Aldi-rival Kaufland launches in Australia

Aldi-rival Kaufland launches in Australia

13 October 2017

Australia’s fiercely competitive grocery sector is set for another shakeup after German giant and Aldi-rival Kaufland purchased the landmark Le Cornu site in the Adelaide suburb of Forestville for $25 million to launch its inaugural and flagship store, reports The Sydney Morning Herald.

German-based Kaufland is part of the Schwarz Group, the world’s fourth largest retailer, with over 60,000 products and $US94.5 billion in sales in the 2015/16 financial year.

The company operates more than 1,230 stores across Europe and is now eager to make its mark in Australia.

The Australian reports the retail giant has gifted its burgeoning Australian arm with more than $43 million in fresh capital to feed its ambitious growth plans in the region.

The company has also secured a portfolio of trademarks for the Australian market around its branding, as well as a range of retail services and goods.

Kaufland will build a signature 20,000 square metre supermarket on the Adelaide site, about four times the size of an average Coles or Woolworths store.

The retail giant’s arrival will surely send shivers down the spines of Australia’s “cosy” Coles and Woolworths grocery duopoly, already under siege from Kaufland’s arch-rival Aldi, which also hails from Germany.

News.com.au explains that shoppers can expect a whole new, and vast, experience with Kaufland favouring huge, warehouse style stores of up to 20,000 square metres, compared to the more traditional Coles and Woolworths stores which are generally less than a fifth of that size.

“It will be more akin to a Costco approach with a whole breadth of product offerings, including groceries and white goods,” an Adelaide retail expert said.

In contrast to Costco, Kaufland does not charge shoppers membership fees.

The AFR states that Kaufland will need to be careful with its site selection in other capital cities as it prepares to expand in Australia.

Roger Drake, the owner of 60 Foodland and Drake supermarkets in South Australia and Queensland told the AFR that good sites were becoming harder to come by, and the large footprints required by Kaufland were difficult to pick up.

“Location is so important. Location is number one. There has to be good parking, it has to be on the right side of the road,” Mr Drake said.

According to some analysts, Kaufland needs at least 15 to 20 stores to make its Australian investment viable.

Russell Zimmerman from the Retail Traders Association told the ABC that the company had been eyeing off Australia for some time.

“It’s certainly been on the radar for them for quite a while to come to Australia and can I say that quite honestly that’s not unusual because there’s lots of retailers looking at Australia,” Mr Zimmerman said.

“I think what’s most interesting in this particular instance is that it would appear that South Australia will be their first.”

Kaufland set up headquarters for its Australian staff in a small Port Melbourne office in March.