Aldi

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Aldi
Private
Industry Retail
Founded 1946 (split in two parts in 1960, renamed to ALDI Nord and ALDI Süd in 1962)[1]
Founder Karl and Theo Albrecht
Headquarters Essen, Germany (Aldi Nord)
Mülheim an der Ruhr, Germany (Aldi Süd)
Number of locations
 9,600
Area served
 Global
Key people
 Matthew Barnes (CEO, UK Operations)[2]
Products Discount store, Supermarket
Revenue Increase €53 billion (2009)[3]
Website aldi.com

Aldi is a leading global discount supermarket chain with over 9,000 stores in over 18 countries, and an estimated turnover of more than €50bn.[1][4][5] Based in Germany, the chain was founded by brothers Karl and Theo Albrecht in 1946 when they took over their mother's store in Essen which had been in operation since 1913; it is one of the world's largest privately owned companies.[1] The brothers built up a chain of stores until, by 1960, they owned 300 shops, and split the operation into two separate groups, that later became Aldi Nord, headquartered in Essen; and ALDI Süd, headquartered in Mülheim an der Ruhr.[6][7] The two operate independently, each within specific areas. In 1962 they introduced the name Aldi (short for Albrecht Diskont),[8] which is pronounced About this sound Aldi (help·info) (aldiː) in Germany. Aldi Nord and Aldi Süd have been financially and legally separate since 1966, although both divisions' names may appear (as if they were a single enterprise) with certain house brands or when negotiating with contractor companies. The formal business name is ALDI Einkauf GmbH & Compagnie, oHG.

The individual groups were originally owned and managed by brothers Karl Albrecht and Theo Albrecht. Karl Albrecht (d. 2014) retained ownership of Aldi Süd, and with a personal wealth of €17.2 billion, was the richest man in Germany, while the co-owners of ALDI Nord, Berthold and Theo Albrecht Jr., follow close behind at €16 billion. Dieter Schwarz, owner of Lidl and Kaufland came in third, with a fortune of €11.5 billion.[9]

ALDI's German operations consist of Aldi Nord's 35 individual regional companies with about 2,500 stores in western, northern, and eastern Germany, and Aldi Süd's 31 regional companies with 1,600 stores in western and southern Germany.[citation needed]

Internationally, ALDI Nord operates in Denmark, France, the Benelux countries, the Iberian peninsula, and Poland, while ALDI Süd operates in Ireland, Great Britain, Hungary, Switzerland, Australia, Austria, and Slovenia (ALDI Süd operates as Hofer within the latter two countries mentioned). Both ALDI Nord and Aldi Süd also operate in the United States; Aldi Nord is owner of the Trader Joe's chain while Aldi Süd operates as Aldi.

According to a 2002 survey conducted by the German market research institute Forsa, 95% of blue-collar workers, 88% of white-collar workers, 84% of public servants, and 80% of self-employed Germans shop at Aldi.[10] One of ALDI's direct competitors, both nationally and internationally, is Lidl.

History[edit]

Albrecht grocery store in Essen-Schonnebeck (1958)
Aldi's original store in Essen, still in operation

The earliest roots of the company trace back to 1913, when the mother of Karl and Theo Albrecht opened a small store in a suburb of Essen. Their father was employed as a miner and later as a baker’s assistant. Karl Albrecht was born in 1920, Theo Albrecht in 1922. Theo Albrecht completed an apprenticeship in his mother’s store, while Karl Albrecht worked in a delicatessen. Karl Albrecht took over a food shop formerly run by F. W. Judt who already advertised that they were the "cheapest food source". Karl Albrecht served in the German Army during World War II. In 1946, the brothers took over their mother’s business and soon opened another retail outlet nearby. By 1950, the Albrecht brothers owned 13 stores in the Ruhr Valley.[citation needed]

The brothers' idea, which was new at the time, was to subtract the legal maximum rebate of 3% before sale. The market leaders at the time, which often were co-operatives, required their customers to collect rebate stamps, and to send them at regular intervals to reclaim their money. The Albrecht brothers also rigorously removed merchandise that did not sell from their shelves, cutting costs by neither advertising nor selling fresh produce, and keeping the size of their retail outlets small.[citation needed]

When the brothers split the company in 1960 over a dispute whether they should sell cigarettes,[11] they owned 300 shops with a cash flow of DM90 million yearly. In 1962, they introduced the name Aldi—short for "Al"brecht-"Di"skont. Aldi Nord and Aldi Süd have been financially and legally separate since 1966, although both divisions' names may appear (as if they were a single enterprise) with certain house brands or when negotiating with contractor companies.

ALDI started to expand internationally in 1967, when ALDI Süd acquired the grocery chain Hofer in Austria,[12] ALDI Nord opened its first stores abroad in the Netherlands in 1973,[13] other countries followed. After German reunification and the fall of the Iron Curtain ALDI experienced a rapid expansion. The brothers retired as CEOs in 1993; control of the company was placed in the hands of a private family foundation, the Siepmann Foundation, which safeguards the common interests of the members of the Albrecht family.[5]

Business organization[edit]

Germany[edit]

Aldi in Germany

The Aldi Nord group currently consists of 35 independent regional branches with approximately 2,500 stores. Aldi Süd is made up of 31 companies with 1,600 stores. The border between their territories is commonly known as ″Aldi-Äquator″ (literally: Aldi equator)[14][15] and runs from the Rhine via Mülheim an der Ruhr, Wermelskirchen, Marburg, Siegen, and Gießen east to just north of Fulda. The former East Germany is served by Aldi Nord, except for one Aldi Süd in Sonneberg, Thuringia, whose regional office is in Bavaria. The regional branches are organised as limited partnerships with a regional manager for each branch who reports directly to the head office in Essen (Aldi Nord) or Mülheim an der Ruhr (Aldi Süd).

Internationally[edit]

Aldi stores worldwide: Aldi Nord in blue, Aldi Süd in orange

The ALDI group operates over 8,000 stores worldwide. A store opens roughly every week in Britain alone.[16]

ALDI Nord is responsible for its stores in Belgium, the Netherlands, Luxembourg, France, Poland, Spain, Denmark, and Portugal, and also operates the Trader Joe's supermarket chain in the United States. Aldi Süd's responsibilities are in the USA (operating under the Aldi name), Austria and Slovenia (as Hofer), Great Britain, Ireland, Australia, and Switzerland. Aldi Süd's first Switzerland store opened in 2005, while it has operated in Hungary since 2007. Aldi Süd had invested an estimated €800m ($1bn; £670m) in Greece from November 2008 until pulling out on 31 December 2010.[17]

Whilst ALDI Nord has renamed its Dutch and Belgian subsidiaries Combi and Lansa to the Aldi Markt/Aldi Marché brand, Aldi Süd tries to maintain a regional appearance, branding its stores Aldi Süd in Germany, Aldi Suisse in Switzerland, and Hofer in Austria and Slovenia.[18]

Aldi UK Market Share from Kantar Worldpanel

In Great Britain, Aldi opened its 500th store in October 2013 and now has a market share of 3.6%.[19] Aldi has opened stores in affluent locations including Knutsford and Bury St Edmunds. Aldi has been aggressively recruiting management staff at top UK universities.[20]

In the USA, as with most American supermarkets, Aldi accepts debit cards and public assistance debit-style cards as payment. Unlike all other supermarket chains Aldi does not accept credit cards. Trader Joe's does accept credit cards.

In much of Australia, Aldi filled a void in the discount supermarket business that arose when the discount grocery chain Franklins, in 2002, became limited to New South Wales. Although Aldi had been operating in a few locations in Australia since the late 1990s, other discount supermarkets, such as BI-Lo, were either purchased or pushed out of the Supermarket business by Coles and Woolworths at about the same time. On 17 December 2008, Aldi opened its 200th Australian store; its supermarkets are in Victoria, New South Wales, the Australian Capital Territory, and Queensland.[21]

Geographic distribution[edit]

Country Name Aldi group Since Outlets
 Germany Aldi Nord 1961[8] 2,400[8]
Aldi Süd 1962[22] 1,790[22]
 Australia Aldi Süd 2001 345 [23]
 Austria Hofer Süd 1968 430[22]
 Belgium Aldi Nord 1973 380
 Denmark Aldi Nord 1977 244
 France Aldi Nord 1988 680
 Hungary Aldi Süd 2008 100 [24]
 Ireland Aldi Nord 2014 111
 Luxembourg Aldi Nord 1990 12
 Netherlands Aldi Nord 1975 406
 Poland Aldi Nord 2008 72
 Portugal Aldi Nord 2006 36
 Slovenia Hofer Süd 2005 71
 Spain Aldi Nord 2014 227 [25]
  Switzerland Aldi Suisse Süd 2005 130[22]
 United Kingdom Aldi UK Süd 1990 512[26][27]
 United States Aldi Süd 1976 1,300[28]
Trader Joe's Nord 1979 418[29]
total number of Aldi Nord stores 4,875
total number of Aldi Süd stores 4,734
combined total of Aldi stores 9,609

Business practices[edit]

Some Aldi practices are common in German supermarkets but largely unique to Aldi in other countries.[citation needed] These include the system of metal gates and turnstiles forcing customers to exit through the checkout, and charging customers for shopping bags. Until 2004, Aldi stores accepted only cash (since then, German stores have accepted domestic Girocard debit cards). Debit cards also are accepted in the USA, the UK, Austria, Belgium, Denmark, France, Portugal, Spain, the Netherlands, Switzerland, Ireland, Australia, Slovenia, and Hungary. Electronic-benefit transfer cards are also accepted in the USA.[citation needed]

Aldi generally does not accept credit cards, though Aldi Australia accepts MasterCard and Visa for a 0.5% surcharge and Aldi Ireland accepts Visa/MasterCard with no surcharge. In the USA, Aldi accepts Discover Card at some locations. Aldi has accepted Visa/MasterCard without surcharge throughout Great Britain from October 2014, which had previously been accepted only in Scotland.[30]

Another practice at Aldi stores in Europe, Australia and the USA, is requiring a coin, or an Aldi-issued reusable token, to use a shopping trolley. When the coin or token is inserted, the trolley is unlocked from the other trolleys. When the cart is returned, the customer is refunded their coin, effectively costing the customer only the time to return the cart. This is a common practice in some European supermarkets. Likewise when Aldi opened its stores in Australia, coin deposit for trolleys was already commonplace especially in low socio economic areas to counter theft and subsequent repurposing of trolleys by customers[citation needed]. By contrast, many U.S. competitors have employees return carts left in parking areas.[31]

In-store layout[edit]

Aldi Nord interior
The inside of an Aldi store in Hungary

Aldi specialises in staple items, such as food, beverages, toilet paper, sanitary articles, and other inexpensive household items. Many of its products are own brands, with the number of other brands usually limited to a maximum of two for a given item. This increases sales for each article, and lets Aldi shops be smaller than stores with more brand choice. This practice let Aldi avoid price tags, even before the introduction of bar code scanners. Aldi's, on many of its in-house brands will place, if feasible, multiple bar codes on products to speed the check out process.

Branded products carried include HARIBO in Germany, Marmite and Branston Pickle in the UK; and Vegemite and Milo in Australia. In the USA, major brand-name products, such as Oscar Mayer bacon, sometimes are offered as a 'special purchase': name-brand items that Aldi has received at a special price from the vendor and can offer for a reduced price. Unlike most shops, Aldi does not accept manufacturers' coupons, although some USA stores successfully experimented with store coupons (e.g. $10 off a $25 purchase).

In addition to its standard assortment, Aldi has weekly special offers, some of them on more expensive products such as electronics, tools, appliances, or computers, usually from Medion. Discount items can include clothing, toys, flowers, and gifts. Specials have strict limits on quantities, and are for one week. Aldi's early computer offers in Germany (such as a Commodore 64 pack in 1987) resulted in those products selling out in a few hours.[32]

Aldi is the largest wine retailer in Germany[33] Some Australian stores now sell alcoholic beverages. Some USA stores also sell alcoholic beverages (mainly beer and wine) where permitted by local laws.

Aldi mainly sells exclusively produced, custom-branded products (often identical to and produced by major brands[34]) with brand names including Grandessa and Fit & Active. USA, Australian, and UK Aldi stores also feature bargain-priced, gourmet foods imported from Germany.[citation needed]

Aldi's gift certificates must be paid for in cash.[citation needed]

Advertising policy[edit]

Aldi has a policy in Germany of not advertising, apart from a weekly newsletter of special prices called "Aldi informs" that is distributed in stores and by direct mail, and often printed in local newspapers. It claims this is a cost saving that can be passed on to consumers. In Germany, Aldi has never used an external advertising agency.[10]

In the USA it advertises in newspapers and on television as well as print ads distributed in stores and via the Internet.

In the UK, print and television ads have appeared since mid-2005.

Reputation[edit]

Originally Aldi shops were often ridiculed as being cheap shops selling low-quality goods, whose customers could not afford to shop elsewhere.[35]

In the UK, Aldi has won the Supermarket of the Year award two years in a row (2012/13),[36] and in 2013 Aldi won the Grocer of the Year Award.[37]

In the United States, due to the relatively low staffing of Aldi locations compared to other supermarket chains, Aldi has a reputation of starting employees out at significantly higher than minimum wage, unusual among American supermarkets.[38][39]

In Ireland, Aldi has been accused of "lack of corporate responsibility" to their farmer suppliers by the Irish Farmers' Association (IFA).[40]

Subsidiaries & Joint Ventures[edit]

Aldi Talk[edit]

Main article: Aldi Talk

Aldi has a mobile virtual network operator in Germany, Belgium, and the Netherlands, called Aldi Talk. Aldi also operates a similar network in Australia using Telstra's 3G network, called ALDImobile.[41]

Aldi Liquor[edit]

Aldi has a liquor website serving the east coast of Australia.[42] The site launched in mid-2013, and was a world-first move into online retailing for ALDI.[43]

The ALDI Liquor website has been shortlisted for a 2014 ORIA award for "Best New Online Retailer".[44]

Diskont[edit]

In Austria through its subsidiary Hofer, Aldi has a joint venture with the local petrol retailer Free Energy (FE) Trading GmbH, to create some no frills petrol stations called Diskont.[45] The 66 stations are on or nearby the stores, providing self-serve unleaded or diesel fuel by card-operated pumps. These have been in operation since 2009.

Criticism[edit]

In April 2000, Aldi UK paid damages to a shop manager who was fired for being HIV-positive. Aldi reached an out-of-court settlement with Mark Hedley (who had been manager of the Aldi supermarket in Seaham, County Durham) shortly before an employment tribunal hearing. Hedley complained of discrimination after he was asked to leave because bosses said staff were uncomfortable around him. It is thought the damages paid to Hedley were "six figures".[46]

In 2004, German Aldi stores sold garden furniture made of Indonesian Meranti wood. Because it was not able to show that it was sourced legally (70% of Indonesian timber is illegally logged), environmental organisations pressured Aldi to stop selling the furniture.[47] Within days Aldi announced that all of the timber used in its products would bear the FSC certificate, which promotes sustainable forestry.[48]

In 2008 Aldi UK demolished a historic coaching inn in Burpham having previously agreed not to until planning consent had been received.[49]

In 2010, over 200 Aldi store managers in the USA filed charges over unfair labour practices, claiming they were illegally classified as exempt from overtime pay, receiving a fixed salary regardless of the actual number of hours worked. The plaintiffs claimed that instead of managing, most of the time was spent stocking shelves, cleaning spills, and serving customers. Aldi store managers are not responsible for hiring, firing, or promoting employees.[50]

In September 2011, Australian community groups in Quakers Hill, New South Wales launched objections over Aldi's plans of selling discount alcohol at several stores.[51]

In 2013, Aldi Germany was criticised for spying on its own staff,[52] in the same year it was also caught up in the horse meat contamination scandal along with Tesco and others.[53] On 8 February 2013, the store group admitted that some of its frozen lasagne and Spaghetti bolognese products contained 30% — 100% horse meat rather than the advertised beef and that it had terminated its relationship with the supplier responsible for the adulterated product.[54]

In 2014, The Guardian reported that Aldi is client of Charoen Pokphand Foods. During 6 months The Guardian traced down the whole chain from slave ships in Asian waters to leading producers and retailers. [55]

References[edit]

  1. ^ a b c Thomas Rudolph (1 Oct 2011). Diversity in European Marketing: Text and Cases. Springer Science & Business Media. p. 141. 
  2. ^ "Joint chiefs take over at Aldi UK". Thegrocer.co.uk. Retrieved 29 January 2014. 
  3. ^ "Obituary: Theo Albrecht."
  4. ^ "Working for Alsi". aldi. 
  5. ^ a b Stefan Wagstyl (21 July 2014). "Karl Albrecht, Aldi co-founder, 1920-2014". The Financial Times. 
  6. ^ "Impressum" ALDI Nord. Retrieved on 14 February 2011. "ALDI Einkauf GmbH & Co. oHG Eckenbergstraße 16 45307 Essen."
  7. ^ "Impressum." Aldi Süd. Retrieved on 14 February 2011. "Burgstraße 37 45476 Mülheim an der Ruhr Amtsgericht Duisburg HRA 8577."
  8. ^ a b c http://www.aldi-nord.de/aldi_ueber_uns_814.html Retrieved on 22 February 2014.
  9. ^ Aldi dynasty continue to lead German rich list.Published: 10 October 11, 15:32 CET
  10. ^ a b Steinhoff, Jürgen; Helga Hein; Ingrid Lorbach (16 December 2002). "Hinter den Kulissen des Discounters". Stern (in German). Retrieved 4 August 2010. 
  11. ^ Graham Ruddick (7 Dec 2012). "Billionaire Aldi heir Berthold Albrecht dies at 58". the Telegraph. 
  12. ^ "ALDI Süd - About ALDI Süd(German)". 
  13. ^ "ALDI Nord - About us(German)". 
  14. ^ Hielscher, Henryk (28 July 2014). "Sieben Leitsätze : Der Aldi-Äquator trennt das Land" (in German). Wirtschaftswoche. Retrieved 1 January 2015. 
  15. ^ Wilkes, Christoph; Wilkes, Johannes (2012). Der Aldi-Äquator: 4 Jungs, 20 Filialen, 660 Kilometer [The Aldi equator: 4 guys, 20 stores, 660 kilometer] (in German). Fischer Taschenbuch Verlag. ISBN 978-3-596-19471-1. 
  16. ^ Wallop, Harry (30 June 2008). "Aldi pledges to open a new store every week". London: The Telegraph. Retrieved 18 February 2012. 
  17. ^ "Aldi quits Greece" (in German). www.german-retail-blog.com. 23 July 2010. Retrieved 18 February 2012. 
  18. ^ Hofer. "Hofer - Start". Retrieved 29 October 2014. 
  19. ^ Yeomans, Jon. "Aldi, Lidl and Waitrose seize share as market polarises". Thegrocer.co.uk. Retrieved 29 January 2014. 
  20. ^ "BBC News – Graduate jobs: The hunters and the hunted". Bbc.co.uk. 6 July 2010. Retrieved 29 January 2014. 
  21. ^ Aldi opens five new Queensland stores > FOODweek Online > Main Features Page[dead link]
  22. ^ a b c d "Aldi Süd Facts and Figures". Archived from the original on 22 December 2008. Retrieved 6 December 2008. 
  23. ^ ALDI. "Find your Local ALDI Store - ALDI Australia". Retrieved 29 October 2014. 
  24. ^ "Aldi stores in Hungary". 
  25. ^ "Los Supermercados Aldi más próximos". Retrieved 7 December 2014. [not in citation given]
  26. ^ Food and Drink (29 October 2013). "How Aldi won the class war – and became the fastest-growing supermarket in Britain". London: Telegraph. Retrieved 7 December 2014. 
  27. ^ "Aldi Stores UK (AldiUK) on Twitter". Twitter.com. Retrieved 7 December 2014. 
  28. ^ ALDI Honored with Retailer of the Year and Product of the Year Wins. 12 February 2014.
  29. ^ "Where in the dickens you can find a Trader Joe's?". Trader Joe's. April 2014. Retrieved 13 May 2014. 
  30. ^ "Aldi: Credit and Bank Cards now accepted". Retrieved 14 November 2014. 
  31. ^ "Job Description". Retrieved 12 February 2014. 
  32. ^ "HCM: The Home Computer Museum". Retrieved 9 February 2007. 
  33. ^ "GERMANY: Aldi is the biggest wine retailer in Germany". Progressive Newsletter 79. Progressive Group International Newsletter. 20–26 March 2006. Retrieved 18 February 2012. 
  34. ^ A list of no-name brands and the major brand companies behind them for Germany. Aldi relies on re-labeled major brand products.
  35. ^ Waltraud Schwab (19 June 2010). "Arme Discounterkunden: Kasse dank Masse" (in German). Die Tageszeitung. Retrieved 18 February 2012. 
  36. ^ "Aldi wins Supermarket of the Year at Which? awards for second year in a row". 
  37. ^ "Aldi scoops Grocer of the Year Award at Grocer Golds". 
  38. ^ "Working at Aldi – Reviews of Jobs at Aldi". Jobitorial.com. Retrieved 29 January 2014. 
  39. ^ "Aldi, Inc. Employer Wages, Hourly Wage Rate". PayScale. 3 January 2014. Retrieved 29 January 2014. 
  40. ^ "IFA hold protest outside Aldi's Letterkenny store over beef prices". 19 September 2014. Retrieved 19 September 2014. 
  41. ^ Sharma, Krishan (5 March 2013). "List of Aldi and Kogan's budget phone plans". BIT (Haymarket Media). Retrieved 9 March 2013. 
  42. ^ "ALDI LIquor". ALDI.com.au. Retrieved 2 July 2014. 
  43. ^ Speedy, Blair (22 June 2013). "Aldi goes online to brew a new battle". The Australian (News Limited). Retrieved 2 July 2014. 
  44. ^ Phillips, Campbell (18 June 2014). "Meet the Finalists of the StarTrack Online Retail Industry Awards 2014". Power Retail (Groundswell Media Pty Ltd). Retrieved 2 July 2014. 
  45. ^ "Diskont homepage". FE-Trading GmbH. Retrieved 2014-10-26. 
  46. ^ "Damages for sacked HIV manager". BBC News. 10 April 2000. Retrieved 14 January 2007. 
  47. ^ "Umwelt:Aldi auf dem Holzweg" (in German). Spiegel Online. 20 May 2004. Retrieved 4 February 2007. [dead link]
  48. ^ "Protestaktionen bringen Discounter zum Umdenken" (in German). 26 May 2004. Retrieved 4 February 2007. [dead link]
  49. ^ Report of the Borough Honorary Remembrancer for the Municipal Year 2006/07 PDF (2.19 MB),
    Roger Marjoribanks, Hon. Remembrancer, Borough of Guildford (Accessed 3 May 2009)
  50. ^ Cho, Janet (20 January 2010). "Aldi grocery store employees accuse chain of violating federal wage laws". http://www.cleveland.com. Retrieved 18 February 2012. 
  51. ^ "Aldi to sell alcohol". 
  52. ^ "Detective: Aldi spies on staff private lives – The Local". Thelocal.de. Retrieved 29 January 2014. 
  53. ^ "Horsemeat found in beefburgers on sale in UK and Ireland". BBC News. 15 January 2013. Retrieved 17 January 2013. 
  54. ^ "Aldi Frozen Ready Meals 100% Horsemeat". Sky News. 8 February 2013
  55. ^ Hodal, Kate; Chris Kelly; Felicity Lawrence (2014-06-10). "Revealed: Asian slave labour producing prawns for supermarkets in US, UK". The Guardian. Retrieved 11 June 2014. Charoen Pokphand (CP) Foods, buys fishmeal, which it feeds to its farmed prawns, from some suppliers that own, operate or buy from fishing boats manned with slaves. ... CP Foods admits that slave labour is part of its supply chain. 

External links[edit]

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