From the ruins of the Third Reich, the man who built Aldi
Published 07/08/2010 | 05:00
Theo Albrecht, who has died aged 88, was the reclusive co-founder of the Aldi discount supermarket chain -- and one of the world's richest men.
Built up by Theo and his older brother Karl from their mother's corner shop in the bombed-out rubble of postwar Essen in Germany, the privately controlled Aldi empire now extends to more than 8,000 stores around the world, including 77 in Ireland.
Aldi's no-frills, low price format had little impact on shopping trends when it arrived here in 1999 at the start of the boom years. It was dismissed by the chattering classes as a chain for people on low incomes who could not afford quality branded goods.
But the recent economic downturn has made it a mecca for hard-pressed middle class families keen to cut grocery costs. With its rival discounter Lidl, Aldi accounts for close to 8pc of the Irish grocery market.
Worldwide, Aldi achieved sales in 2009 of more than €50bn. It's a massive international success story -- but amazingly little is known about the private lives of the family behind it.
Theo's wealth was estimated by Forbes last year at €12.6bn, making him the 31st richest person in the world and Germany's second richest behind Karl at $17.76bn; the brothers' fortunes combined were exceeded only by those of Warren Buffett, Bill Gates and the Mexican Carlos Slim.
The Albrechts' obsession with privacy -- living behind fortress-like security on estates overlooking the Ruhr valley, rarely snapped by paparazzi, never making public statements -- derived in part from Theo's experience in December 1971, when he was kidnapped at gunpoint by Heinz-Joachim Ollenburg, a lawyer with gambling debts, and his accomplice Paul Kron.
Theo was held for 17 days in Ollenburg's Düsseldorf office, but so nondescript was his appearance -- he favoured cheap, ill-fitting suits -- that the kidnappers demanded to see his ID to make sure they had snatched the right man. He responded by haggling over the ransom sum, which was eventually fixed at seven million Deutschmarks, and was delivered to a highway rendezvous by the Bishop of Essen.
Ollenburg and Kron were caught and jailed, but only half of the money was recovered. Albrecht went to court to claim it as a tax-deductible business expense.
Theodor Paul Albrecht was born in the Schonnebeck suburb of Essen, in the industrial Ruhr region, on March 28, 1922, two years after his brother Karl. Their father was a miner until emphysema rendered him an invalid; their frugal, hard-working mother ran a small food shop and, in the 1930s, the two youths sold buns around the district from a wooden cart.
Both served in the German army during the war: Theo with Rommel's Afrika Corps until he was eventually captured by US troops in Italy in 1945.
When the brothers were released from prisoner of war camps to return to Essen they found most of the city (a major railway centre, which had also been the site of Krupps munitions factories) reduced to ruins, but their mother's house and shop was intact. They began to expand the business with other grocery outlets, experimenting with a no-frills self-service format and a limited range of merchandise.
Within a decade, as Germany's economic recovery gathered pace, they owned more than 100 stores.
In 1961 they adopted the name Aldi (a contraction of Albrecht Discount) and divided the map of Germany in half -- along the so-called Aldi Equator -- reportedly after disagreeing over whether or not to sell cigarettes. Theo took control of Aldi Nord, still based in Essen, while Karl, reputedly the more dynamic of the duo in their younger days, ran Aldi Sud from Essen's sister city of Mulheim.
They later divided the rest of the world, if not quite in such a logical way. Theo's empire expanded into France, Spain, Portugal and Poland, while Karl's eventually reached Britain and Australia. And both brothers built operations in the United States, Karl under the Aldi banner and Theo as owner of the Trader Joe's chain of 340 "gourmet" grocery stores that he acquired in 1979.
At home in Germany the group expanded to 4,000 stores, owned via a number of legally separate operating units which allowed the brothers to co-operate when it suited them but to circumvent laws on accounting disclosure for large businesses and to avoid having to deal with a nationwide workers' council.
They ran their operations with military discipline and attention to detail, and in such secrecy that Aldi managers were forbidden not only to talk to the press but even to talk to their own colleagues in other districts.
Growth was funded out of retained profits rather than public capital-raising, and success was achieved by offering no more than a few hundred well-chosen product lines (rather than the tens of thousands found in other supermarkets) at low prices made possible by massive purchasing. This was combined with a high ratio of sales per square metre of floor space, and ferocious cost control -- the latter being Theo's special skill.
Little money was wasted on marketing, and none at all on making Aldi stores look elegant: goods were simply piled up along the aisles in packing cases. Theo himself made a point of using pencil stubs rather than expensive pens.
Asked to approve the plans for a new outlet in Holland, he replied that the design was good but the paper it was drawn on was too thick. "If you use thinner paper we will save money."
A devout Roman Catholic, Theo Albrecht retired from the day-to-day running of the business in 1993, but remained active as chairman of the foundation that is Aldi Nord's principal shareholder. He is survived by his wife Cilli, their sons Theo Jr and Berthold, who hold management positions in Aldi, and his brother Karl, now 90.