Germany: Aldi founder Theo Albrecht - The discount idea is gaining relevance again

Updated: Apr 3

With the istart of Aldi, the entrepreneur revolutionized the food trade. 100 years after his birth, inflation could give the discounters a new boost.


Theo Albrecht made grocery shopping cheaper and earned billions from it. Together with his brother Karl, the Aldi founder, born in Essen on March 28, 1922, invented the food discounter and taught supermarkets to fear. On the 100th birthday of the entrepreneur, who died in 2010, of all things, the surge in inflation triggered by the corona pandemic and the Ukraine war could give the brothers’ idea of ​​the century new impetus.


"In the next few years, the price when shopping will be much more important again," said trade expert Frank Küver from the market research company NielsenIQ of the German Press Agency. According to his assessment, this should lead to the discounters regaining market share after years with rather mixed results.


When Karl and Theo Albrecht took over their parents' grocery store in Essen after the Second World War and invented Aldi (Albrecht Diskont), they broke with many of the conventions that were common in the grocery trade at the time.


Things were spartan in the Aldi stores: the selection was small and the goods were presented unadorned in boxes stacked on pallets under cold neon lights. One looked in vain for branded articles.


“At first glance, the idea, focusing on the price and on processes that are as effective as possible, may not seem particularly spectacular, but combined with the will to keep improving one’s own model, something really big has emerged from it: a completely new one Store concept that works worldwide,” says Küver.


In the German food retail trade, Aldi, Lidl, Penny and Co. secured a large part of the market with the discount model invented by the Albrechts and then continuously refined. According to current figures from the market research company GfK, the discounters had a market share of almost 35 percent last year.


For comparison: almost 30 percent of the business was accounted for by supermarkets, 12 percent by hypermarkets and 15 percent by specialist retailers. Drugstores and online providers shared the rest.


Business model is successful worldwide

And the low-cost providers were also able to score points with their concept worldwide. "The discount model is the biggest export success of German retail," said Küver. Whether in France, Italy, the USA or even Australia, travelers from Germany can now find branches of one or the other discount chain almost everywhere.


Thanks to the worldwide expansion of its discount subsidiary, the Lidl parent company, the Schwarz Group, has risen to become the fourth-largest retailer in the world, according to a recent market study by the consulting firm Deloitte. Aldi follows in 8th place.


The Aldi brothers became billionaires with their cheap strategy. In 1961 they split up their cheap empire. Theo Albrecht got Aldi Nord, Karl Albrecht Aldi Süd. Last year, Manager Magazin estimated the assets of Theo Albrecht's heirs alone at around 17.4 billion euros.


However, the success story also attracted criminals to the scene while Theo Albrecht was still alive. In the fall of 1971, the businessman was kidnapped and only released after 17 days for a ransom of millions. After that, the already public-shy billionaire shielded his private life even more strictly from the public. For a long time, this did not detract from the success of the group.


However, the corona pandemic proved to be a challenge for the discounters. "Customers wanted to buy as much as possible in one store for fear of contagion - and the price was no longer that important," Küver described the development. As a result, the low-cost providers lost market share to the supermarkets with their much larger range in the two Corona years.


However, according to Küver, the next few years could bring a “growth comeback for the discounters”. The trigger for this is the noticeable price increases for many everyday products caused by the pandemic and the Ukraine war.


"The high inflation rates at the moment have the potential to change shopping behavior just as much as Corona did before," said Küver. “The discounters could regain market share as a result. After all, low prices are their core competence.”


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