German mega-supermarket chain Kaufland is poised to open its first Australian store in 2019.
The company has revealed it will spend $325 million on its plans to go head-to-head with Woolworths, Coles and ALDI.
The Aussie division recently received a capital injection of $145million from its German parent company, the Schwarz Group, topping up the initial $43 million it received in 2017 to begin its expansion Down Under.
A Kaufland spokeswoman confirmed the “war chest” to The Australian this week.
“This capital increase reflects the importance and long-term commitment to our expansion,” the spokeswoman said.
“It marks our continual investment in Australia both now and for the future, through the creation of jobs, competition and opportunity.”
In addition to groceries and alcohol, Kaufland also sells general goods such as electronics and kitchen appliances, both household brands and its own labels.
There are plans for an initial six stores in Australia: Chirnside Park, Dandenong, Epping, Oakleigh South, Coolaroo and Mornington.
The Chirnside Park site is next to a Dan Murphy’s liquor outlet.
As soon as the company gets the go-ahead from an advisory committee set up by the Victorian government, it will begin construction on its first Melbourne store.
The advisory committee’s “Terms of Reference” show Kaufland wants to enter the Australian market with a “critical mass” of stores, with the rollout providing a “significant economic and employment benefit across the state”.
However, a ‘Save Our Shops’ campaign run by local small businesses in Victoria – including IGA, FoodWorks and Friendly Grocer – has claimed that Kaufland will “destroy” them.
In response, the Kaufland spokeswoman said the company was “committed to working with local communities in an honest, transparent and fair way”.
“When the market grows, so will we, and so will our competitors,” she noted. “When a new player enters the retail market, it encourages everyone to raise the bar in terms of quality, service and choice.”
Kaufland has also received planning approval this week for a proposed $35 million retail complex in Adelaide this week, despite the Prospect Council voicing continuing concerns.
Among Kaufland’s high-profile hirings are former Woolworths and Metcash executive Mark Hewlett, who had six months’ training in Germany last year before taking up a leadership role as director of supply chain, logistics and sales.
The supermarket chain began advertising for liquor staff in December. It advertised on Jora for a Property Officer – Liquor Licensing to manage and execute the license program across all Australian state as “with Kaufland as we make our mark in Australia”.
The candidate was required to have previous experience in dealing with councils regarding liquor licensing and DAs; plus “exceptional knowledge of state-based liquor regulations, specifically VIC, SA, NSW & QLD”.
While it’s been compared to ALDI, Kaufland stores are around 15 times bigger and stock more than 40,000 grocery and liquor brands, compared to only around 1300 at ALDI.
One thing both German retailers have in common is that their products are cheap.