Kaufland abandons Australian market before opening a single store

Over the past year, Kaufland held multiple ‘sod turning’ ceremonies to begin construction on multimillion-dollar stores and distribution centres in Queensland, South Australia and Victoria.

This week the German supermarket chain announced in a shock decision that it will abandon all Australian development plans.

The world’s fourth largest retailer remained vague on the reasons behind the exit when the news broke to the company’s 200 staff in Australia on Wednesday.

In a statement to media, Kaufland said the decision was 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”.

Kaufland International acting chief executive, Frank Schumann, said abandoning the Australian market was “not an easy decision.”

He said the company has “a great deal of growth potential” in Europe, where it has more than 1300 stores and 132,000 employees

More than 20 stores across Australia were expected to open later this year and early 2021.

Victoria will be the worst affected by the company’s decision to pull out of Australia, with Melbourne chosen as the company’s Australian headquarters that will cease operation too.

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Kaufland said its existing Australian investments, including properties bought for retail outlets and distribution infrastructure, would be discussed with the relevant parties in the coming days.

Last year in June, Maximilian Wiedmann the Kaufland Australia director said Australia “is one of the fastest-growing regions in the world, and we are excited to grow with it.’’

At the time the company was celebrating the construction of a $255 million distribution centre at Mickleham, Victoria.

The Andrews Labor government said Kaufland’s stores in Victoria “will create more than 1500 jobs and inject almost half a billion dollars into the state’s economy.”

In September, it confirmed it had lodged paperwork for nine sites in Victoria, including in Oakleigh South, Coolaroo, Epping, Dandenong and Chirnside Park.

At the time Kaufland Australia managing director, Julia Kern, said the company was committed to basing its Aussie headquarters in Victoria and would tip half a billion dollars into the state.

In South Australia, Kaufland’s $24 million Prospect store was expected to generate 150 jobs throughout the construction phase and 100 jobs once operational.

Three stores in Queensland and a store in Belmont North, Newcastle were also apart of the company’s initial expansion plans in Australia.

The stores were said to be a cross between a Coles or Woolworths, Kmart and JB Hi-Fi all in one and would offer a customer loyalty program.

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One of the world’s largest retailers, Kaufland, has broken ground to commence construction of its first South Australian supermarket in Prospect, their first outside of Europe. It is one of three stores it will be building in Australia, with more to come.

The multi-million-dollar development, on a 24,000sqm vacant site, will feature a Kaufland supermarket, food hall, outside dining area and support tenancies.

The company has also secured planning approval for another Adelaide store on the former Le Cornu site on Anzac Highway at Forestville and has another development application currently being assessed.

Premier Steven Marshall said it was an exciting day for the state to have a company of Kaufland’s international standing build one of its first two Australian stores in Adelaide.

“Not only will this project create an estimated 150 construction jobs and up to another 100 retail jobs upon completion, it will offer South Australian consumers more choice,” said the Premier.

“Developments like this from major international companies show the confidence in the South Australian economy, reinforcing that we are heading in the right direction.

“Kaufland’s expansion into South Australia presents significant opportunities for the state’s food producers, as the company has publicly stated its desire to stock local products on its shelves which is fantastic news.

“We look forward to working with the company as they look to expand into further sites across Adelaide and the state.”

Minister for Trade, Tourism and Investment David Ridgway said construction of Kaufland’s Prospect store and the subsequent projects in Forestville and across Adelaide will provide a number of important contract opportunities for local construction companies.

“The company has already employed a local property development and construction management team in preparation for Kaufland’s expansion, which is a further indication of Kaufland’s strong commitment to South Australia and the local economy,’’ Mr Ridgway said.

“To have a global brand like Kaufland invest in property is a great reflection of South Australia’s global standing, and I’m confident this partnership will generate further trade advantages in the future particularly with Europe where Kaufland has almost 1,300 stores across the continent”.

Kaufland Australia’s Managing Director, Julia Kern said they are committed to investing in South Australia for the long term, and today’s celebration at Prospect is a tremendous and exciting milestone for Kaufland Australia.

The Prospect store will initially operate as a testing facility to train staff, practise processes and trial proposed concepts.

Construction of the Prospect store is due to be completed in late 2020.