German supermarket Kaufland buys site in Adelaide as it follows Aldi into Australia

Simon Evans
Oct 6 2017
AFR
The Kaufland supermarket and general merchandise chain operated by the world’s fourth largest retailer, Germany’s Schwarz Group, is stepping up its Australian expansion plans after acquiring a large site in inner Adelaide.
It is the first large property purchase in Australia by the group and marks a serious step forward for Kaufland which has spent the past year or so scouring Australia for potential sites ahead of a launch. It is following in the footsteps of German rival Aldi which has built a network of almost 500 stores in Australia since opening up in 2001.
Aldi has been a major thorn in the side of dominant supermarket retail chains Woolworths and Coles, and the IGA network, in the Australian supermarket sector. Aldi has made a serious dent in profit margins of the other three players with a predominantly private label offering and now has a national market share which Morgan Stanley estimates at close to 8 per cent.
Kaufland operates more of a large warehouse style offering more in the mould of United States giant Costco, which has been expanding in Australia and now operates nine big barn outlets.
Kaufland’s parent company Schwarz Group also operates the Lidl discount supermarket brand. Kaufland operates 1,230 stores in Germany, the Czech Republic, Poland, Bulgaria, Croatia, Romania and Slovakia.
CBRE associate director Ben Heritage said the deal was settled on Tuesday. “It’s the first property Kaufland has purchased in Australia,” Mr Heritage said on Friday.
The company paid $25 million for the site of about 36,000 square metres which had been on the market for two years and was owned by the Le Cornu family, who sold their furniture operations to ASX-listed furniture retailer Fantastic Holdings several years ago. South African firm Steinhoff bought Fantastic Holdings last year for $361 million in an agreed takeover.
The site is about 2km from the Adelaide CBD in the inner suburb of Forestville and fronts Anzac Highway, one of the busiest suburban thoroughfares in Adelaide. The Le Cornu site has been through a painstaking sale process. Initial estimates had been put at between $23 million to $28 million when the sale process began.
Kaufland Australia has its own website up and operating and makes it clear that it is proposing a serious Australian business.
“Kaufland has an ambitious Australian investment and development programme,” the company says.
It specifies that its ideal site size in Australia is between 15,000 square metres to 20,000 square metres, with car parking for between 200 to 300 vehicles.
The bigger Kaufland stores generally stock about 60,000 product lines and it runs a range of private label offerings under the K-Classic brand. Kaufland’s head office is in Neckarsulm in Germany where it opened its first “hypermarket” in 1984.
The Le Cornu furniture stores were a household name in South Australia and had a lineage stretching back to the 1860s.
Morgan Stanley analyst Tom Kierath last month said he expected Aldi’s sales would rise from an estimated $8.1 billion in 2017 to $18.7 billion by 2024, and reach $20.5 billion by 2026, lifting its national market share from 7.8 per cent to 15 per cent.
Read more: