Theo Albrecht – Become a billionaire with cheap prices

Theo Albrecht – Become a billionaire with cheap prices

With the invention of the discount, Aldi founder Theo Albrecht revolutionized the food trade. On the occasion of the 100th birthday of the entrepreneur who passed away in 2010, the business idea has regained relevance.

Theo Albrecht made spending cheaper and made billions with it. Together with his brother Karl, the founder of Aldi, born in Essen on March 28, 1922, he invented the food discount and taught supermarkets to fear.

On the entrepreneur’s 100th birthday, who passed away in 2010, the surge in inflation triggered by the crown pandemic and the war in Ukraine could give new impetus to the idea of ​​the brothers of the century.

“In the next few years, the price of purchases will again be much more important,” said trade expert Frank Küver of the German news agency’s market research firm NielsenIQ. According to his assessment, this should lead discounters to regain market share after years with rather mixed results.

About 24 hours after his release in December 1971, Theo Albrecht speaks to reporters from a window in his Essen-Bredeney mansion.  He was then kidnapped and released after paying seven million marks after 17 days.

About 24 hours after his release in December 1971, Theo Albrecht speaks to reporters from a window in his Essen-Bredeney mansion. He was then kidnapped and released after paying seven million marks after 17 days.
Photo: Picture Alliance / dpa

Broken with conventions

When Karl and Theo Albrecht took over their parents’ grocery store in Essen after World War II and invented Aldi (Albrecht Diskont), they broke with many of the conventions that were common in the grocery trade at the time. Things were spartan in Aldi stores: the choice was small and the merchandise was presented unadorned in boxes stacked on pallets under the cold neon lights. One searched in vain for branded items.

“At first glance the idea – focusing on the price and on processes as effective as possible – may not seem particularly spectacular, but in connection with the desire to continuously improve one’s model, something really great has emerged: a completely new one. Store concept that works around the world, ”says Küver.

In the German food retail trade, Aldi, Lidl, Penny and Co. have secured a large part of the market with the discount model invented by the Albrechts and then continuously refined. According to current data from market research firm GfK, discounters held a market share of nearly 35% last year. For comparison: nearly 30 percent of the business was supermarkets, 12 percent hypermarkets, and 15 percent specialist retailers. Pharmacies and online vendors shared the rest.

Convincing all over the world

And even low-cost suppliers have been able to score points with their concept around the world. “The discount model is the biggest export success of German retail,” said Küver. Whether in France, Italy, the United States or even Australia, travelers from Germany can now find branches of one or the other discount chain almost everywhere. Thanks to the worldwide expansion of its discount subsidiary, Lidl’s parent company, the Schwarz Group, has become the fourth largest retailer in the world, according to a recent market study by consulting firm Deloitte. Aldi follows in 8th place.

The Aldi brothers became billionaires with their cheap strategy. In 1961 they split their empire on the cheap. Theo Albrecht got Aldi Nord, Karl Albrecht Aldi Süd. Last year, manager Magazin estimated the assets of Theo Albrecht’s heirs alone at around 17.4 billion euros.

However, the success story also lured criminals to the scene while Theo Albrecht was still alive. In the fall of 1971, the businessman was kidnapped and released only after 17 days for a ransom of millions. After that, the already shy billionaire protected his private life even more strictly from the public. For a long time, this did not detract from the group’s success.

Corona challenge

However, the corona pandemic proved to be a challenge for discounters. “Customers wanted to buy as much as possible in one store for fear of contagion and the price was no longer that important,” said Küver, describing the development. As a result, low-cost suppliers have lost significant market share to supermarkets with their much wider range in Corona’s two years.

However, according to Küver, the next few years could bring a “return of growth for the discounters”. The trigger is the significant price increases of many everyday products caused by the pandemic and the war in Ukraine.

“High inflation rates at the moment have the potential to change buying behavior just like Corona did before,” Küver said. “As a result, discounters could regain market share. After all, low prices are their core competency. “

© dpa-infocom, dpa: 220321-99-607168 / 3


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