In the highly competitive grocery wars, Germany-based discount supermarket chain Aldi is poised to become the third-largest grocery store in the United States, with around 2,100 stores nationwide. With around 11,000 locations worldwide, the wildly successful supermarket chain is a global juggernaut and has ambitious plans to expand further into the US, but investors may not be able to take part in this growth. . Here’s why.
Can you buy Aldi shares?
Unfortunately, those waiting for an initial public offering from Aldi may have to wait a bit. Aldi’s parent company, Aldi Einkauf SE & Co. oHG, is firmly in the hands of the founding family, Albrecht, and as of 2022 there are no signs that investors will soon be able to participate in an initial public offering. For now, investors will have to look elsewhere for a grocery stock solution.
How is Aldi doing?
Because it is a private company, Aldi Einkauf SE & Co. oHG does not have to publicly share financial statements or performance estimates for its discount supermarket chain. The company actually went the extra mile to keep this information secret, only disclosing minimal details about its affairs.
A Deloitte Global Powers of Retailing reports Aldi’s retail revenue growth for 2019 was 5.6%, compared to Walmart’s 1.6% for the same period. This report also suggests that Aldi North and South – two branches that span different parts of the world – are likely to join forces as Aldi South’s growth has far outpaced its lagging counterpart.
How did Aldi start?
Aldi’s story began after World War II, when Germany faced enormous challenges to rebuild destroyed cities, shelter millions of homeless people and provide food for its citizens.
German brothers Theo and Karl Albrecht returned home after the war and took over their mother’s small grocery store in 1946. The Albrecht brothers understood their price-conscious customers and cut costs to stay competitive. With this action, a new type of grocery store was born. The brothers were ruthless cost-cutters and resorted to strategies such as running smaller storefronts and quickly removing products that weren’t selling to save money on operations.
Aldi North and Aldi South
In 1961, the brothers separated after disagreeing over the sale of tobacco products. They split the family business, with Karl Albrecht taking the southern German stores as well as the rights in the UK, Australia and the US, under the brand name of this branch of the Aldi Sud company. Theo Albrecht claimed the businesses in northern Germany and Europe, under the brand of his Aldi Nord division.
In the 1970s, Karl Albrecht ventured overseas and opened America’s first Aldi store in Iowa, while his brother bought California-based Trader Joe’s.
Aldi the Fierce and Good
Aldi is unapologetically no-frills: There’s no gentle misting of vegetables, no courteous grocery-wrapping clerks, or free sample Saturdays. Nevertheless, customers flock to Aldi stores for the low prices and high quality products.
Many competitors underestimated Aldi’s potential. Dubbed the “silent killer” by some industry insiders, Aldi is the discount supermarket that quietly appears in a community and quickly grabs business from local competitors. Not one to rest on its laurels, the company plans a five-year, $5 billion expansion in the United States
Good to know
In 2021, Aldi was named America’s Most Sustainable Grocery Store and continues its commitment to supporting our planet’s resources by becoming the first major US retailer to eliminate all plastic bags from its stores.
Does Aldi have a decentralized corporate structure?
Because Aldi Einkauf SE & Co oHG operates its discount supermarket chain in two separate branches or divisions, the company operates – and fosters – a highly decentralized organizational structure, which emphasizes flatter chains of command. This allows subsidiaries to reflect on regional markets and adapt to changing situations. Aldi Sud, for example, is organized as a group of companies grouped under international and regional “head offices”.
Given Aldi’s growing popularity and future growth plans, it’s no wonder investors are keen to participate in the success of this discount supermarket chain. But since Aldi’s parent company is private and has no plans to go public anytime soon, investors are going to have to look for gains elsewhere for now.
Those interested in an Aldi IPO may want to wait and see if Aldi North and South merge first. Industry experts believe that Aldi Nord is suffering financial losses. This could weigh on Aldi Sud’s more buoyant performance and impact the overall value of the business.
Information is accurate as of May 4, 2022.
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