Title

Aldi in Australia

Date of this Version

7-1-2006

Document Type

Book Chapter

Publication Details

Interim status: Citation only.

Bonn, I. (2006). Aldi in Australia. In C. W. L. Hill, G. R. Jones & P. Galvin (Eds.). Strategic management: An integrated approach (2nd ed.). (pp. C1-C11). Milton, Qld: John Wiley & Sons.

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© Copyright John Wiley & Sons, 2006.

ISBN

978-0-470-80176-5

Abstract

Extract:

In 1948, the brothers Theo and Karl Albrecht opened the grocery store ‘Albrecht Discounts’ (Aldi) in Essen (Ruhr Valley), Germany. The store had a simple layout and offered a restricted number of products at a low price. The company grew rapidly, owning 13 stores in 1950 and about 300 stores in 1961 across Germany.

In 1961, Theo and Karl divided the company into Aldi North (run by Theo) and Aldi South (run by Karl). The reasons for this division, according to Dieter Brandes, a former managing director of Aldi in Schleswig-Holstein, Germany, were different views about how to develop the business. However, the brothers regularly exchanged information about a range of issues such as performance and cost figures, current and potential suppliers and they also conducted joint negotiations with suppliers. In 2003, Theo and Karl stepped down as CEOs. Theo’s son, Theo Albrecht Jr, now runs Aldi North, and Juergen Kroll and Norbert Podschlapp run Aldi South.

By the end of 2003, Aldi had become one of the world’s biggest global food retailers with over 7000 stores worldwide and estimated annual turnover of 36.2 billion euro. Aldi’s main market is Germany, which accounts for about two-thirds of sales and where Aldi has a 40 per cent share of the grocery market.

Today, Aldi still operates in two divisions. Aldi North, based in Essen, manages operations in northern Germany, Belgium, Denmark, France, Luxembourg, Netherlands and Spain. Aldi South, based in Muelheim, manages operations in southern Germany, Austria, Great Britain, Ireland, Switzerland, USA and Australia.

In Australia, the first Aldi store opened in Sydney in January 2001. The company came with $750 million in paid-up capital and plans to invest profits in further growth. This all-cash approach to expansion keeps Aldi’s risk levels low. In 2004, Aldi owned 44 stores in New South Wales, 20 stores in Victoria and eight stores in Queensland. With these stores, Aldi captured almost 5 per cent of total packaged grocery expenditure in New South Wales, 2.5 per cent in Victoria and 1.4 per cent in Queensland. According to AC Nielsen, Aldi could own over 300 stores and capture 10 per cent of the Australian packaged grocery dollar market by 2010, if it achieves its planned store rollout program.

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