Aldi - Stategic Analysis

Background

In 1948, the brothers Theo and Karl Albrecht opened

the grocery store ‘Albrecht Discounts’ (Aldi) in Essen

(Ruhr Valley), Germany. The store had a simple

layout and offered a restricted number of products at

a low price. The company grew rapidly, owning 13

stores in 1950 and about 300 stores in 1961 across

Germany.

In 1961, Theo and Karl divided the company into

Aldi North (run by Theo) and Aldi South (run by

Karl). The reasons for this division, according to

Dieter Brandes, a former managing director of Aldi in

Schleswig-Holstein, Germany, were different views

about how to develop the business. However, the

brothers regularly exchanged information about a

range of issues such as performance and cost figures,

current and potential suppliers and they also conducted

joint negotiations with suppliers.

1

In 2003,

Theo and Karl stepped down as CEOs. Theo’s son,

Theo Albrecht Jr, now runs Aldi North, and Juergen

Kroll and Norbert Podschlapp run Aldi South.

By the end of 2003, Aldi had become one of the

world’s biggest global food retailers with over 7000

stores worldwide and estimated annual turnover of

36.2 billion euro.

2

Aldi’s main market is Germany,

which accounts for about two-thirds of sales and where

Aldi has a 40 per cent share of the grocery market.

3

Today, Aldi still operates in two divisions. Aldi

North, based in Essen, manages operations in northern

Germany, Belgium, Denmark, France, Luxembourg,

Netherlands and Spain. Aldi South, based in Muelheim,

manages operations in southern Germany, Austria,

Great Britain, Ireland, Switzerland, USA and Australia.

4