Karl Albrecht

Carnation

Karl Albrecht, who has died aged 94, was the co-founder with his younger brother Theo of Aldi, one of the world's most successful retail discount chains.

Although the family had a frugal and reclusive reputation, Karl's fortune was estimated at more than £15bn in 2009, which reportedly made him the wealthiest man in Germany and 24th richest in the world.

The two brothers had served in the Wehrmacht during the second world war, but in different theatres. Karl fought in Russia while Theo served in the Afrika Korps. Both were captured, but at the end of the war were quickly returned to Essen, the city where they had been born. There they found that their mother's small corner grocery store stood unscathed amid the ruins left by the Allied bombing of the severely battered Ruhr industrial region.

It was a typical "Auntie Emma shop" as the Germans call them, opened by their mother, Anna, after their father, also Karl, a coal miner, had been incapacitated by emphysema. The two brothers used it as a base for a pared-down grocery business, selling the bare necessities for which there would always be demand while eliminating the waste associated with perishable foods. The wartime ruin of Germany forced frugality on the nation, but even as a recovery took hold, Germans remained thrifty. The Albrechts carried on saving their customers money, and more of them from all classes came to value their approach. By 1950 they owned 15 stores in the Ruhr valley.

Aldi is an acronym formed from "Albrecht discount" and price-cutting with minimal waste underpinned the brothers' success. They set out to undersell not only corner shops but also giant retailers, stocking only around 2,000 items compared with up to 40,000 offered by a typical supermarket. Bulk-buying from obscure suppliers helped them achieve their basic aim of selling at the lowest prices, and by 1960 Aldi had more than 300 stores in West Germany, still displaying items of stock in their original cardboard boxes, as they had done from the outset.

However, the two brothers then fell out over the issue of whether to sell cigarettes. The budding empire was split, with Theo establishing "Aldi north", which sold tobacco, and Karl leading "Aldi south", which did not. Germany was therefore divided by an "Aldi equator" between the parallel companies and later they carved up much of the world on similar lines, accumulating nearly 10,000 stores between them. Curiously, Britain (with more than 400 stores) is part of Aldi south, which embraces southern Europe. Both companies built up large businesses in the US, Europe and Australia.

German unification in 1990 further boosted the fortunes of the two companies: high unemployment and low wages in the former East Germany were just the kind of conditions in which Aldi had flourished in the first place, while the banking collapse and Euro-crisis of 2007-08 encouraged western customers to fight austerity by saving on groceries at the considerable expense of conventional supermarkets.

Thus the dispute about tobacco sales did not prevent the two companies from flourishing in parallel, step by step. Both brothers retired from active management in their 70s in 1993, handing over to their respective families and importing outside managers to help each unquoted Aldi company to carry on growing. Karl retired from his business altogether only in 2002.

Throughout their lives the two remained resolutely private – neither man gave any interviews after the early 1950s – and that trait was set in stone after Theo was kidnapped and held for ransom for 17 days in 1971. He was released unharmed after a massive ransom payment, after which both brothers turned their Ruhr valley homes into fortresses and adopted security precautions normally associated with heads of state. They shared the use of Karl's heavily protected, 18-hole private golf course in the Black Forest.

Both brothers took their thriftiness to extremes, requiring staff members to use pencils down to the stubs and wearing their own suits to shiny relics. Each put his version of Aldi in the hands of a foundation run by family members and carefully chosen business associates. They resembled an amicably divorced couple who lived apart but remained in close touch.

Karl's wife, Maria, died in 2013. He is survived by their two children, Karl and Beata.

Karl Hans Albrecht, businessman, born 20 February 1920; died 7 July 2014

Powered by Guardian.co.ukThis article was written by Dan van der Vat, for theguardian.com on Monday 28th July 2014 12.30 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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