Another German retail giant enters China, targeting 500 stores in five years

How can AI Müller’s experience store model respond to the challenges of Chinese e-commerce?

(Article by Huo Dongyang, edited by Zhang Guangkai)

In early 2026, a signing announcement quietly took place in Pudong, Shanghai—another German retail giant has set its sights on the Chinese market.

German daily goods chain Müller KG officially signed a strategic cooperation agreement with Puxing Road Street. The group plans to invest $30 million to establish a regional headquarters and flagship store in Pudong, expected to open in Q4 of this year, with an ambitious plan to open 200 to 500 stores in China within five years.

This marks the first step of a mature retailer with nearly a thousand stores in Europe, annual revenue of 5 billion euros, and over seventy years of history entering Asia. It’s also another German retail brand, after Aldi, choosing to bet on the Chinese consumer market.

Müller in Europe: A Misunderstood Retailer

In Germany, when it comes to drugstore chains, consumers usually think of dm and Rossmann, not Müller.

This isn’t because Müller is weak, but because it fundamentally isn’t a traditional drugstore chain.

Müller’s store structure resembles a small department store, offering nearly 188,000 products including cosmetics, large pharmacies, perfumes, health foods, home goods, and multimedia products—not just a drugstore.

dm and Rossmann, on the other hand, represent the typical European drugstore efficiency model: small store sizes, strict SKU control, private brands at the core, and mainly essential products like toiletries, cleaning supplies, or maternal and infant items—more like basic urban infrastructure.

While Müller focuses on the daily necessities segment, its stores are mostly between 400 and 4,500 square meters, more like a hybrid retail space similar to a small department store, heavily reliant on shopping malls and urban commercial districts.

This “shopping stroll” experience is the core competitive advantage Müller has built in Europe, setting it apart from dm and Rossmann.

Some analysts believe Müller’s success in Europe is due to its wide product range and high-end beauty collections, attracting consumers who want to complete their entire shopping—from shampoo to perfume—under one roof.

Besides the German-speaking regions, Müller has opened multiple stores in Croatia, Spain, Hungary, and other European countries, with nearly 1,000 stores generating about €5 billion in sales.

During its expansion into Central and Eastern Europe, Müller developed a regional operation model. The company established a logistics center in Letenye, Hungary, supporting stores in Hungary, Croatia, and Slovenia, creating a supply network across the region.

Recently, Müller has continued to expand in Europe and upgrade its supply chain. The company introduced automated warehousing at its headquarters in Ulm to improve multi-channel distribution efficiency; simultaneously, it launched the “Müller Health World” pilot focusing on nutrition supplements and medical-grade skincare.

In market expansion, Müller entered Slovakia last year and is planning to develop in the Czech Republic. Additionally, through acquiring Swiss toy retailer Franz Carl Weber, Müller has further strengthened its multi-category retail structure.

However, this European logic contains a structural contradiction that is extremely difficult to resolve when entering China.

Müller lacks strong private brands; it is an integrator of third-party brands. This integrated value heavily depends on the physical experience of wandering, comparing, and feeling in-store.

Brands Carried by Müller

The “shopping” experience Müller relies on is being eroded by the entire Chinese retail ecosystem. Xiaohongshu solves the “discovery” aspect, live-streaming sales address “impulse buying,” and flagship e-commerce stores ensure “brand authenticity.”

The function of Müller as a space container in Europe has almost been replaced by more efficient digital alternatives in China. Its only irreplaceable aspect is the space itself—something that is very hard to establish value for in China.

Aldi in China: A Long Journey of Identity Recognition

If Müller’s entry into China is a confident debut based on European success formulas, Aldi’s journey has been a story of painful yet honest self-redefinition.

Aldi first entered China in 2017 via cross-border e-commerce, and in 2019 officially opened offline stores in Shanghai. Initially positioned as a “mid-to-high-end boutique supermarket,” emphasizing imported goods, European supply chains, and German standards, it aimed to ride the wave of consumer upgrading at that time.

This judgment wasn’t unfounded, but it underestimated one thing: Aldi’s core DNA of deep discounting, which is well-known in Germany, is fundamentally mismatched with its carefully curated boutique image in China.

Post-pandemic consumer restructuring has given Aldi a historic opportunity to reposition itself.

Since late 2023, Aldi has launched a new slogan in China: “Good quality, low price enough,” and has introduced and iterated hundreds of private label products, solidifying its “low price” positioning. Using “Xueyi marketing,” it humorously conveys the message: “Prices are very low, but quality is good.”

This isn’t a step back but a return to its roots: Aldi’s global success has always been built on “offering good products at unexpectedly low prices.”

The product-level actions of this transformation are very concrete. In May 2024, Aldi launched over 50 fresh products at once, with black pork prices dropping by an average of 40%; in July, it promoted frozen foods with significant discounts, some up to 40%; and in October, it entered the wine market with a value series.

These changes align with its brand messaging: no longer emphasizing “from Germany,” but “worth the price.”

On social media, many young consumers now call Aldi the “poor ghost supermarket” or “poor ghost home.” This self-deprecating label essentially acknowledges its price advantage.

Aldi’s confidence comes from its highly mature private label system. For example, its “Super Value” series saw SKU numbers double from 80 to about 200 within a year.

This means Aldi’s low prices are not achieved through losses or subsidies but by eliminating middleman markups and directly controlling the supply chain. It’s a sustainable low-price model, not a temporary promotional discount.

In store SKU management, Aldi keeps each store’s SKUs under 2,000, only one-tenth of the industry average.

This highly streamlined product selection helps reduce procurement costs, strengthen supplier relationships, and accelerate product turnover—similar to the efficiency model of dm and Rossmann.

After the strategy proved effective, Aldi began expanding geographically.

After six years of refining a replicable store model in Shanghai, Aldi officially “entered” Suzhou and Wuxi in 2025, with stores in the Suzhou Industrial Park and Wuxi Yuanrong Plaza as its first in Jiangsu.

Subsequently, the pace accelerated.

In May 2025, Aldi opened a store in Kunshan, seen by many industry observers as its first entry into county-level markets; it continued to expand in Suzhou and Wuxi, opening its first store in Changzhou and starting to plan in Nanjing. By late 2025, Aldi’s China store count approached 70.

In 2026, multiple stores in Nanjing opened simultaneously, and Aldi’s regional network in the Yangtze River Delta began to take shape.

This expansion rhythm reflects Aldi’s consistent “deep first, broad later” logic: cautious regional expansion combined with rapid product iteration.

Aldi’s six-year story in China proves one thing: in China retail, finding a true self-positioning is more important than timing the market. It remained obscure during its four years trying to become a boutique supermarket, but in the two years returning to discount retail, it sparked nationwide discussion.

Müller’s Chinese Gamble: Structural Challenges of the Experience Store Model and an Alternative to dm

With Aldi’s complete case as a mirror, the risk landscape for Müller’s entry into China becomes quite clear.

First, Müller’s core competitiveness in China.

Will consumers really want to stroll into stores? What can Müller offer to replace the extreme convenience of mobile shopping? High-end beauty brands have more channels in China; what is the “one-stop shopping” value proposition Müller provides in a market where every category is finely operated by e-commerce?

Deeper still is the supply chain cost issue.

Müller’s European expansion heavily relies on “German direct supply,” which guarantees product credibility in Europe but also means that most of its nearly 200,000 SKUs require logistics across Eurasia—costly, and ultimately reflected in pricing.

Aldi’s success in China, on the other hand, is built on compressing SKUs to under 2,000 and increasing local suppliers to over 80%, a supply chain logic that is fundamentally different.

Another gap is in brand recognition.

Müller has no online presence in China before opening in Pudong; to most Chinese consumers, it’s a completely unfamiliar name.

Entering as a stranger, it’s hard to organically build traffic. The need to quickly open stores to dilute fixed costs increases operational risks before brand awareness is established. This is a common trap for new retail entrants in China.

Compared to Müller’s track, the outlook isn’t optimistic. A direct reference is Watsons.

Watsons and Müller are highly similar: comprehensive retail with a focus on beauty and personal care, relying on offline stores, emphasizing “one-stop” experience.

Watsons built strong brand recognition over thirty years in China, with over 4,000 stores at its peak, but under the triple pressures of beauty e-commerce, live-streaming sales, and community stores, revenue and profit continued to decline.

Müller’s only chance is whether its first store in Pudong can offer a sufficiently differentiated experience—not just product variety, but a reason for consumers to make a special trip. This is possible but requires precise product selection, strong scene operation, and a long brand preheating cycle.

All three require time and gradual exploration in China, not direct transplantation from Europe.

Some observers also note that Müller’s European prices carry a high premium, and suggest that in China, Müller might focus more on imported German baby foods and skincare products.

In contrast, dm’s approach is a smarter solution.

In March 2017, dm entered China via Tmall’s cross-border e-commerce platform, opening an official flagship store on Tmall Global—its first step outside Europe.

The entire process was managed by Shanghai-based Tmall partner Oddity Asia. When entering Tmall, dm only brought 22 products.

Today, dm’s overseas flagship store (operated by GREEN BAY INDUSTRIAL GROUP LIMITED) and its best-selling private brand Balea (operated by Hong Kong XingCan Co., Limited) are active on Tmall Global.

dm’s management has openly stated that the performance of its Tmall flagship greatly exceeded expectations.

Chinese consumers are highly curious about product usage methods and German supply chain information, aligning with dm’s reputation in Germany for “affordable quality” across beauty, skincare, maternal and infant, health, food, and kitchen cleaning categories.

Its pricing hits the “value for money” sweet spot: much cheaper than luxury beauty brands, more credible German origin than domestic white-label products, and almost no direct competitors in the “European daily essentials” niche.

Choosing not to open physical stores is a highly rational decision. dm’s management explained that in large cities like Shanghai and Beijing, store and transportation costs are high, and China’s mature e-commerce infrastructure can reach consumers more efficiently.

For a vast market, relying solely on physical stores makes it difficult to cover nationwide demand, so online entry is a more practical approach.

Ultimately, the comparison between dm and Müller boils down to a fundamental question: “What can cross borders?”

dm believes it’s a quantifiable cost-performance product, a cognitive anchor that can be communicated with data. Müller’s answer is a shopping experience, a richness, a lifestyle that can only be perceived in physical space.

The former can fly across Eurasia in bytes; the latter requires the slow accumulation of stores and consumer recognition.

Aldi spent six years refining a store model in Shanghai before daring to expand to Suzhou and Wuxi. dm took nearly nine years of Tmall accumulation to make Balea a meaningful term in Chinese skincare vocabulary. Neither announced plans to open a hundred stores within five years from day one.

Müller’s statement hints at an optimistic outlook for China, as if its seventy years of retail experience in Europe could be directly copied, and that a $30 million investment and a location in Pudong could bypass the long process of brand recognition.

Retail doesn’t work that way, especially in China. The market rewards courage, but the best results usually go to those who take the time to understand who they are and why consumers must choose them.