The ALDI Success Story
An Organisational Profile by Kai F. Mahnert, DBMK
Conducted for Ivan McPhillips, Lecturer in Enterprise Development, GMIT
In 1948 brothers Karl and Theo Albrecht opened a small grocery store in Essen, Germany. Due to the post war shortages in supplies and the size and capital of their business the brothers had only a small assortment of products. Today, more than fifty years later, ALDI is a worldwide chain of discount stores, a continuously growing empire with a concept so simple the business world is left with the question 'Why didn't we think of that?'.
At the bottom of ALDI's sales policy is the idea of selling high quality products at the lowest possible price. This (on its own not very original) concept is achieved by reducing cost of sales to a minimum. Thus, what was once a necessity, namely the narrow product width in ALDI stores, became a virtue.
Even today the ALDI (North, see below) has no more than 700 products on display. Compared with an estimated 20000 products for REWE, probably the biggest German enterprise, that does not seem like a whole lot. However, in spite (or because?) of the smaller product mix, in 1999 estimated turnover was 35 and 50 billion Deutsche Mark for ALDI and REWE respectively.
'Becoming a shop window decorator for ALDI' is an inside joke in the German business world. ALDI does not invest in image, promotion or any other 'superfluous' activity not immediately related to the sale of goods. The Corporation owns their own coffee factory, legal firms and property agencies, thereby reducing costs further. ALDI is said to be the largest landowner in the country.
To prevent a potential business disaster in the case of a fall out between the brothers, ALDI was...