Supermarket chain Kaufland pulls pin on Australia

An artist’s impression of a proposed Kaufland supermarket.
An artist’s impression of a proposed Kaufland supermarket.

German supermarket giant Kaufland’s entry into Australia is over almost before it began, after it withdrew from the market before opening a single store.

The world’s fourth biggest retailer arrived last year with considerable fanfare, touting plans to open 20 stores nationally as part of an initial launch, but those plans are now in tatters after the company announced on Wednesday it was pulling out.

The decision leaves about 200 local employees in limbo and a string of future Kaufland sites abandoned.

Kaufland last year announced its intention to disrupt Australia’s supermarket industry, positioning itself as a challenger to Coles, Woolworths and Aldi.

Work had already begun on the construction of a number of stores, with many underway in Victoria, South Australia and Queensland.

It was also constructing a 115,000sqm distribution centre at Mickleham in Melbourne.

Kaufland supermarket Prospect South Australia

An artist’s image of Kaufland’s store at Prospect.

But in a statement the company said it was pulling out in order to prioritise its European business, where it operates more than 1200 stores and is a dominant player.

“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,” it said.

“We always felt welcome in Australia. We would like to thank our employees and we apologise for the disruption this decision will cause.”

Kaufland International acting CEO Frank Schumann said the decision was tough, but did not explain what had gone wrong in the months since it announced its Australian launch.

“In Europe, we see a great deal of growth potential. We will actively shape the consolidation of the European retail sector, thus further reinforcing our leading position,” he said.

An artist’s impression of the Kaufland distribution centre at Mickleham.

In September, Kaufland Australia managing director Julia Kern announced plans for more stores at Oakleigh South, Coolaroo, Highton, Braybrook, Coburg North, South Morang, Narre Warren, Lyndhurst, Pakenham, Warrnambool and Kennington in Victorian, in addition to the three stores already approved at Dandenong, Epping and Chirnside Park.

It also revealed it had acquired Morayfield Village Retail Centre in the Moreton Bay region in Brisbane’s north, with a clear view to transform it into one of its outlets, and had filed an application for a store in Toowoomba, in addition to stores in South Australia.

“With five approved stores, as well as the additional nine sites under review, we are committed to our long-term, sustainable growth across Victoria. We look forward to creating thousands of jobs and creating opportunities for local businesses,” Kern said at the time.

The news comes after a string of high-profile retail closures in the first three weeks of 2020, including Harris Scarfe, McWilliams wines, EB Games and Bardot.