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Retail Format Competition: The Case of Grocery Discount Stores and Why They Haven’t Conquered the Chinese Market (Yet)
- Source :
- Moravian Geographical Reports, Vol 26, Iss 3, Pp 220-227 (2018)
- Publication Year :
- 2018
- Publisher :
- Sciendo, 2018.
-
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.
Details
- Language :
- English
- ISSN :
- 12108812
- Volume :
- 26
- Issue :
- 3
- Database :
- Directory of Open Access Journals
- Journal :
- Moravian Geographical Reports
- Publication Type :
- Academic Journal
- Accession number :
- edsdoj.53de5fb54b6f4540941a87360346e709
- Document Type :
- article
- Full Text :
- https://doi.org/10.2478/mgr-2018-0018