German retailer Kaufland moves into Australia market | Business| Economy and finance news from a German perspective | DW | 08.03.2019
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German retailer Kaufland moves into Australia market

German giant Kaufland has won planning permission to open its first stores in Australia, despite objections from other players in the sector. The move has sent shivers through the country's huge grocery market.

Kaufland said this week it plans to invest 459 million Australian dollars ($335 million/€300 million) to construct a 110,000 square meter warehouse to supply three stores it is opening later this year.

Kaufland Australia managing director Julia Kern said the initial investment would create up to 1,600 jobs "and stimulate much needed competition and consumer choice in Australia's supermarket sector."

The supermarket was given an additional 145-million-Australian-dollar capital injection this week from its German parent Schwartz Group for its plans.

The warehouse will be built on land the German giant bought in Merrifield Business Park in the southern state of Victoria and will be the largest in Australia.

Shock waves in the sector

The duopoly of Coles and Woolworths has faced strong competition from Kaufland's arch rival, the German company Aldi, which opened its first store in Australia in 2001. It now has more than 500 stores in the country.

Aldi (picture-alliance/dpa/S. Hoppe)

The German retailer Aldi has had a large presence in Australia for almost two decades

According to IbisWorld, Woolworths has a 37.5 percent share of the 103.4 billion-Australian-dollar supermarket and groceries market, with Colesat about 30 percent, discount chain Aldi at 10 percent and IGA (Metcash) on 7.3 percent.

Coles said in January it plans to spend almost a billion dollars over the next six years fitting out warehouses in Sydney and Brisbane.

Big steps

Kaufland, part of the world's fourth-largest grocery conglomerate, arrived in Australia in 2017 when it acquired the Le Cornu site in the Adelaide suburb of Forestville for 25 million Australian dollars. It has three more sites under review.

The company is controlled by the Schwarz Group, one of the world's biggest retailers with 95 billion Australian dollars in retail sales in the 2015/16 financial year. The business operates 1,200 stores in 7 countries, with over 150,000 employees across Europe.

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