time it features more than seventy thousand online stores and has attracted a maximum of 180 million Chinese buyers. ALDI partnering with Alibaba is a guarantee to reach its market in China as ALDI China. Tmall group acting solely but under Alibaba’s umbrella has been ranked number one in China among all Chinese retail website regarding the rate of transactions conducted with a gross merchandise volume estimating to RMB 30 billion. In July 2014, Tmall was announced as the eighteenth most visited website in the whole world and the seventh most visited website in China (Hughes, 2015). How Tmall conducts is operation is seen to differ from other online shopping websites (marketplace) such as the Amazon. Operations in Tmall demands a dedicated and specialized cross-functional team, a team that can either be employed by the merchant in-house or in most occasions the group is managed through a partnership principle which is certified by the Tmall Partner Agency (“TP”) (Van Zon, 2016). The “TP” operates the business conducted in the store on an ongoing basis on behalf of the owner of the shop. ALDI made its first step into China’s retail market in 2017. The C.C.O of Ogilvy & Mather China discovered that for an organization to attract the attention of a high number of consumers it has “to do something flamboyant and very memorable.”
The Consumers
Terry von Bibra, the manager of Alibaba Europe, mentioned that the growing number of the Chinese middle-class civilization is developing more and more interest in products that are imported from Germany (Made in Germany) and other western states considered they are of high quality (Tsang, 2014). According to the study conducted by a consulting firm McKinsey & Company, it was indicated that the rate of Chinese middle class population has doubled in the past decade from 399 million to 784 million (Tsang, 2014). It is approximated by experts observing the population of China that by 2022 seventy six percent of China’s urban civilization will be comprised of middle-class Chinese. Online shopping is a habit that is encouraged by mostly the middle class population in China, having that they prefer imported food products and admire how western countries select their products such as wine, snacks and breakfast products.
The demand for online shopping is increasing at a higher rate hence; a competitive business environment for large stores retailers such as ALDIN is experienced (Voigt, Buliga & Michl, 2017). With the rapidly growing rate of the substantial fraction in China, the number of middle-class consumers is predicted to move up by nine percent by 2020 (Miao, 2016). The increase of the middle class civilization in China and Asian countries is good news to online retailers such as ALDI among other retail stores. The middle-class Chinese having to respond to life crisis and obligations, a huge fraction of China’s population are forced to shop on online stores since they offered a variety of best- selected products at lower prices, hence, they are able to maintain their living standards high. The Grocer magazine indicated that thirty- one percent of Chinese middle-class shop on online websites due to price reduction and best quality of products which are handpicked to serve their desire (van Rompay, Deterink & Fenko, 2016). The 31 percent of the civilization reflects the “AB” demographic which identifies (A) as the upper-middle-class and (B) as the “higher or intermediate managerial professional or administrative people. Twenty-eight percent of the fraction is however represented by lower middle class for marketing reasons having that most of its members are from junior managerial, supervisory and administrative jobs.
ALDI China promises its consumers to be committed to help them enjoy the very best of imported products in their daily experience (Voigt, Buliga & Michl, 2017). With as the slogan of the brand suggests all products are “handpicked for you,” ALDI China promises to provide superior quality of their products at a fraction of the price. ALDI working together with the Chinese leading online platform (Tmall) has assured to make online grocery and food shopping to be simpler and smart, hence, presenting international specialty experiences and products right at the door of the Chinese (Voigt, Buliga & Michl, 2017) . ALDI is collaborating with Ogilvy Shanghai, a retailer’s agency that host a fashion event to attract customers. In the event, the company hires a florist, a fashion designer, a celebrity chef and a hairstylist to make runway looks (Costumes) using commodities that are sold at ALDI’s sales website. During the runaway event which was conducted on April 24, it appeared that some of the outfits made from food products were funny while some impressed; an example was a coat that was worn by one of the models which was made out of a clear plastic bag filled with red wine (Mortimer, 2016). The event consisted of costumes such as a gladiator bore shield that was made out chocolate, almonds, pistachios and chocolate chip cookies. The whole event was targeted to have a high-end feel for the discount grocery supermarket chain. The Chinese market has a perception that significant brands sell most when they penetrate China’s market because the Chinese tend to look for quality whenever they purchase foreign products (Walker, Gowland & Points, 2017).
ALDI’s slogan handpicked for you; the idea following the slogan was derived from the action that the artists handpicked the products with how they were designed. This idea was an indication of how ALDI selects a narrow range of products while maintaining high quality. Interestingly, the guests at the event consume the same food that was being showcased in the form of costumes. It was more like eating the costumes. For ALDI to serve the Chinese market it will use its Australian suppliers for continuous supply of their products to China’s retail market. Terry Von Bibra, the manager of Alibaba Europe, passed that the Chinese middle-class is developing more interest in ‘Made in Germany” products compared to other products (Li, Gordon &Netzer, 2017). The Germany discount chains are slowly extending to other regions of the globe. ALDI China identified its consumers as their greatest stakeholders and insisted that responding to the needs of its customers is the major key to the doors of success for their company. ALDI China is working on various means that will enable them, reach their customers while outside of their retail stores. One way of achieving this measure is increasing the activity of international organization on social media. ALDI China will conduct customer surveys to enable them to know more about their customers’ thoughts regarding the company and its products. ALDI China will offer an online field for answering inquiries from consumers every year and taking new ideas from its customers.
Product Availability
ALDI is identified as the world’s best grocery chain by consumer/customers from different locations (Jakubovskis, 2017). The German retail store is believed to have more than eight thousand stores around the world, and it’s expanding its branches at a rapid rate. One primary reason for ALDI’s popularity is the low price for its products and availability of various products (Mortimer, 2016). According to Research conducted by “cheapism” on major retail stores, it is noticeable that groceries and other products presented by ALDI are “shockingly cheaper” compared to other retail stores such as Wall-Mart and industry darling Trader Joe’s (Jenkins & Williamson, 2015). For ALDI to offer massive discounts on their products, it has employed few strategies in selling its brands products.
Private labeling
It is evident if you have ever shopped at one of ALDI’s branches, you have noticed that there are no significant brand names in their stores. ALDI is believed to stick to private labels and offer fewer products than any other grocery store. ALDI has focused more on individual brands than significant brands that have become common in every retail outlet. The strategy of relying on private labels has also been put into practice by different retail supermarkets such as Costco. While a significant retail store presents forty thousand items, ALDI China offers an approximation of 1400 items. According to business experts, it is easy to notice that selling fewer products/items increases the sales volume and helps in driving discounts (Jenkins & Williamson, 2015).
ALDI has opened an office with a total of 40 staffs at the Shanghai center and a significant center for distribution in the port of Ningbo. The collaboration of ALDI and Alibaba is a clear indication of continuous supply of products to the Chinese consumers having that Alibaba B2C platform Tmall Global looks far more than a “toe-dipping” exercise in the South China Sea. ALDI China currently offers over one hundred food lines, and it intends to grow its assortment for it to carter best to the needs and demands of the Chinese middle-class consumers in the chain of retail business. One of the products that ALDI China has developed an interest in improving its supply and availability is baby food (Mortimer, 2016).
ALDI’s Christoph Schwaiger passed that baby product are at the top of their priority and providing fresh produces is one of the various possibilities they are keenly considering. Mr. Schwaiger confirmed that products that will be sold at ALDI China are bought from ALDI’s suppliers who are from Australia. The products will be delivered at the central distribution center in Australia (Lawley & Birch, 2014). From the primary distribution center in Australia, the products are then transferred by sea and partly by air to their central distribution center and bonded warehouse in Ningbo. Ningbo happens to be the world’s largest port and its located two hundred and thirteen kilometers south of Shanghai. ALDI’s China online orders are sent to the DC in Ningbo where they are prepared and boxed for delivery (Olsen 2017). After the goods have cleared customs, they are sent off to logistics services provider. Christoph Schwaiger insisted that all orders made by the consumers are delivered before 4 p.m and for consumers who are located in major Chinese conurbations will receive their orders within 24 hours. For ALDI China to provide for all the requests presented by the consumers, Alibaba offers its support through the Alibaba subsidiary Cainiao Logistics. Cainiao Logistics is believed to optimize the logistics channels and the value added to assure that ALDI China’s products are delivered to everyone even a village dweller in China (Jenkins & Williamson, 2015). Cainao locates the right provider for each location in China having that currently, ALDI China does not have an exclusive delivery partner.
Chinese middle-class civilization has developed an interest in western products such as food and wine; the middle class prefers anything that is of high quality and has less risk to their health (Miao, 2016). ALDI China promises to help the Chinese desire by delivering fresh and handpicked groceries, fine wine and snack to the high growing middle-class population demand for quality products. ALDI China was launched through a fashion show ceremony in Shanghai. The idea of using the fashion show strategy was used to show how ALDI work up exclusive brands and showcasing the quality of products they present. The show aimed to make potential customers feel much closer to what makes ALDI’s brand particular and how it offers exceptional quality and excellent value for money. The products that are sold on ALDI China’s website include clothes, health and beauty products, households’ goods, stationery, soft tools, electronic products, fresh fruits and vegetables (Jenkins & Williamson, 2015).
Competitors of ALDI China
With the rising number of middle-class population and their demand/ desire for imported quality food products from western countries, China has become a gold mine for significant chain supermarkets such as ALDI and Woolworths from Australia, Waitrose, and Sainsbury from the UK (Jakubovskis, 2017). Alibaba hosting the most extensive online shopping platform in China has offered various western retail stores a privilege to sell their goods directly to the Chinese using its marketplace. The Chinese middle class is believed to relay more on imported food products due to quality and affordability (Tsang, 2014). ALDI China is therefore likely to meet high competition in the journey of it basing a branch in China. The online marketplace provided by Alibaba (Tmall) host more than just one retail store. Local competition in China is seen to be fierce having that the economy is slowing and the e-commerce is rising rapidly (Jakubovskis, 2017). Most of the international chain supermarkets are expanding to second, third and fourth-tier cities, which are far from the bright lights and saturated market of Beijing and Shanghai. According to Mathew Crable, the director of Asia research for Mintel Group, the Chinese market is seen to be crowded; hence, it will be a difficult task for ALDI China or any other retail store to gain attraction rapidly (Jakubovskis, 2017).
He passed said that the Chinese market already comprises of many food companies and coping up with the existing industry can be challenging. ALDI China is making its sales on Alibaba Groups Tmall Global platform which has allowed various overseas labels to sell their products directly to the Chinese consumers without legal entity (Cahill, 2017). Costco is identified as one of the stores conducting its business under the umbrella of Tmall Global. Costco introduced online shopping in 2014 being the first company to practice online sales for its products in China. Wal-Mart being another retail store under Tmall, has over four hundred stores located in China. Wal-Mart has partnered with a local partner JD.com which is a rival of Alibaba to boost its e-commerce capabilities to gain more publicity for the benefit of its sales (Jakubovskis, 2017).
Waitrose a retail store from the United Kingdom has also partnered with Alibaba’s Tmall Group, offering an initial of thirty products from ranges such as Waitrose Duchy Organic and Waitrose baby which are exclusive to the Royal Mail store on Tmall Global. Waitrose is believed to set up a deal through China’s e-commerce specialist Avenue 51 which controls the Royal Mail store on Tmall Global. The Waitrose director of commercial passed that the potential for Waitrose in China is very enormous and they have hopes of the retail supermarkets becoming a successful business in China within five years (Metzger, 2014). Waitrose is also esteemed to meet the demands of its customers. This is because it is strategically placed to attract consumers who tend to value brands from countries such as Britain because of their high quality.
Waitrose has, however, joined the fraction of leading British names which are already present in the Royal Mail store. Amee Chande, the managing director of UK/Ireland and Nordics at Alibaba Group, said that China offers their business a suitable marketplace and the existing demand for British products by the Chinese middle-class civilization is a sign for a successful business. Woolworth is another retail store in Australia that has managed to gain access to the Chinese market through the support of Alibaba’s Group Tmall (Cahill, 2017). Competition for ALDI China will be high hence; they will have to better their strategies of reaching the consumers. However, health and product safety are considered to be vital to the Chinese consumers, who are discerning in their choice of daily use products and are ready to source them from providers who can be trusted coming from Australia, UK or German (Miao, 2016).
Social Responsibility and Ethics of ALDI China
The core principle of ALDI China is to address the demand for best quality and cheaper imported products in China (Hughes, 2015). The plans of ALDI going Green in China is opted to make an impact having that it will be the first grocery retail store to have its branch in China. ALDI is well known for its products and its products prices (Li, Gordon &Netzer, 2017). ALDI China will enable various middle-class people to save money and acquire high-quality products. The idea of ALDI selling its products at a lower price compared to other retail stores in Tmall will attract various consumers to its website. In Australia the birthplace of ALDI, citizens are seen preferring to shop online on ALDI’s website never the less 70% of household in Australian homes are bought from ALDI (Li, Gordon & Netzer, 2017). ALDI prefers spending less on advertising strategies; due to this reason they allow customers to come with their shopping bags whenever they come shopping and have hired fewer supermarket attendants to involve its consumers to shop at their interest and select the quality that fits them best.
ALDI is the only retail supermarket that offers an exciting discount to its consumers. As mentioned in the above segment of this work, the primary concerns of ALDI are people of middle-class from rural, urban and suburban areas (Voigt, Buliga & Michl, 2017). Through focusing on few products but of high volume and quality, ALDI can increase its sales in China and thus it can offer its price at a minimum level by keeping few branded products and more locally made products (Cahill, 2017). According to the director of ALDI China, customer services aims to satisfy the customer with excellent service.
Cross-Cultural Issues
At this modern time, businesses are expanding their branches and sales to various foreign countries. Understanding the culture of the country the business is set to be is one major step that must be considered before setting up the project (Chatterjee, 2017). The Chinese middle class population, who in this case are considered as the consumer; are eager to adopt the western culture hence; they prefer products from Germany and other western retails. Middle class civilizations in China are seen to prefer German’s wine selection, snacks, food products and households (Miao, 2016). ALDI China is promising to deliver on the demands of its Chinese consumers through shipping their products from Australia to its branch in China. ALDI China is ready to introduce German products to the Chinese and learn new ideas from the Chinese for it to conduct changes where appropriate (Chatterjee, 2017). One step that ALDI has taken in the journey of addressing Cross-Cultural issues is using China’s large retail market Tmall (Alibaba) to fit for the Chinese online shoppers. This is an evident step showing that ALDI is ready to address the demands of the Chinese and it has come closer to Chinese (Voigt, Buliga & Michl, 2017). ALDI opts to be the best retail shop in China having that its discounts are benefiting its customers offering them a chance to keep up the saving culture. The Chinese middle class have developed the culture of preferring “quality at a cheaper price” (Miao, 2016)
SWOT Analysis
The grocery industry in Australia for years has experienced battles between two major retail stores namely; Coles and Woolworth (Jones & McGrath, 2016). These two groceries stores control over seventy percent which is equivalent to $82bn of the economy of Australia. ALDI, on the other hand, has gained substantial market shares in Australia from about three percent in 2005 to ten percent this year (Jakubovskis, 2017). However, its sales and popularity are continuing to increase as its open branches to other parts of the world. In China ALDI is also likely to capture the attention of various consumers due to the low price of its products hence, placing it at a suitable state for it to achieve profits from its sales (Chatterjee 2017). China’s grocery industry became the world’s largest in 2012. According to research conducted by the Institute of Grocery Distribution, last summer China was able to accumulate a total of US$1tn (Hughes 2015). These amounts are triple times more than the UK’s profit. However, China’s market is fractured and highly competitive having that it has allowed various western retail investors to sell their products directly to their Chinese middle-class civilization. The step of enabling multiple retail investors presents threats to retail stores that are immerging since they have to put more at stake for them to survive in the business (Jones & McGrath 2016). ALDI’s vision in China is likely to become a reality having that it is the only store in China that will reach the demand of the Chinese through selling their products at an affordable price.
ALDI is working together with Alibaba; it will manage to reach its consumer through broadcasting their visions and live streaming in favorite channels in China. It is noted that Alibaba uses such strategies to draw buzz to such sales criteria. During the launch of ALDI China Ogilvy gave the guest an electronic refrigerator magnet. This refrigerator is connected and can be used to order for ALDI’s product range. However, ALDI China’s of investing less in advertising their brand name will act as a weakness in achieving their vision. Other brands such as Woolworth and S. have majored in promoting their brands to the maximum to gain a significant percentage of China’s online shoppers (Chatterjee 2017). It is recommended that for ALDI to beat the existing market in China, it should focus and invest in marketing and advertising their brand. China is a country full of potential for retail investments but to attract the consumer’s attention strategic measures must be practiced (Chatterjee 2017).
Conclusion
ALDI is a chain supermarket that is likely to grow big in China due to its low price of its commodity. ALDI does not have specialized services or products; the products which are found at ALDI’s shopping line are also located at other stores. The primary difference between ALDI and other retailers is the gap of pricing. ALDI is cheaper compared to other chain supermarkets. Alibaba will play a vital part in marketing ALDI regarding technology and media services, however, it up to ALDI to invest more in advertising their brand in China.
References
Cahill, J., 2017. Making a Difference in Marketing: The Foundation of Competitive Advantage. Taylor & Francis.
Chatterjee, S. and Chatterjee, S., 2017. Two efficiency-driven networks on a collision course: ALDI’s innovative grocery business model vs Walmart. Strategy & Leadership, 45(5), pp.18-25.
Han, T., Yoo, B. and Jeon, S., 2015. Building a Korean fashion platform in Taobao, China’s
biggest online commerce: The case of fashion e-commerce company Accommate. Seoul
Journal of Business, 21(1), p.87.
Hughes, A., 2015. 17. Retailers, corporate ethics and fair trade. Handbook of research on fair trade, p.298.
Jakubovskis, A., 2017. Flexible production resources and capacity utilization rates: A robust optimization perspective. International Journal of Production Economics, 189, pp.77-85.
Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis. Routledge.
Jones, H. and McGrath, K., 2016. A slippery slope: The social gradient of food insecurity and healthy eating in Australia. Parity, 29(2), p.7.
Lawley, M. and Birch, D., 2014. Food marketing in Australian higher education: The current state of play.
Li, Y., Gordon, B.R. and Netzer, O., 2017. An empirical study of national vs. local pricing under multimarket competition.
Lowe, J., 2016. Book Review: The New Middle Class in China: Consumption, Politics and the Market Economy.
Metzger, K., 2014. International Management Analysis of ALDI.Informit
Miao, Y., 2016. Being Middle Class in China: Identity, Attitudes and Behaviour (Vol. 61). Taylor & Francis.
Mortimer, G., 2016. ALDI gives suppliers, as well as shoppers, greater choice: Retail expert. Journal of the Home Economics Institute of Australia, 23(2), p.39.
Ododo, C., Mulholland, G. and Turner, J., 2015, November. Can Discount Pricing Be A Comeptitive Brand Strategy? An Evaluation of Aldi. In International Conference on Marketing and Business Development (Vol. 1, No. 1, pp. 241-251). Bucharest University of Economic Studies Publishing House.
Olsen, M., 2017. Shopping with Strangers: Grocery Shopping Behaviors of Generation Z.
Tsang, E.Y.H., 2014. Introduction: China Engages a Middle-Class Society in the 21st Century?. In The New Middle Class in China (pp. 1-17). Palgrave Macmillan, London.
vanRompay, T.J., Deterink, F. and Fenko, A., 2016. Healthy package, healthy product? Effects of packaging design as a function of purchase setting. Food quality and preference, 53, pp.84-89.
Van Zon, H., 2016. Globalized finance and varieties of capitalism. Palgrave Macmillan.
Voigt, K.I., Buliga, O. and Michl, K., 2017. Striving for Customer Benefit: The Case of Aldi. In Business Model Pioneers (pp. 11-24). Springer International Publishing.
Walker, M.J., Gowland, M.H. and Points, J.O.H.N., 2017. Managing Food Allergens in the UK Retail Supply Chain. Journal of AOAC International.