GERMANY’S KAUFLAND DUMPS AUSTRALIAN SUPERMARKET PLAN

·         ELI GREENBLAT

• JANUARY 22, 2020
• The Australian

GERMAN SUPERMARKET DISCOUNTER KAUFLAND HAS DUMPED PLANS TO OPEN MORE THAN 20 OF ITS BIG-BOX RETAIL STORES IN AUSTRALIA.

AFTER SPENDING HUNDREDS OF MILLIONS OF DOLLARS ON PROPERTIES, ADMINISTRATION AND HIRING STAFF, IT WILL INSTEAD WALK AWAY FROM ITS ENTIRE PLAN WITHOUT EVEN OPENING A SINGLE STORE.

APART FROM SAYING IT WANTED TO CONCENTRATE ON ITS “EUROPEAN CORE MARKETS”, KAUFLAND OFFERED NO CLEAR REASONS FOR ITS DECISION TO WITHDRAW FROM AUSTRALIA.

IT HAD PLANNED TO OPEN ITS FIRST STORES IN 2021.

MAJOR SUPERMARKET CHAINS WOOLWORTHS AND COLES WILL BE RELIEVED THAT THE CASHED-UP KAUFLAND, WHICH THREATENED TO DISRUPT THE NATION’S $90 BILLION GROCERY SECTOR, WILL NOW DUMP ITS AMBITIOUS AUSTRALIAN GROWTH PLANS.

IT WILL ALSO COME AS A HUGE RELIEF TO OTHER SUPERMARKET COMPETITORS SUCH AS FELLOW GERMAN DISCOUNTER ALDI AND INDEPENDENT SUPERMARKET CHAINS.

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KAUFLAND’S SHOCK DECISION TO TOTALLY WITHDRAW FROM THE AUSTRALIAN MARKET AND BIN ITS PLANS WILL MEAN THE LOSS OF 200 LOCAL JOBS, AFTER KAUFLAND WENT ON A HIRING SPREE OVER THE LAST THREE YEARS.

KAUFLAND HAS BOUGHT UP DOZENS OF PROPERTIES ACROSS VICTORIA, SOUTH AUSTRALIA AND NSW AND HAS ALSO INVESTED HEAVILY IN PLANS TO BUILD DISTRIBUTION CENTRES.

IT ALSO POACHED KEY GROCERY EXECUTIVES TO KICKSTART ITS LAUNCH IN AUSTRALIA AND WAS EXPECTED TO OPEN ITS FIRST STORE NEXT YEAR.

IN A STATEMENT, KAUFLAND SAID THAT AFTER “CAREFUL AND THOROUGH CONSIDERATION”, IT HAD DECIDED TO UNDERTAKE AN ORDERLY WITHDRAWAL FROM THE AUSTRALIAN MARKET.

“THE COMPANY WILL BE CONCENTRATING ITS BUSINESS ON ITS EUROPEAN CORE MARKETS IN THE FORESEEABLE FUTURE,’’ KAUFLAND SAID.

KAUFLAND’S 200 AUSTRALIAN EMPLOYEES WERE INFORMED OF THE DECISION TODAY, WITH AN ASSURANCE THAT GENEROUS PACKAGES, INCLUDING ALL ENTITLEMENTS, WILL BE OFFERED AS PART OF A SUPPORT AND CONSULTATION.

IT SAID THE FUTURE OF KAUFLAND’S EXISTING AUSTRALIAN INVESTMENTS, INCLUDING PROPERTIES PURCHASED FOR RETAIL OUTLETS AND DISTRIBUTION INFRASTRUCTURE, WOULD BE DISCUSSED WITH THE RELEVANT PARTIES IN COMING DAYS.

“THIS DECISION IS ABOUT FOCUSING BUSINESS ACTIVITIES IN EUROPE AND IS IN NO WAY A REFLECTION OF THE EFFORTS OF OUR LOCAL EMPLOYEES OR MANAGEMENT, OR THE SUPPORT KAUFLAND HAS RECEIVED FROM THE AUSTRALIAN BUSINESS COMMUNITY OR GOVERNMENTS,’’ THE KAUFLAND STATEMENT SAID.

FRANK SCHUMANN, ACTING CEO OF KAUFLAND INTERNATIONAL, SAID: “THIS WAS NOT AN EASY DECISION FOR US. WE ALWAYS FELT WELCOME IN AUSTRALIA. WE WOULD LIKE TO THANK OUR EMPLOYEES AND WE APOLOGISE FOR THE DISRUPTION THIS DECISION WILL CAUSE.

“WE WOULD ALSO LIKE TO THANK OUR BUSINESS PARTNERS, WHO OFFERED US GREAT SUPPORT OVER THE LAST FEW YEARS. WE WOULD ALSO LIKE TO THANK THE GOVERNMENT FOR BEING VERY OPEN-MINDED TO OUR PROJECTS.

KAUFLAND IS CURRENTLY OPERATING IN GERMANY, POLAND, THE CZECH REPUBLIC, ROMANIA, SLOVAKIA, BULGARIA, CROATIA, AND THE REPUBLIC OF MOLDOVA, WITH ROUGHLY 1300 STORES AND 132,000 EMPLOYEES.

KAUFLAND HAD INITIALLY UNVEILED HIGHLY AMBITIOUS AND AGGRESSIVE PLANS TO LAUNCH IN AUSTRALIA AND ONLY SEVEN MONTHS AGO REVEALED ITS PLANS TO BUILD A $255 MILLION DISTRIBUTION CENTRE IN VICTORIA TO SUPPORT ITS NATIONAL ROLLOUT.