IT IS 59 years since Karl and Theo Albrecht opened a no-frills grocery store amid the postwar ruins of bombed-out Essen in Germany, selling essential products at bargain prices.

Named Aldi after the words Albrecht Discount, the chain has become one of the fast-est-growing retailers in the world, delivering sales increases of 8% a year since 1998. In Britain and Ireland, Aldi is opening more than 50 stores a year as part of an ambitious plan to almost quadruple the size of the company from 400 shops at present to 1,500.

The group is at the forefront of a gradual but unmistakable shift in shopping as low-cost supermarkets – others are Lidl and Netto – have enjoyed a huge surge in popularity although so far they have not dented the market share of the traditional giants such as Tesco and J Sainsbury.

Aldi will shortly post its 2006 financial results for Britain and Ireland, which will show a 30% increase in sales from £1 billion to £1.3 billion as it cashes in on cost-conscious shoppers looking for a bargain.

Since 1992 Aldi has grown its market share from 1.5% to 2.6%, and retail experts predict it will carry on expanding as savvy middle-class consumers facing the financial squeeze of higher mortgage repayments ditch their snobbery to snap up everything from smoked salmon to artichoke hearts at rock-bottom prices.

Globally Aldi has more than 7,500 shops, including the Trader Joe’s chain in America, turning over an estimated €45 billion (£31 billion). But despite its success Aldi remains one of the most secretive companies in the world.

In Britain it does not publish a telephone number for its head office and little is known about the Albrecht family, even though the unstoppable growth of their empire has made Karl Albrecht Germany’s richest man with a fortune estimated by Forbes at $37.5 billion (£18.5 billion).

The brothers have avoided the spotlight since 1971 when Theo was kidnapped for 17 days and subsequently released in return for a reported $4m ransom. He has never spoken publicly since and is said to live modestly on the German island of Fohr in the North Sea, where he plays golf and collects typewriters.

Paul Foley, the UK and Ireland managing director of Aldi, claims that their silence is largely unconnected to the kidnapping. “That is overhyped. It is just their business philosophy that they like to do things simply and quietly,” he said.

The brothers are now in their eighties; but even though it is no longer practical for them to take day-to-day responsibility for running the company, they remain heavily involved and have a panel of other family members and representatives to which Aldi’s national heads report.

The business is divided into two divisions, Aldi Sud, run by Karl – of which the UK and Ireland are part – and Aldi Nord, which is run by Theo.

Frugality is the key to Aldi’s success. It has one store format – about 1,000 sq metres in the UK – and the industrial-style buildings are constructed to be maintenance-free for 15 years. Each store has the same internal structure with four aisles, one selling a range of nonfood products on special offer. Stores are run with minimal staff levels, with often only three people on duty at the same time. All are trained to do a range of tasks, from operating the check-outs to stacking shelves.

Aldi’s remorseless cost-cutting even extends to asking its suppliers to get their lorry drivers to unpack the goods themselves once they arrive at one of the group’s seven British distribution centres.

Foley said the unique Aldi culture fosters great loyalty. “Many people join the business in their twenties and retire with us. I don’t know another business like that. Because it is a family company it has an unusual paternal aspect to it.”

All the group’s area managers are hired directly from university on a starting salary of £39,000 plus an Audi A4 car, rising to about £60,000 within three years.

“They are given total responsibility for the quality of the people who work in the store and what they do. No-one interferes; but as a result we really have to train them because they are the personnel department for all our store teams,” Foley said.

“When we see young graduates who have been advised to change jobs every two or three years to get ahead, they look at us wide-eyed when we say we have a plan for the rest of their working lives.”

Trade unions tell a different story, complaining that Aldi is antiunion and will not let them organise on the premises – a suggestion that Foley denies. “That is not true. We don’t prevent unions operating, but our raison d’etre is to take care of our people completely. We work very hard to make sure we look after their welfare so my view is why would you need to join a union?”

For the shopper, Aldi is a cheap but not particularly cheerful experience. At the check-out products are rung through the till only to be placed back in your trolley, for you to transport them to a packing area to pack your own bags – which, inciden-tally, you have to pay for. The range is small – only 850 core products – compared with some 30,000 in a bigger store such as Tesco, but it is surprisingly good quality.

In the past three years Aldi has started to win awards for its premium wines, high-quality hams and top-of-the-range frozen food, which includes dishes such as lamb tagine and lamb shank. It even sells foie gras, and several different kinds of nicely packaged pesto.

On average, Aldi claims its products are about 30% cheaper than some rivals. More importantly, even though Aldi is a German-owned chain, most of its products are targeted firmly at the British shopper. The majority of the items are own-label products – Harvest Morn for breakfast cereals or Soupreme for own-brand soups. But despite the occasional bratwurst or packet of “premium frikadella”, most goods are distinctly British – jammy dodgers, honey and sliced white bread feature alongside gourmet smoked salmon. The stores also sell a small range of iconic brands from other manufacturers such as Marmite or Branston pickle.

The business is flying in Britain. But it wasn’t always that way; when Aldi first entered the UK in 1990 it made a misjudgment by targeting the lowest end of the grocery market. It changed its strategy in 2000, offering a greater selection of premium products and targeting a wider range of shoppers, and it hasn’t looked back since. In 2000 it was only just breaking even, but by 2005 – its last published financial results – it was making profits of £70m. Foley won’t reveal group profits for 2006-7, but they are likely to be much higher than that.

Aldi may not be pretty – but it is cheap and increasingly successful.

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