#910 1962 · Aldi (Karl and Theo Albrecht) · Grocery retail
The Albrecht brothers cut a supermarket's range down to a fraction and called it Aldi
the problem
Postwar German grocers competed on more brands and variety, driving up overhead price-sensitive customers didn't want
background
Karl and Theo Albrecht took over their mother's small grocery store in Essen, Germany after World War II and by 1955 had expanded it to roughly 100 branches, competing in a market where German supermarkets grew by carrying more brands, more categories and more variety to give shoppers choice. The brothers instead built their stores around the opposite bet: stock only the fastest-selling item in each category, cut the rest, and pass the savings from lower inventory, smaller stores and minimal staff directly into the lowest possible price.
In 1962 the brothers formalized this limited-assortment discount format under the name Aldi, short for Albrecht Discount, running stores that carried a small fraction of a typical supermarket's stock-keeping units, displayed goods in their delivery cartons rather than on stocked shelves, and skipped advertising, credit and store décor entirely.
what everyone would do
The prevailing strategy for growing a grocery chain was to add brands, categories and variety to draw more shoppers and let them find whatever they wanted under one roof.
what they saw
The Albrechts saw most of a supermarket's cost — inventory, shelf space, restocking, brand markups — funded variety shoppers didn't value. Cutting to one item per category left almost none of that cost to pass on.
the move
Aldi stores carried roughly a few hundred core items rather than the tens of thousands typical of a full supermarket, sold heavily under Aldi's own private label rather than national brands, and stripped out the overhead — large staff, wide displays, advertising, elaborate store fitting — that a wide assortment required, redirecting all of it into shelf price.
why it works
Stocking one item per category instead of a dozen let Aldi cut warehouse complexity, shelf restocking labor, and the negotiating leverage national brands otherwise had over price — all of which flowed straight into a lower shelf price. Displaying stock in delivery cartons and skipping advertising removed further costs a full-assortment store treated as fixed.
the payoff
By 1960 the brothers ran over 300 stores; today Aldi's two networks run more than 11,000 stores across 19 countries.
where it breaks
It only works for a customer base that genuinely prioritizes price over selection — shoppers who want brand choice or specialty items will simply shop elsewhere for those categories. It also requires picking the right single item per category to stock, since a wrong pick with no alternative on the shelf loses the sale outright rather than just the upsell.
what came after
Aldi's limited-assortment discount format became the template for hard discounters worldwide, later replicated by Lidl and copied in the US by chains like Trader Joe's, which the Albrecht family also came to own.
references
- [1]Karl Albrecht — PLMA Hall of FamePrivate Label Manufacturers Association, 2020plma.com