By the end of World War II, Theo and Karl Albrecht took over the small grocery Store of their mother to make it become one of the most successful discount supermarket chains in the world. Aldi operates according to the motto “the best quality at the lowest price.” The company generated €24.2 billion in revenues in 2020.
The ALDI origin story: the low-cost business model
In 1913, Frau Anna opened a small grocery store in the suburb of Essen, Germany. By the end of World War II, Karl and Theo, Anna’s soon took over their mother’s business, and run it with the motto “the best quality at the lowest price.” That motto would become the company’s vision for decades to come.
By 1948, opening the two brothers had opened four stores in the local area. They managed to keep prices extremely low by only stocking non-perishable items and by selecting the things that sold the most from the shelves while removing the slow-sellers.
By that time Theo and Karl Albrecht decided to focus on developing a chain of small stores. In 1954, the brothers opened Germany’s first self-service store. By 1960, Theo and Karl Albrecht owned 300 stores with an annual turnover of millions of dollars.
The split over a cigarette
In the 1950s the brothers split the chain into two separate groups, presumably over a dispute about whether to sell cigarettes. Theo headed Albrecht-Diskont Nord, which sold cigarettes. Karl instead became the CEO of Albrecht-Diskont Süd, which did not sell cigarettes.
Albrecht-Diskont store became ALDI
In 1962, despite the disagreement kept working together and changed the name of the. group to Aldi Nord and Aldi Süd. The taken from the first two letters of Albrecht and Diskont. The two businesses became financially and legally separate in 1966. By this time, there were 200 Aldi Süd stores in Germany.
The Trader’s Joes acquisition by Aldi Nord
In 1979, a trust headed by Aldi Nord’s Theo Albrecht bought the chain Trader Joe’s, which now operates 475 stores in the US.
The full story of Trader Joe’s below, in our podcast series:
How does Aldi keep its prices low?
Aldi uses a set of strategies to keep its prices low while maintaining a high quality:
- Aldi lists 1,300 items in each store every day, which is very limited compared to other supermarket chains. That keeps waste to a minimum
- Aldi also stocks a lot of their own brands, with some becoming successful, which lowers the sales and marketing cost
- 90% of the products are Aldi-exclusive brands, which makes it easy for the chain to market them, with more flexibility on. price and distribution
- ALDI in a way retains a. self-service attitude, where customers bring their own bags or can buy reusable bags at the store. Also, they must bag their own groceries. This lower the costs of serving clients for the company compared to other chains
- Limiting store hours and keeping their stores small (about 15,000-20,000 square feet)
ALDI Mission and Core Values
As the company highlights:
ALDI Nord is an internationally successful discounter. We provide broad groups of consumers in nine countries with high-quality products at consistently low prices. “Simplicity, responsibility and reliability” – these values guide our actions and have been codified in our “Simply ALDI” mission statement. The mission statement provides a clear sense of direction for more than 69,000 ALDI employees.
Back in 2017, the company announced its restructuring of the stores, according to the ALDI Nord Instore Konzept (ANIKo) program, aimed as it explained, at creating:
An atmosphere that makes our customers feel right at home – that is the goal at the heart of our new stores. The renovation is the largest project to date in the history of the ALDI North Group. A majority of the 4,700 stores are slated for an update in the next two to three years. Many changes immediately stick out, while others are being made unseen behind the scenes. Our virtual tour reveals all that awaits ALDI North customers in the freshly renovated stores. But that’s not all: it also shows where we are making our product range increasingly sustainable – both in brand-new and already existing stores. Because whether already modernised or not, customers will find a bigger selection, greater freshness and more sustainable products at the proven ALDI price at all of our stores.
ALDI North in numbers
Source: cr-aldinord.com
As reported by Aldi North official report:
The ALDI North Group is represented in nine European countries with companies as independent legal entities. In Germany, the ALDI North Group as a group of subsidiaries is comprised of legally independent regional companies, in each case with the legal form of a GmbH & Co. KG, which means that the managing directors of the independent regional companies have equal status in casting votes at regular board meetings. ALDI Einkauf GmbH & Co. oHG is engaged by these regional companies to provide various services. This company is also the licensor of the ALDI brand for the legally independent foreign companies of the ALDI North Group operating in the ALDI North Group countries. This arrangement ensures a uniform market profile.
The motto remains “offering high-quality groceries at everyday low prices.”
In 2020 ALDI North Group recorded sales for 24.2 billion euros, compared to 22.8 billion in 2019.
ALDI North has more than 54,000 employees.
One of the secrets for ALDI’s business model success is to keep its price low is the own brand’s portfolio, which as you can see spans anywhere from 65% in Denmark, up to 90.5% in the Netherlands.
ALDI North corporate responsibility program
ALDI North follows a corporate responsibility program, which comprises five main areas:
- Employee appreciation.
- Supply chain responsibility.
- Resource conservation.
- Social commitment.
- Dialogue promotion.
ALDI’s founders are among the wealthiest businessmen in Germany
As reported on thelocal.de the top ten richest Germans are:
1. Karl Albrecht and family (Aldi Süd) €17.20 billion
2. Berthold and Theo Albrecht junior and family (Aldi Nord) €16 billion
3. Dieter Schwarz (Lidl, Kaufland) €11.50 billion
4. Otto family (Otto mail order) €9.00 billion
5. Susanne Klatten (BMW, Altana) €8.90 billion
6. Reimann family (Reckitt Benckiser, Coty) €8 billion
7. Reinhold family Würth (Würth) €7.20 billion
8. Günter and Daniela Herz (Germanischer Lloyd) €7 billion
8. Oetker family (Oetker) €7 billion
10. Rethmann family (Remondis) €6 billion
This makes the total personal wealth from ALDI founders at over 33 billion euros (about $38 billion at current rate).
ALDI as a private company
Aldi might well be among the largest private companies in the world. As a private company, ALDI has total control over its strategy without focusing on quarter results. Also, ALDI can keep its number relatively secret from its competition.
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What is Aldi's business model?
With the motto “the best quality at the lowest price” ALDI operates a low-cost business model, where it stocks a relatively small list of items available in its store every day, thus keeping waste at a minimum, while also prioritizing on its own brands, which can get distributed with more flexibility in terms of price and distribution.
What is Aldi's business culture?
Aldi’s core purpose is to “provide value and quality to customers by being fair and efficient in all it does.” And it follows three core values: consistency, simplicity, and responsibility. According to Aldi consistency leads to reliability. Simplicity creates efficiency. And responsibility stands for its commitment towards people, customers, partners, and the environment.
