Trader Joe's Owner, German Billionaire Theo Albrecht Dies

Theo Albrecht, the billionaire whose expansion of no-frills Aldi Group grocery stores made him Germany’s third-richest man, has died at 88.

Albrecht passed away in the western Germany city of Essen on July 24, Aldi Nord said today in a faxed statement. Der Spiegel reported that Albrecht, who also owned Trader Joe’s stores in the U.S., had been ill since a fall a year ago and was buried in a private ceremony early today.

“Aldi mourns a man who was humble toward his business partners as well as fellow employees and always held them in great respect,” the company said in the statement.

The expansion of Aldi from Germany’s industrial Ruhr Valley into a global retailer that generated 53 billion euros ($68.9 billion) in revenue last year made Theo and his brother, 90- year-old Karl, two of the richest people in the world. Their combined fortune topped $40 billion in 2010, according to Forbes, which ranked Theo and Karl 31st and 10th, respectively.

The brothers’ key to success was their low-cost business model: a limited assortment of goods that pared down supply expenses and a minimal level of advertising. The result was a shopping experience that lacked the refinement of brightly-lit supermarket chains. In return, consumers often paid less than they would have elsewhere.

‘Revolutionary’

Albrecht “stood for the establishment of a revolutionary and brand-new retail concept,” Klaus Kraenzle, a consumer-goods analyst at GSC Research in Dusseldorf, said in an interview.

The billionaire had two sons, Theo and Berthold, who work for Aldi Nord, according to Spiegel. Albrecht had already clarified a plan for succession at Aldi Nord and the company’s assets are held in protected trusts that will guarantee the further expansion of the business, the company said.

“For several years the company has been led by experienced Aldi managers who made all operating decisions independently from Theo Albrecht and his family,” the statement said.

“The retail industry has lost one of its great entrepreneurs,” said Stefan Genth, executive director of the German retailers’ association HDE. “There are only few people who have characterized a whole industry like he did.”

Albrecht contributed to “public welfare” because he made high quality food affordable for consumers, Genth said.

“Albrecht is a pioneer in his industry, but Aldi’s discount concepts also led to a price driven market,” said Joerg Funder, a retail expert at Worms University in the German town of the same name.

Kidnap Ransom

Discounters represent about 30 percent of the German food retailing market, an average 10 percentage points more than in other countries, said Boris Hedde, director of the Cologne-based retail research institute IFH.

“The discount concept has its roots in Germany and is being copied increasingly in other countries,” he said.

Little is known about either Albrecht brother, whose last photographs appeared in the 1980s, according to Der Spiegel. Theo lived in near-total seclusion, a circumstance compounded after he was kidnapped for a 17-day stretch in 1971, the magazine reported. The Albrecht family paid 7 million deutsche marks ($4.6 million) in ransom, which was handed over to the assailants by the bishop of Essen. There are only three confirmed public statements from Theo, according to Kraenzle.

Aldi Nord

Theo was born in Essen in 1922. The brothers took over their parents’ grocery store in 1946 after serving apprenticeships there, according to the statement. They opened more outlets, shortening “Albrecht Discount” to Aldi. As the business expanded, the brothers divided it into independent operations in 1960: Theo took over the north; Karl the south.

Aldi Nord has stores in western Europe and Poland, with about 2,400 outlets in Germany and 2,000 outside the country. Karl’s half, Aldi Sued, has stores in regions including the U.S., U.K. and Australia. Theo’s retail empire was enhanced by the 1979 purchase of U.S. discounter Trader Joe’s. The chain, which has 342 outlets, generated sales of $8 billion last year.

Aldi’s growth has begun to be eclipsed by its imitators. Both businesses lost market share last year in Germany, said Wolfgang Adlwarth, an analyst at market researcher GfK SE in Nuremberg. The figure fell to 18.4 percent from 19 percent in 2009 and the decline continued this year, according to Adlwarth.

To contact the reporter on this story: Patrick Donahue in Berlin at at pdonahue1@bloomberg.net; Holger Elfes in Dusseldorf at helfes@bloomberg.net.

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