Kaufland Australia boss says one-stop shop a winner

Simon Evans
Sep 4, 2019

AFR

The boss of the Australian operations of German discount retailer Kaufland says the group will win over local customers because of its ”one-stop-shop model” of cheaper groceries and general merchandise under the one roof.

Julia Kern, the managing director of Kaufland Australia, said on Wednesday that the privately owned German group had already factored in that Australia was a highly competitive market, and was still fine-tuning the proportion of its 4000-square-metre stores to be devoted to groceries.

She said shoppers were increasingly time-poor and Kaufland had the right model for the times.

Kaufland Australia managing director Julia Kern at the Prospect site in northern Adelaide. AAP

“Kaufland is a one-stop destination shop,” Ms Kern said.

“It means that we offer the best of both worlds.” A discount supermarket offering and general merchandise would also be accompanied by a ”high-quality” private label range.

Kaufland, which is owned by the world’s fourth largest retailer, Schwarz Group, operates 1200 stores in Europe. Schwarz Group also owns discounter Lidl. Kaufland’s retailing model means it is taking on Woolworths and Coles, its fellow German competitor Aldi and also parts of discount department stores Kmart and Big W in Australia.

Ms Kern was speaking at an official sod-turning ceremony at the construction site of a Kaufland store in the northern Adelaide suburb of Prospect, which along with an outlet also under construction at Dandenong in outer Melbourne, will be the first Australian stores to open.

Ms Kern said construction of both would take about 12 months. She declined to say how many stores in Australia that Kaufland was targeting. It now has one less in its sights after shelving a proposed $24 million outlet in the outer northern suburbs of Adelaide at Munno Para.

“At the moment we’re at the early stages of our expansion so it’s hard to comment on the number of stores that we’ll have in total,” she said.

Ms Kern said being privately owned was an advantage. “We are able to take our time, we’re able to really get the model right.”

The Kaufland model involves about 30,000 products across categories including dry groceries, fresh produce, meat, seafood, general merchandise, clothing, toys, hardware and homewares.

“We’re here to grow with the market not at the expense of it,” Ms Kern said.

“Australia is a very competitive market. We agree to that and we’re actually embracing challenges because that’s when you get out of your comfort zone and that’s when you perform at your best.”

Ms Kern said the Prospect and Dandenong stores would be used as test stores for the broader expansion across Australia. There would be substantial tweaking of the model on the way through to ensure it was the right one for Australian conditions.

“I believe that change and competition, and increasing competition, will raise the level of retail excellence.”

The specific components of the retail offer were being kept under wraps for now. “Once we’ve got it right, we’re also happy to comment on our assortment.”

South Australian Premier Steven Marshall said there were strong opportunities for South Australia food producers to benefit from being part of a national expansion by Kaufland.

Kaufland’s Australian distribution centre is being constructed at Mickleham, in suburban Melbourne, at a cost of $460 million.

The company is well advanced in its Victorian expansion, with five stores approved and several others in the planning stage. The company remains tight-lipped about proposed expansion into Australia’s most populous market of NSW.