Aldi: A Low-Cost Retail Giant's Distinctive Business Practices

The grocery retail market was dominated by companies which offered a limited assortment of products at extremely low prices. Besides, unlike in other developed markets, there was reportedly no social stigma attached to shopping at discount stores in Germany (Refer to Exhibit II for a note on retailing in Germany).

Aldi was among the oldest retailers in Germany, and was considered to be one of the pioneers of the hard discounter concept. According to a survey conducted in 2004 by GfK, a German market research company, Aldi was the third most respected brand in Germany, behind Siemens AG and BMW AG.¹¹

Aldi was set up by Karl and Theo Albrecht (Karl and Theo) soon after the Second World War. The Albrecht siblings (born in 1920 and 1922 respectively) were sons of a miner, and lived in Schonebeck, a blue collar suburb in the Essen region of Germany. When Karl and Theo were children, their father contracted a lung disease, and quit his mining job to work in a bakery. Their mother maintained a small grocery store near their home to make ends meet. Karl and Theo attended middle school and then went into training, the former at a delicatessen and the latter at his mother's grocery store.