As reclusive as he was rich: Aldi co-founder dies

Theo Albrecht, the recluse who founded the Aldi discount network with his older brother Karl, died, aged 88, at the weekend. True to the brothers' reputation for secrecy, his death was not announced until yesterday.

The fraternal empire was launched from a humble German grocer's shop nearly half a century ago. Its famously spartan stores and value-for-money produce soon turned the business into one of the world's largest cut-price supermarket chains with stores across Britain and Europe. Theo left a personal fortune of $16.7bn (£10.7bn) when he died.

But his demise has amplified concerns about the future of the retail giant which is losing ground in the face of fierce competition from its rival, Lidl.

Lack of fresh blood and innovation at senior management level prompted Germany's Manager magazine to describe Aldi as being "reminiscent of the final days of communist East Germany" yesterday.

The Albrecht brothers adhered religiously to their business slogan "the best quality at the lowest price". The austere atmosphere of Aldi stores that began to spring up in towns and cities across West Germany in the 1960s and 1970s soon became legendary.

There was no advertising, and, unlike most shops that opened during those "economic miracle" years, early Aldi stores did not even have shelves.

Many simply displayed rows of half-opened cardboard boxes stacked on the floor under neon lights and packed with tins, bottles or packets straight from the supplier. All the goods were invariably much cheaper than at regular supermarkets and often superior in quality.

Theo Albrecht personified his own thrifty marketing strategy. At board meetings he was renowned for taking notes with pencil stubs rather than an executive fountain pen. He once upbraided architects who were designing a new Aldi store for the Netherlands for using drawing paper that was " too thick".

When Theo Albrecht was kidnapped by a lawyer with gambling debts in 1971 and held for 17 days, his abduction shocked the nation. He paid the equivalent of €3.5m (£2.91m) for his release. However, it later emerged that he had bargained over the ransom for days. And he subsequently demanded tax relief on the payment, claiming it was a business expense.

Such parsimony saw the Albrecht brothers appear with unfailing regularity on the Forbes rich list.

Their reputation for reclusiveness is part of German business folkore. There are only a handful of photographs of the two brothers in existence. Yesterday, Der Spiegel was obliged to use a portrait of Theo that was taken in the 1970s to illustrate its obituary. The other shots of him were taken without his permission by press photographers. "The only quotes from him that are available date back to 1953 and 1971," the German magazine noted.

Theo and Karl Albrecht were born and brought up in humble surroundings in the city of Essen in the Ruhr Valley. Their father was a miner whose ability to earn a living underground was cut short when he contracted emphysema. Their mother opened a small grocery shop to keep the family afloat.

The Albrecht boys were determined not to follow their father down the mineshaft. Theo stayed with his mother and learned the grocery trade, while Karl trained as a delicatessen.

Both brothers fought with the German Wehrmacht during the Second World War. Theo survived the war in the desert as a soldier with Rommel's Afrika Korps. Karl was wounded on the Russian front. Back in Essen, in the early post-war years, the brothers started opening one grocery store after another based on the "best quality, lowest price" principle. By 1961 the retail chain was formally given the name Aldi – a contraction of "Albrecht discount".

By the late Sixties, however, the brothers divided their German empire into "Aldi North" and "Aldi South" after a row about selling cigarettes over the counter. Theo became head of North and Karl of South.

Despite the spread of Aldi across Europe and an annual turnover of some €25bn, the division has persisted until today. But critics of the concern say that both branches are now suffering from advanced managerial malaise.

Although Theo's two sons – Theo and Berthold – both work at Aldi North, neither hold senior management positions. Instead the concern is run by a team of family-appointed managers who were being described yesterday as " yes men". Aldi south – still partially run by Karl Albrecht who is now 90 – is reportedly facing similar difficulties.

Armin Burger, 47, one of the concern's most innovative directors recently resigned following a series of disagreements with Karl 's daughter, and 34-year-old grandson, who are both board members.

Meanwhile Aldi's dominance of the German discount market is being seriously challenged by Lidl. "The managers at Theo's North and Karl's South are watching helplessly as Aldi's market share in Germany shrinks," wrote one critic yesterday.

The richest recluses

Howard Hughes

No recluse has ever quite matched Hughes for infamy and range of achievement. The industrialist, aviator and film producer suffered from obsessive-compulsive disorder. Once a prominent figure, he ultimately withdrew entirely from public life. He once spent four months in a screening room eating nothing but chocolate, stacking Kleenex boxes and watching movies.

Harry Hyams

Widely considered the definitive property speculator in London in the 1960s, Hyams, now 82, was so private that he wore a Mickey Mouse mask to a company AGM. In 1972, he blamed his desire for privacy on the image of developers. "While the nasty image is perpetuated," he said, "I do not wish it to spill over into my private life."

Harry Weinberg

The billionaire corporate raider became Hawaii's biggest landowner, and gave away his vast wealth to philanthropic causes. It was in death that his desire for privacy most memorably manifested itself: he bought 72 plots in a graveyard in his home town of Baltimore to ensure that he and his wife would be laid to rest in absolute peace.

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