"Aldi Nord and Aldi Süd about to merge"

German website Manager Magazin says both Aldi branches (Nord and Süd) are actively pursuing a plan to merge by 2022, ending a schism lasting half a century. As usual, the retailer denies, but it is certain that both entities are cooperating ever more closely.

Efficiency

The – usually very well informed – German website Manager Magazin claims both discounters have decided on the merger two years ago, in an internal document that details in seven pages how both branches will strive to form an association in which both will have a say. The “North South company” is meant to eliminate redundant structure and raise efficiency: staff costs could even be cut in half.

Aldi Süd (reportedly the pace setter in this possible merger) has already formally denied the report, stating that no merger – be it organisational or judicial – is planned and the economic independence of both branches is to stay intact. However, the discounter does admit that it is collaborating closer than before with its northern rival.

Increasing competition

The German website attributes the planned mega-merger to the increased competition both Aldis met in the last few years: both suffer attacks from all sides on their German home market: from chains like Edeka and Rewe, from other discounters (not to mention Lidl), and from e-commerce (Amazon). Even high-end retailers push back on Aldi: a recent survey states that hard discounters are losing German market share as consumers have gained more means and are now more demanding when it comes to shopping experience and sustainability.

Both organisations are already responding to that threat: Aldi Süd is closing regional offices in a plan that leaves 580 employees fearing for their jobs, Aldi Nord had to admit losses for the first time ever in 2018 as the costs for its ambitious store improvement programme were skyrocketing.

IT and private label

The first steps that enable a merger have already been taken: both companies have streamlined their IT infrastructure and closed a common deal with a mutual credit card service provider and with a marketing agency. Last year, both branches also announced they would join forces on their private label range: while Topstar (Süd) loses out and River (Nord) becomes the common soda brand, Milfina (Süd) beats Milsani (Nord) when it comes to yogurt. Here, too, the reason is economy of scale and efficiency.

North and South split in 1961, due to a difference in opinion between the founding brothers Theo and Karl Albrecht on the sale of cigarettes. By now, all family members who were involved in the split have passed away, making a merger possible again. Put together, both discounters employ 210,000 people worldwide in their 11,000 stores on four continents. A merger would have no problem with the antitrust authorities, as both branches belong to the same family.