It was in the summer of 1978 when I drove into Jacksonville with a lady visitor from Germany. When we passed by the newly opened Aldi store on East Morton Avenue, she expressed amazement that this Midwestern town would have a grocery with the same name as her grocery in Germany. When we checked with the manager, we quickly found out that it was not a coincident at all.
We learned that all the Aldi stores here and in Europe belonged to the same brothers, Karl and Theo Albrecht. The two had been raised in modest circumstances. Their father was a miner; their mother operated a small grocery store where Theo served as an apprentice while Karl worked in a delicatessen shop.
In 1948 the brothers incorporated their grocery with the name "Aldi", short for Albrecht Discount. By 1955 they had expanded their business to 100 stores and by 1960 to over 300. At that time, the brothers divided their control over the company. Theo took the northern territories of Germany and Karl the area south of the Ruhr valley.
Initially Aldi carried only its own 500 select brand products, to be sold “at the lowest prices possible.” Overhead expenses were kept to a minimum. That gradually made Aldi “the king of the no frills shopping experience.” It is the niche the company found profitable and popular with lower and middle income shoppers.
By 1976, Aldi decided to expand across the Atlantic and open its first store in southeastern Iowa. Continuously honing and refining its product line and its merchandising methods, the chain added more refrigerated and frozen foods, as well as special offerings of imported items.
When the company’s management got concerned about the cost of retrieving unreturned shopping carts, it introduced the German-made carts that require a 25-cent returnable deposit. Since then, employees no longer need to hunt all over the parking lot for unreturned carts. More recently, Aldi stores began accepting debit cards and opening on Sundays. Now they carry about 1,400 regularly-stocked items, including fresh meat, and, in some locations, beer and wine.
By 1997 Aldi controlled over 3,000 stores in Germany, by 2003, 6,500 stores worldwide. In the U.S. today, Aldi owns over 1,000 stores in 29 states, from the East Coast to Kansas. Two years ago, Wal-Mart closed its discount outlets in Germany, partly because shoppers found the U.S. giant too expensive in comparison to Aldi. In 2008, the company’s American revenues were reported to have grown by as much as 20 percent to $7 billion. Aldi’s continuing growth has convincingly shown that discount merchandising can be profitable. Since 1961, Karl Albrecht has increased his estimated net worth to over $27 billion.
That makes him the wealthiest man in Germany and the eleventh richest man worldwide. (Yet, he is still far behind America’s Warren Buffet, who last year owned some $62 billion and is still ten years younger than the 88-year old Albrecht.) At the beginning of 2002, Karl relinquished this position as chairman of the board and, according to Forbes magazine, retired to raising orchids and playing golf on his own golf course.
Presently, the U.S. arm of Aldi is in the process of expanding in Wal-Mart's home turf and opening 75 more stores, including its first outlet in New York City. As the Aldi experience has shown, selling low-cost foods and other necessities cannot only be very rewarding, it is obviously also far more recession-proof than merchandising upscale and luxury goods.