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

How can AI Müller’s experience store model respond to challenges from 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 for 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 bet by a German retail brand on China’s consumer market, following Aldi.

Müller in Europe: An 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 street” richness is the core competitive barrier Müller has built in Europe, and the fundamental difference from dm and Rossmann.

Some analysts believe Müller’s success in Europe is due to its wide product range and high-end beauty collection, 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 euros 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 Central and Eastern Europe.

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, the company entered Slovakia last year and is planning 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 very 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 brick-and-mortar stores.

Brands carried by Müller

The “shopping” experience Müller relies on is being eroded by China’s entire 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, which is precisely the kind of value recognition that is hardest to establish in China.

Aldi in China: A long journey of identity recognition

If Müller’s entry into China is a confident debut based on Europe’s successful formula, Aldi’s journey is 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: the dissonance between Aldi’s core discount DNA in Germany and its deliberate boutique image in China, which cannot be reconciled.

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,” and has introduced and iterated hundreds of private label products, solidifying the “low price” label. Using “Xue Yi” marketing, it humorously conveys “low price but good quality.”

This isn’t a fallback 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 down by an average of 40%; in July, it launched discounted frozen foods, with some bestsellers also dropping by 40%; in October, it entered the wine market with value series.

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

On social media, many young consumers now call Aldi the “poor guy’s supermarket” or “poor guy’s home.” This self-deprecating label essentially recognizes 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 of launch.

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

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

This highly streamlined product selection helps reduce procurement costs, stabilize supplier relationships, and accelerate product circulation—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 outward, but rapid product iteration internally.

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

Müller’s China gamble: structural challenges of the experience store model, and an alternative answer from 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 be willing to stroll into stores? What can Müller use to replace the extreme convenience of mobile shopping? High-end beauty products have more channels in China; what is the “one-stop” value proposition Müller offers in a market where every category is finely operated by e-commerce?

Deeper still is the supply chain cost issue.

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

In contrast, Aldi’s success in China is built on compressing SKUs to under 2,000 and increasing local suppliers to over 80%, a supply chain logic diametrically opposed to Müller’s.

Another difference is brand recognition starting point.

Müller has no online presence in China and was a completely unfamiliar name to most Chinese consumers before its Pudong store opening.

Entering as a stranger, it faces difficulty building organic foot traffic, and the high fixed costs require rapid store openings to dilute expenses—yet quick expansion before brand recognition is established increases operational risks. This is a common trap for new retail entrants in China.

From the perspective of its category, it’s also less optimistic—its closest comparable 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 Pudong flagship can offer a sufficiently differentiated experience—more than just product variety, but a reason for consumers to make a special trip. Achieving this requires extremely precise product selection, strong scene operation, and a long brand preheating cycle.

All these 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 speculate 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, with dm initially bringing only 22 products.

Today, dm’s overseas flagship store (operated by GREEN BAY INDUSTRIAL GROUP LIMITED) and its popular private brand Balea (operated by Hong Kong XingCan Co., Limited) have separate stores on Tmall Global.

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

Chinese consumers are highly curious about how to use dm products and the German supply chain info, 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 for Chinese consumers: much cheaper than luxury beauty brands, more credible German origin than domestic white-label products, and almost no direct competitors in the “everyday European 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, high store and transportation costs make physical retail less efficient, and China’s mature e-commerce infrastructure can reach consumers more effectively.

For such a vast market, relying solely on physical stores makes it difficult to cover nationwide demand, making online entry 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, 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 its Shanghai model 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 100 stores within five days.

Müller said this. It’s not necessarily a wrong ending, but it hints at an optimistic outlook for China—like its seventy years of retail experience in Europe is a blueprint that can be directly copied, and that a $30 million investment and a location in Pudong can bypass the long process of brand recognition.

Retail never works that way, especially in China. This market rewards courage, but it usually favors those who take the time to understand who they are and why consumers must choose them.