110 years Aldi
The discount empire started out as a baked goods retailer
04/10/2023, 08:05 am
On April 10th, 1913, the baker Karl Albrecht opened a “trade in baked goods” in Essen. His sons turn it into a corporation that revolutionizes retail. After 110 years, the company faces new challenges.
In view of the dramatic price increases for food, the discounters are experiencing a boom. With their focus on inexpensive products, they have their finger on the pulse of the times. So it’s fitting that the discount inventor Aldi is celebrating an anniversary this year. 110 years ago, the Aldi founding family, the Albrecht, laid the foundation for today’s retail empire. On April 10, 1913, the baker Karl Albrecht started a “trade in baked goods” in Essen.
From small beginnings grew one of the largest trading empires in the world. The sister companies Aldi Nord and Aldi Süd are now not only active in Europe and North America, but also in Australia.
“The discounters are now more than ever an important support for many households with their cheap offers,” says retail expert Robert Kecskes from the market research company GfK. So it’s no wonder that, according to GfK, the discounters increased their market share in Germany from 34.8 to 36.9 percent within just twelve months by the end of 2022 – at the expense of supermarkets and specialist retailers. At the beginning of the year, too, the shift in sales to low-cost suppliers continued unabated.
However, despite all the pioneering spirit, it is not the baker Karl Albrecht who is behind the success story of the Albrecht family. It is his sons Karl Junior and Theo Albrecht who made the company big. After their father’s death, they took over responsibility in their parents’ business and developed the discount concept. The first “Aldi” store – the abbreviation stands for “Albrecht-Diskount” – was opened in 1962, a good 60 years ago.
Prices are rising the most in the cheap segment
The original recipe for success: a small range in a sparse ambience at rock-bottom prices. Aldi and a little later its rival Lidl in Germany and subsequently in many other countries taught the supermarket competition to fear. However, today’s Aldi branches have little in common with those of the early days. Where once cold neon light and goods on wooden pallets characterized the shop image, modern shop design with a feel-good ambience has long since found its way. And in addition to the classic own brands, there are now more and more branded items at Aldi. “Today, people want a pleasant shopping environment. The discounters had a lot of catching up to do, and they did it,” said Kecskes.
Ironically, the discounters are struggling with their most important feature – the low prices – at the moment. They, too, recently had to raise prices sharply – in percentage terms, even more so than many branded goods companies, as Kecskes reports. Because the drastically increased energy and procurement costs had an even greater impact on the private brands, which are priced at a lower level, than on the manufacturer brands with their generally significantly higher advertising expenses and profit margins. However, the decisive factor for customers is probably that despite the jump in price, private labels are generally still significantly cheaper than branded items.
Lost online
So is everything okay in the anniversary year? Not quite. According to the trade expert Gerrit Heinemann from the Niederrhein University of Applied Sciences, Aldi in particular still has a neglected construction site: online trading. “Until now, the discounters have not had to deal with the topic of online trading to a large extent,” says the retail expert. But it is only a matter of time before the topic becomes relevant for them too. “And then it will be difficult for Aldi, because the rival Lidl has a considerable lead here.”
In fact, Lidl has managed to secure a place among the top ten German e-commerce retailers with its online shop in the most recent ranking by the Cologne retail research institute EHI. With sales of a good one billion euros, lidl.de took 8th place in the ranking, even though the discounter hardly offers any groceries online. For comparison: Aldi does not appear in the top 100 at all with its online shop.
Heinemann is convinced that the imbalance should set alarm bells ringing at Aldi. “It’s easy for Lidl to flip the switch and also sell groceries when the time comes. Aldi is far from ready.”