<abstract xmlns="http://www.w3.org/1999/xhtml"><p> The international expansion of the German discounters Aldi and Lidl in recent years has been a large success in grocery retailing. In China, the world’s largest grocery retail market, however, grocery discounters have not (yet) established a physical store presence. In 2017 Aldi Süd and Lidl for the first time entered a new market without the help of a physical store, implementing an online shop in China. As to the format’s future, significant disagreement amongst retail experts exists. This paper, which is based on qualitative interviews with high-ranking senior executives of international retailers, argues for three major reasons as to why the discount format has not hitherto gained a foothold in the Chinese market. Firstly, due to the characteristics and challenges of China’s market, such as high fragmentation as well as the need for strong localisation, a high standardisation of the format is not possible. Secondly, the extremely low-margin operation of discounters faces a price level in China that is already very low, limiting one of the discounter’s major competitive advantages. Thirdly, the discount format is facing a lack of consumer acceptance, toughening the establishment of private brands, which represents one of the major characteristics of the discount format.</p></abstract>

The international expansion of the German discounters Aldi and Lidl in recent years has been a large success in grocery retailing. In China, the world’s largest grocery retail market, however, grocery discounters have not (yet) established a physical store presence. In 2017 Aldi Süd and Lidl for the first time entered a new market without the help of a physical store, implementing an online shop in China. As to the format’s future, significant disagreement amongst retail experts exists. This paper, which is based on qualitative interviews with high-ranking senior executives of international retailers, argues for three major reasons as to why the discount format has not hitherto gained a foothold in the Chinese market. Firstly, due to the characteristics and challenges of China’s market, such as high fragmentation as well as the need for strong localisation, a high standardisation of the format is not possible. Secondly, the extremely low-margin operation of discounters faces a price level in China that is already very low, limiting one of the discounter’s major competitive advantages. Thirdly, the discount format is facing a lack of consumer acceptance, toughening the establishment of private brands, which represents one of the major characteristics of the discount format.

Retail Format Competition: The Case of Grocery Discount Stores and Why They Haven’t Conquered the Chinese Market (Yet)

Moravian Geographical Reports

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

The international expansion of the German discounters Aldi and Lidl in recent years has been a large success in grocery retailing. In China, the world’s...

Retail Format Competition: The Case of Grocery Discount Stores and Why They Haven’t Conquered the Chinese Market (Yet)

Published Online: Oct 17, 2018

Page range: 220 - 227

Received: Jan 25, 2018

Accepted: Jul 25, 2018

DOI: https://doi.org/10.2478/mgr-2018-0018

Keywords
discount, grocery retail, format competition, internationalisation, Aldi, China

© 2018 Sina Hardaker, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Retail Format Competition: The Case of Grocery Discount Stores and Why They Haven’t Conquered the Chinese Market (Yet)

Published Online: Oct 17, 2018

Page range: 220 - 227

Received: Jan 25, 2018

Accepted: Jul 25, 2018

DOI: https://doi.org/10.2478/mgr-2018-0018

Keywordsdiscount, grocery retail, format competition, internationalisation, Aldi, China

© 2018 Sina Hardaker, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
discount, grocery retail, format competition, internationalisation, Aldi, China