A Secretive Family's Success: What Makes the Aldi Discount Empire Tick
The death of Aldi co-founder Theo Albrecht marked the end of an era for Germany's largest discounter. The company has found success as it expands into foreign markets, including other European countries and the United States, but what does the future hold for the ultra-secretive grocery chain?
An old file in the public records office of the western German town of Essen contains two entries on Karl and Theo Albrecht, the billionaire founders of the Aldi discount grocery empire. According to one entry dated the end of January 1997, Karl purchased eight cemetery plots in a graveyard in the city's Bredeney district for 69,984 deutsche marks (35,782) for himself and his family. Two months later, his brother followed suit and paid 65,912 marks (33,700) for 14 plots in the same cemetery.
That sums up the Albrechts, that sums up Aldi. Theo and his brother Karl, who is two years older, laid the cornerstone for what became their discount empire in 1948 when they took over their mother's small grocery store. In 1961, they changed the name to Albrecht's Discount -- or "Aldi" for short. Within decades, they had built a retail chain worth billions, one which permanently changed the way food retailing was done in both Germany and across the globe.
On Wednesday of last week, the story of the most eccentric, secretive and mysterious pair of siblings in Germany post-war economic history came to an end with the death of Theo.
Theo was one of the richest men in the world, with a personal fortune estimated by Forbes magazine at $16.7 billion recently. Yet he would use outdated envelopes bearing the old four-digit German postcode for his correspondence, and simply had his staff replace the number with the new five-digit code.
A Withdrawn Life
After he was kidnapped and held for 17 days in 1971, he led a withdrawn life and refrained from giving interviews or appearing at public functions or being photographed. But years after the kidnapping, he went to court to try to get a tax rebate for the ransom payment. His request was denied.
He and Karl, 90, ran a global business with some 9,400 stores spread from Seattle to Sydney. But on Wednesday morning, when his closest relatives gathered in a spartan oratorium for a memorial service, his death had not even been made public. There was no procession, no requiem, no speeches. The 30 mourners present were just the families of Theo and Karl, children, grandchildren and close friends.
No paparazzi, no crowds. Three hours later the company informed all its executives and confirmed the news of the death which SPIEGEL had by then already reported. Theo Albrecht had already died on the previous Saturday at 2 p.m. in an Essen hospital after a lengthy illness.
The 'Aldization' of the World
He wasn't just an entrepreneur, just like Aldi isn't any company. Aldi is Germany, and Germany is Aldi. This sense of order, this devotion to efficiency, the sparse logic of logistics and above all, determined thrift.
So it's no wonder that Germany isn't just the land of poets and thinkers, but also of discount shopping. The concept of super cheap groceries wasn't invented in the United States, it was invented by the Albrechts. The concept had nothing to do with customer service, just with providing discount food for the masses. "Our advertisement is the cheap price," Karl Albrecht said in 1953. That remained the only public statement he made in the entire history of the company.
The "Aldization" of the world didn't just generate jobs and cheap food. It also entailed uniformity, an efficiency mania and anonymity that manifested itself in Aldi's no-name products.
Aldization also meant putting pressure on suppliers, occasional public scandals about alleged exploitation in the Third World, a suspicious attitude towards trade unions and unshakeable faith in the power of the market in all areas of life -- from discount airlines to discount burials.
And "Aldi-ized" society must regularly ask itself whether it wants to stick a price tag on everything. And it will eventually have to answer the question whether cheapness is the be all and end all. The company embodies a conflict that is in all of us. We all want the T-shirt for 3 ($4), but we're appalled when we find out that children in Bangladesh have to toil away to produce it that cheaply.
We are happy that companies like Aldi are great levellers when it comes to shopping. At Aldi and Starbucks, McDonald's or IKEA, all shoppers are equal. Eckhard Cordes -- the head of Germany's Metro retail group, which owns the country's biggest warehouse wholesale markets and other stores -- rightly lauded Theo Albrecht's "contribution to society." He said Albrecht "democratized shopping with extremely cheap groceries and products and helped to bring prosperity and stability to broader swathes of society."
Absolutely No Frills
In the beginning it was the sheer poverty of customers that made the Albrechts rich. Afraid of stirring envy, the family was always careful to avoid flaunting its wealth, even after its brand had long reached cult status.
The group gave a bit of quality of life back to an exhausted and hungry nation after World War II. Generations of "guest workers" -- immigrants from Turkey, Italy and other nations invited by the West German government to make up for a shortage of labor after the war, supplied themselves with Aldi groceries laid out on pallets in the stores. The Germans and Aldi formed a symbiosis that would not have worked so perfectly in any other country. This nation of sensible shoppers got the grocery market it deserved: as cheap as possible, practical and with absolutely no frills.
© SPIEGEL ONLINE 2010
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH