John Dagge
29 November 2017
Herald Sun
GERMAN supermarket interloper Kaufland has secured its first site in Melbourne as it steps up its assault on the nation’s $90 billion grocery sector.
Kaufland, a discount retailer set to open a new front in the supermarket wars, has purchased an empty Bunnings site in Dandenong for $16.4 million.
It is the second Australian site Kaufland has secured in the past two months, having shelled out $25 million to buy a major site in the fringe of the Adelaide central business district early last month.
The quick-fire purchases come after the German retail giant spent the past year searching for suitable locations to house its “hypermarket” stores, which are generally four to five times bigger than a Coles or Woolworths.
Kaufland Australia, the local arm of the German chain, bought the Bunnings site on Gladstone Rd at Dandenong in Melbourne’s south east late last month, property records show.
The deal, which includes 12,000sq m of retail space on 3.3ha of land, was struck with the property management arm of Bunnings.
The hardware heavyweight has not occupied the site since July, when it shifted into a former Masters store in Dandenong South.
Kaufland is part of the Schwarz Group, the fourth-biggest retailer in the world.
Its stores can span 20,000sq m and sell 60,000 goods ranging from cheese slices to car tyres at discount prices.
The chain, which operates more than 1230 stores across Europe, insists on buying rather than leasing its sites.
Retail consultant Brian Walker said Kaufland posed the most serious threat in Australia to fellow German grocer Aldi and US interloper Costco.
But it would also take business from Coles and Woolworths, he said.
Mr Walker, who heads Retail Doctor Group, said he expected the nation’s latest supermarket and general merchandise player to target 20 to 25 stores over the next five-years.
“They are going to go hard and fast — they make their money by volume and they’ve got to get scale,” he said.
“They will be very aggressive on price, very aggressive on product and they are going to appeal to that Aldi, Costco buyer.”
Mr Walker said the decision to secure sites in Adelaide and Dandenong showed Kaufland had thought long and hard about how it would find local success.
“The two markets they have opened in a classic value markets so they are very well researched,” he said.
Kaufland has also beefed up its Australian management team, poaching the chief financial officer of the UK arm of France-based sporting goods goliath Decathlon.
Spanish-born Jon Ruiz del Portal was appointed to the Kaufland Australia board this week, company filings show.
Kaufland Australia, which has received $88.4 million in funding from its German parent so far, did not respond to questions from Business Daily.
Its website says it “has an ambitious Australian investment and development program” and it is looking to buy sites ranging from 10,000sq m to 20,000sq m with parking for 200 to 300 cars.
A spokesman from Bunnings’ property management arm confirmed it had sold the site but said all other details were confidential.
European retailers have found much success in Australia with Aldi building a network of almost 500 stores since launching here in 2001.
The Schwarz Group also owns the Lidl chain if discount supermarkets
Lidl is a key rival to Aldi but is yet to enter the Australia market despite registering a number of trademarks.
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