The Grocer – 24 August 2019

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comment & opinion

Learning from Aldi’s move into China

the saturday essay

A

multiple retailer from
the west turning up in
China full of promises is
nothing new. They arrive to a big
fanfare, and then usually leave
quickly with their declarations
unfulfi lled. So it was with keen
interest I visited one of the newly
opened Aldi stores in Shanghai.
Aldi has been astute in its
approach to China. It entered
the market as an online seller,
including a presence on the
hugely popular TMall. But China
is a tough online marketplace –
one even the likes of Amazon
have found too diffi cult.
Aldi has done modestly well
online selling only imported
goods to start with, but bricks
and mortar presence is the acid
test in what is now the most
sophisticated consumer envi-
ronment in the world. To give
the German retailer a test run, I

decided to take a friend with me

for a lunchtime shop.

My fi rst impression: in size it’s

a cross between a convenience

store and a normal-sized super-

market, which is fairly unusual

in China. It’s well set out with

shelves fully stocked, but more

importantly it’s easy to see Aldi

has got localisation right.

A clever feature is how Aldi

has struck deals with popular

Chinese fmcg food producers to

create exclusive branded ranges,

and there is a good selection too.

The ready-to-eat food is a mix-

ture of Chinese and food from

overseas. There’s a bank of seat-

ing by the window where the

ready meals can be eaten, and

they were all taken during my

visit, which is testimony to the

fact Aldi has succeeded in what

is not an easy challenge.

Another good feature is the

availability of western premium

fmcg brands that are diffi cult or

impossible to fi nd elsewhere in

Shanghai. Not only that, they are

very well priced. This is a major

USP Aldi can capitalise on.

There’s also a good if not

abundant selection of essential

Chinese options such as tofu, fro-

zen dumplings and spices.

One thing I had been expect-

ing, but was missing, was a

greater number of in-store dis-

counts and promotions. Finding

a bargain is ingrained in Chinese

culture no matter what the ticket

price, and it is an eff ective way to

move products.

The fi nal point to report, and

most unusual of all, are the pay-

ment options. In China, the two

payment platforms used most in

the grocery sector are Alipay and

WeChat Pay. A ldi accepts bot h at

the service tills and self-check-

out. The unexpected comes from

an Aldi WeChat mini-programme

t hat a l lows shoppers to sca n ba r-

codes , and simply leave the shop

on trust of payment.

The assumption has to be that

ease of shopping experience,

and saving on staff costs, out-

weighs any potential losses from

dishonesty.

So will Aldi work in China?

From a shopping experience,

the signs look good. It has clearly

done its homework, been pre-

pared to reinvent itself, and been

creative in localised food. The

availability of hard-to-fi nd over-

seas brands at good prices is a

guaranteed winner, and the staff

are knowledgeable and helpful.

There is room for improvement

in terms of off ers across the cate-

gory portfolio, but I have no hes-

itation in being a customer.

Maggie Gao is a retail specialist

at Emerging Communications,

Shanghai

“ Aldi has done its

homework and

been prepared to

reinvent itself”

Maggie Gao

Move on from claims-based culture

third party

Pippa Nordberg is strategy

director, London, at FutureBrand

fmcg has historically been

claims-driven. In this model,

marketers and R&D teams incre-

mentally improved products year

on year, so that each year a dif-

ferent claim could be launched.

As a result, packaging quickly

became a place to display price-

justifying credentials, with any

kind of more emotional mes-

saging relegated or ignored.

Shoppers learned to place value

on this information and perfor-

mance-driven culture. It also

became widely accepted that a

supermarket’s own brand was

never going to perform as well,

but the trade-off between price

and quality was accepted.

However, the world has rapidly

shift ed and we’re seeing radical

shifts in consumer behaviour

that fmcg brands and supermar-

kets need to jointly address.

The shift to online has

undoubtedly represented the

greatest change. Shoppers are

now immersed in an environ-

ment where packaging is reduced

to a thumbnail size. At the same

time, supermarket own label now

off ers almost parity performance

and satisfaction with brands.

Meanwhile, newcomers have

driven widespread awareness

and engagement with bold, emo-

tional messages. Oatly’s bold ‘it’s

like milk but made for humans’

message shows the move from

the provable to the relatable.

Traditional fmcg brands, reluc-

tant to jettison their reassuring

claims, are only just starting to

play catch-up. Others are ripping

up the rulebook.

A more EQ, vs IQ, approach is

required. Fmcg brands need to

re-engage with customers and

better understand their needs.

Ask these questions: what really

turns people on when shopping,

what benefi t s a re t he y re a l ly lo ok-

ing for, and what will make them

feel good about a purchase?

A

s supermarket sales see
the fi rst overall decline
since 2016, many are
pointing to Brexit uncertainty
as a key factor. But a more long-
term problem might be emerging
in fundamental aspects of fmcg
marketing. There’s evidence that
brands are displaying a lack of
empathy for consumers’ real-
ity as the disconnect widens
between how they are behaving
versus what consumers need.
A big part of this is perhaps
because the world of branded

Pippa Nordberg