Why Is Aldi Succeeding in China? 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 Hema and Sam's Club (Liya, 2020). Aldi's China managing director, Roman Risinger, explained that private-label products can create value for consumers by benefiting from economies of scale, reducing unnecessary processes and intermediate links, and enabling more competitive prices (Wang, 2023). Aldi has also positioned its private-label products as offering quality 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?

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 more rational in their spending. According to TMI's Supermarket Consumption Transformation Insights Report (2026), this shift appears to be a longer-term structural change rather than a temporary response to economic conditions.

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 key question, therefore, is not simply how Aldi keeps prices low, but how it has built an operating model that makes those prices sustainable.

📌 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 compete on 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. Competitive pricing is therefore not primarily a marketing battle. It is the result of how efficiently the business can design, source, and sell its

Digitalisation adds another dimension.

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.

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).

Local Sourcing and Supply Chain Efficiency

Aldi has also increased its use of local suppliers in China. According to Sina Finance (2024), approximately 80% of its products are sourced directly from local manufacturers, while around 95% of its fresh produce is locally sourced. The company has also developed a fresh-produce supply network capable of supporting delivery within 12 hours and rapid replenishment (Shuai, 2026).

This combination of local sourcing, supply chain efficiency and private-label control allows Aldi to adapt its global operating systems to China's market conditions while maintaining a consistent global supply-chain framework.

Limited Assortment and Higher Purchasing Efficiency

Another important element is Aldi's limited product assortment.

Rather than offering thousands of alternatives within each category, Aldi reportedly maintains fewer than 2,000 SKUs, with only one or two selected options in many categories. Approximately 1,500 SKUs are daily necessities, while the remainder are seasonal or limited-edition products (Shuai, 2026).

A narrower assortment can create several operational advantages. Higher purchasing volumes per SKU can improve supplier negotiation and purchasing efficiency, while fewer products can reduce inventory complexity, logistics requirements and storage costs. It also simplifies the shopping experience.

This is an important distinction: Aldi's low-price strategy is supported by reducing complexity, rather than simply reducing prices.

As Aldi CEO Jason Hart explained in an interview, the company's model relies heavily on private-label products, efficient operations and a shopping experience designed to save consumers both time and money (Mitchell, 2025).

3. Customer Traffic and Product Mix

Low prices alone do not guarantee profitability. Aldi uses selected low-priced, high-frequency products to attract customers, then generates sufficient value and profit in a 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. These products may generate limited margin individually, but they can encourage customers to visit the store.

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 or to maximise the margin on every item. Instead, Aldi uses different product categories for different purposes: lower-priced products create customer traffic and a strong value perception, while higher-margin products support store-level profitability.

This model is difficult for competitors to replicate because its economics depend on the interaction between Aldi's product mix, private-label range, supply chain and cost structure.

For Aldi, pricing is embedded in an integrated operating model. Its limited assortment, private-label range, supply chain efficiency and carefully managed product categories work together rather than functioning as a standalone low-price tactic.

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 ele.me, 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 replace physical stores with e-commerce. Instead, online channels can complement physical retail by extending customer reach, creating additional purchasing occasions and integrating stores into a wider retail ecosystem.

Aldi's China website currently promotes both physical stores and multiple online purchasing channels, illustrating how online and offline retail have become integrated parts of its customer proposition. This integration 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.