Aldi Nord and Aldi Süd step up cooperation

Minutes from a November 23 board meeting at Aldi Süd’s Mülheim HQ, seen by German trade publication Manager Magazin, revealed that the pair had discussed undertaking the joint procurement of some goods.

That would be the prelude to a merger of Aldi Süd – which runs the UK business, among others – and Aldi Nord’s procurement arms, according to Manager Magazin.

The minutes cited showed that the two also looked into joint corporate responsibility, marketing, quality control and logistics.

The minutes prompted speculation that a potential merger could be on the agenda, bringing Aldi Süd and Nord together as one global retail business.

Manager Magazin reported that Aldi has already engaged several law firms to examine potential antitrust issues regarding closer collaboration.

Discrete entities

Aldi was founded in 1946 by brothers Karl and Theo Albrecht. The business split into two divisions in 1960, thought to be precipitated by a quarrel between the siblings about whether or not to sell cigarettes.

Aldi Süd now operates in the UK, Ireland, Hungary, Italy, Switzerland, Australia, China, Austria and Slovenia, while Aldi Nord stores are in the Benelux countries, Iberia, Denmark, France and Poland.

Of the two, Süd is regarded as the most progressive and has achieved better performance than Nord in recent years.

It is actively exploring ecommerce and digital development, and has plans to move into inner-city convenience formats.

Nord, in comparison, has been viewed by some as slow in adapting to a changing retail environment, although a tranche of store upgrades in some European markets indicates a new resolve to move ahead.

Both have US networks. Süd uses the Aldi fascia, while Nord runs the Trader Joe’s chain of supermarkets in most American states.

Threat to Lidl

The companies have been increasingly moving towards closer collaboration in recent years.

They ran their first joint German TV campaign in September 2016, and other initiatives such as a combined gift card promotion last year.

Any merger would ring alarm bells at arch-rival Lidl, which has benefited from the fractured nature of its domestic competitor.

The scale and reach a combined Aldi would have, at home and abroad, could pose a threat to Lidl’s plans.

Aldi Nord and Aldi Sud said in a joint statement that they were improving cooperation on an ongoing basis. They said: “This is an ongoing process that we have been intensifying for years.”

“A merger is not planned or anticipated as a result of the cooperation or as a result of other considerations.”