German hypermarket ramps up Aussie entry plans

Kaufland signGerman hypermarket giant, Kaufland, has publicly laid down its blueprint for tackling the Australian market, with Melbourne signalled as the location of its headquarters.

The grocery chain looks increasingly closer to entering Australia, with the launch of a new website and the recruitment of personnel. It has also actively started scouting new store locations as part of its “ambitious Australian investment and development programme”.

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Kaufland has not been circumspect in divulging specifics – on its newly launched website are the details of what it is seeking in terms of plot requirements. The Schwarz Group-owned retailer is on the hunt for a site anywhere between 10,000sqm through to its “preferred size of 15,000sqm-20,000sqm”. It also wants room for 200-300 parking spaces – no bigger than 2.7m x 5.2m in case a rival chain wanted to know.

The hypermarket retailer is looking for “talented, friendly and ambitious people” and has currently listed positions including for property development, architectural planning, letting and administration – all based in Melbourne.

Schwarz Group is headquartered in Neckarsulm, Germany and is the parent of both Kaufland and another potential threat to Australia’s supermarket duopoly, retailer Lidl.

Both chains offer a wide range of merchandise, though not many can match Kaufland which stock up to 60,000 products, including its own private label K-Classic brands.

Last year, the German retailer had a lengthy list of products trademark index approved, including items such as foodstuffs, luxury foods, alcoholic and non-alcoholic beverages, health food shop articles, drugstore products, cosmetics, fragrances, medicines, household items and services such as restaurants and lodging, catering, travel agencies and many more.

Kaufland hypermarket chains experienced rapid growth between 2010-2015 in Eastern and Western Europe, on the back of rampant consumer demand for its low-price, high-quality offer. It is now looking to push into uncharted territory, with openings in the US, Russia and Australia.

The hypermarket concept essentially combines a department store with a supermarket, as demonstrated in Australia by the Super Kmart stores of the 1980s, which were abandoned after consumers didn’t take to the hybrid of Kmart and Coles concept.

Speaking to IRW last year at the announcement Kaufland was looking to enter Australia, Brittain Ladd, a former consultant with Deloitte and a global retail expert, said the failure of the Super Kmart hypermarket was not necessarily an indication the concept won’t work locally.

“Australia’s retail landscape is growing in scope and size as consumers are demanding and embracing choice,” he said. “I see no reason why hypermarkets won’t succeed in Australia and must also point out that the Schwarz Group is one of the best companies at understanding consumer and retail trends and if they choose to launch Kaufland stores in Australia, the odds of success are high.”

But Kaufland could find securing suitable sites problematic – if another big box retailer’s slow rollout of stores is anything to go by. Last week, Costco Australia’s managing director, Patrick Noone described the big-box retailer’s expansion strategy as “accretive” after only opening nine stores in less than a decade.

Coles and Woolworths will not be the only retailers concerned about Kaufland’s entry. Schwarz Group operates Lidl, the arch-nemesis of that other German supermarket giant, Aldi, which has eaten into Australia’s largest retailers’ market share since launching nearly 15 years ago. If the past Christmas in the UK was anything to go by, Aussie retailers and consumers can expect the battleground to be played on overall low prices with promotions on festival fruit and vegetables and premium items.

Matt Walton, an analyst at Verdict Retail, said Lidl followed up on Aldi’s “impressive Christmas growth” by following a similar template to its discounter rival. Kaufland operates a similar strategy to Aldi in terms of offering private label brands that are only available in its stores. However, it holds the advantage of stocking a much wider range of products.

Kaufland operates more than 1,230 stores in Germany, the Czech Republic, Poland, Bulgaria, Croatia, Romania and Slovakia with more than 150,000 employees across Europe.

IRW has contacted Kaufland for further comment on its Aussie plans.

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