The success story of ALDI started in the spring of 1913, when the baker Karl Albrecht, together with his wife Anna, opened “Albrecht” in Essen, Germany. At that time, self-service was still quite unusual and all customers were personally served by the store clerks. This is what the first storefront looked like:
After WWII, their sons Karl and Theo took over the store in 1945 and and expanded their family business into 100 branch stores by 1955 and over 300 by 1960. The ALDI brothers Karl and Theo are considered the inventors of the discount supermarket system in Germany and were among the richest people in the world, each valued at just under 20 billion dollars by Forbes magazine. However, both valued their privacy and declined most interviews, hence there are very few photos of the two brothers. Theo Albrecht died in 2010 due to a severe fall, and Karl passed away in 2014. Here is one of the few photos, from WirtschaftsWoche's archive:
A Disagreement About Cigarettes
The growth of the Albrecht store empire went well until 1960, when the brothers divided the company into two geographical areas in Germany: ALDI North and ALDI South. Apparently they had a clash of opinions regarding the sale of cigarettes. The northern branches were taken over by Theo, who was the one that wanted to sell cigarettes and and the southern branches were managed by Karl Albrecht (ALDI South sells cigarettes only since 2003).
Times are Changing
Also in the early 1960’s, Germans started to discover supermarkets how we know them today, where you can walk in, grab what you need, pay and leave. The small service stores like the ones from the Albrecht brothers saw a decline in sales and the brothers decided in 1961 to open their own chain of supermarkets. They chose the name ALDI (ALbrecht DIscount) for their new supermarket-style stores. Their concept for their new stores was a bit different than the one of a traditional supermarket. The ALDI stores offered no duplicates of food, so for example there was only one type of orange instead of several kinds to choose from. The basic idea is to only have products in the assortment which have a high turnover rate, about 700 items per store.
ALDI is focused on staple food items and did not issue price tags on each item until the early 1990s. I still remember being at ALDI with my mother and the cashiers would manually enter each price for each item with the prices they had memorized. If they were not sure, they would ask the next cashier over, who would then yell back with the exact price. The ALDI brothers also negotiated products with well-known manufacturers, which were produced under a different name specially for ALDI. As a result, these products were not subject to price constraints and advertising costs, enabling ALDI stores to sell them favorably.
To this day ALDI stores are rather simple when it comes to decoration and advertisements. Most items are sold directly out of the manufacturers shipping carton and all shelves carry the same orange price sticker. All employees are cross-trained to be at the cash register or re-stock items that are running low. This omission of “traditional” supermarket retail features brought the ALDI supermarkets great cost advantages over the years, at the same time enabling consumers great price advantages. Until the 1980s, ALDI had the image of a “poor people's” supermarket. Their products were regarded as qualitatively sufficient, but without prestige. Even today, poor populations are an important target group for ALDI, however many of the products marketed by ALDI have very good test results in German Consumer Reports magazines.
An important image change for ALDI came during the 1990’s, when they started their short-term weekly offers, usually as part of a theme week, for example handyman items with an assortment power drills, saws and work boots. During my high school years and the rise of personal computers, ALDI even offered the first "ALDI PC" around Christmas 1995, right when the internet started taking off and everybody got an AOL CD in the mail every other week. It was a well-equipped machine, that sold out in the first hours of the sale, based on its fair price and the fact that the German computer market was unsaturated with computers. This is a picture of the first PC’s being sold by ALDI, photo courtesy of Lebensmittel Zeitung:
2 Tips When Shopping at ALDI
Two things to keep in mind before you visit ALDI for your first time either in Germany or in the States: Customers are expected to bring their own bags from home to transport their groceries, otherwise they can purchase bags at the store for a small fee. That way ALDI cuts down on the use of plastic bags, which is good for the environment and good for their expenses.
Secondly, expect to pay a deposit if you want to use a shopping cart. Another way ALDI saves, is that customers pay a 1 Euro deposit to use a shopping cart at ALDI. "The shopping cart rental system is one of many ALDI efficiencies that enable us to keep our prices so low," the company informs on its website. "By not having to hire someone to police the shopping carts, we are able to pass the savings onto our customers." In the USA the deposit is typically a quarter.
You can see their current sales ad here.
Have you been to an ALDI store already? What do you think about them? Let us know in the comments.
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