Aldi in China: Strategic Lessons for International Companies 3

Private Label as a Source of Value and Differentiation

Private-label products are central to Aldi's business model. Approximately 90% of the products sold in Aldi stores are reported to be private-label products, significantly higher than the proportions reported for Box Horse and Sam's Club (Liya, 2020). ‘Private labels products can bring more value to consumers, lowering buying cost through economies of scale, reducing unnecessary processes and intermediate links, and bringing more competitive prices to consumers,’ Roman Rasinger, managing director of China in Aldi explained (Wang, 2023). Aldi has also positioned its private-label products as providing quality that is at least comparable with national brands (Mitchell, 2025).

This creates a potentially important strategic advantage: private label is not simply a way to reduce costs; it can also become a mechanism for controlling the customer value proposition.

Market Interpretation — Why Is Aldi Succeeding in China?

Is Low Price Really a Sustainable Strategy?

There is no absolute lowest price. In a highly competitive market, prices can always go lower. The more important question is whether a retailer can consistently offer high perceived quality at a low price while maintaining a sustainable business model.

This question is particularly relevant in China's supermarket market, where consumers have become increasingly rational in their spending. According to the Supermarket Consumption Transformation Insights Report published by TMI (2026), the rationalisation of consumer behaviour has become one of the most notable trends in the supermarket sector, suggesting a potentially longer-term structural shift in consumer behaviour.

A low-price proposition supported by consistent quality can therefore represent a significant competitive advantage—but only when it is backed by an operating model that competitors cannot easily replicate.

According to a KPMG survey, Aldi's prices in China were approximately 20%–30% lower than those of typical supermarkets, with some products more than 50% cheaper than Walmart (Liya, 2020). With around 500 products priced below RMB 9.9 (approximately US$1.47), the value proposition is immediately visible to consumers. However, Aldi's proposition is not simply "low price". It combines price, perceived quality, private-label products, operational simplicity and consumer trust.

This is important because a low-price strategy alone is easy to copy. What is more difficult to replicate is the operating system that enables a retailer to maintain low prices while delivering consistent value.

Aldi has built its positioning around the idea that consumers do not have to choose between quality and affordability. Instead of relying on complex membership programmes, extensive promotional campaigns or highly service-intensive retailing, the model focuses on a relatively simple proposition: good products at consistently competitive prices, supported by operational efficiency.

The question, therefore, is not simply how Aldi keeps prices low, but how it has built the operating model that makes those prices possible.

📌 Strategic Insight

In an environment characterised by more rational consumer behaviour and increasing competition, Aldi's experience suggests that sustainable price competitiveness depends on operational efficiency rather than price competition alone.

The important distinction is between selling cheaply and building a system that allows a company to sell at a competitive price sustainably. Aldi's expansion in China illustrates how supply chain design, private-label development, product selection, digital channels and product-mix management can work together to support a low-price, high-value proposition. In this sense, competitive pricing is not primarily a marketing battle. It is the result of how efficiently the business can design, source, and sell its products.

Digitalisation adds another dimension.

China's digital retail environment has changed how consumers discover products, compare prices, purchase goods and interact with retailers. Aldi's use of its WeChat mini-program and third-party digital platforms demonstrates the importance of adapting to these established local behaviours rather than relying solely on a traditional physical-store model.

For international companies, this means that successful localisation goes beyond adapting products. It may require adapting the operating model, channels and customer experience around the way consumers behave in the target market.

However, Aldi's next stage of development may be more challenging.

Aldi to address significant regional differences in consumer demand while maintaining the operational efficiency that underpins its price proposition.

In addition, China's discount retail sector is attracting increasing investment and competition from domestic retailers and major technology platforms. Its competitors are also strengthening their own value propositions. Sam's Club, Alibaba’s Hema, regional supermarkets and other retailers are competing for the same increasingly value-conscious consumers.

Aldi therefore cannot rely on low prices alone. As Aldi CEO Jason Hart noted, value extends beyond the lowest price and includes the overall experience and relationship a retailer builds with its customers (Mitchell, 2025).

The strategic challenge for Aldi is consequently to maintain a balance between price, quality, customer experience and operational efficiency as it expands into more regions of China.

1. A Globalised but Localised Supply Chain

Aldi's experience suggests that successful localisation goes beyond adapting products or marketing to local preferences. The more fundamental challenge is integrating local market requirements into the business model itself—including sourcing, supply chain, product selection, pricing, digital channels and operations.

After identifying a shift towards more rational consumption during the pandemic, Aldi accelerated the development of a supply chain designed around three priorities: cost, quality and efficiency (Dashu Cross-border, 2026).

2. Embracing Digitalisation

Aldi's adaptation to China also extends beyond its physical stores.

China's highly developed digital retail ecosystem has allowed Aldi to combine physical retail with online purchasing and delivery. The company has developed its own WeChat mini-program and also sells through third-party platforms including Eleme, Meituan Takeout and JD Home. This integration is particularly relevant in China, where digital consumption has become deeply embedded in everyday shopping behaviour.

Aldi's China model therefore demonstrates that digitalisation does not necessarily mean replacing physical stores with e-commerce. Instead, online channels can complement physical retail by extending customer reach, providing additional purchasing occasions and integrating stores into a wider retail ecosystem.

The company's official China website currently promotes both physical stores and multiple online purchasing channels, illustrating how online and offline retail have become integrated components of its customer proposition. This approach became particularly important during the pandemic, when online channels helped retailers respond to changes in consumer traffic and purchasing behaviour.

For international companies, the broader lesson is that digitalisation should be understood within the context of local consumer behaviour and market infrastructure. The relevant question is not simply whether a company has an e-commerce channel, but whether it can integrate into the digital ecosystem.

3.Customer Traffic

Low prices alone do not guarantee profitability. Aldi's model also depends on attracting customers with selected high-frequency, value-oriented products and then generating sufficient value across the wider shopping basket.

Fresh produce, dairy products, fruit and vegetables function as traffic-generating categories. According to Super Retail Institute (SRI, 2026), these products typically operate at relatively low gross margins of approximately 5%–10%. Kantar data cited by SRI (2026) indicates that Aldi's fresh-produce sales in Shanghai grew by 38% in 2024.

At the same time, Aldi uses higher-margin categories to support overall store economics. Its private-label cosmetics and beauty products are one example. According to estimates from Soochow Securities and Cosmetics Observer, these products occupied less than 5% of in-store shelf space but contributed approximately 15%–25% of total store gross profit (SRI, 2026).

This creates a different way of understanding Aldi's pricing strategy.

The objective is not to make every product the cheapest in the market. Instead, the retailer can use selected products to create customer traffic and a strong value perception, while managing the overall product mix to support store-level profitability.

This model is also difficult for competitors to replicate exactly because different retailers have different cost structures, product mixes, membership models and supply chains.

For Aldi, the pricing strategy embedded into business model, the combination of limited assortment, private label, supply chain efficiency and carefully managed product categories forms an integrated operating model rather than a standalone pricing tactic.