Kaufland announces surprise Australia exit

23 January, 2020 by Brydie Allen

Hypermarket Kaufland, owned by the fourth largest retailer in the world, yesterday announced it would be exiting the Australian market.

The surprise announcement comes after the approval of multiple Kaufland stores in the country, as well as a distribution centre and a headquarters, and the investment of over $500 million.

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The reason for the withdrawal was described as unrelated to local factors and Frank Schumann, acting CEO of Kaufland International said the company wants to concentrate on business back in Europe, where they: “see a great deal of growth potential.”

Last year, Kaufland had similarly described the Australian market and said: “we are well positioned for growth and establishing high performing teams to deliver stores that offer a wide range of competitively priced fresh, grocery and non-food items.”

Meanwhile, Kaufland’s 200 Australian staff were told yesterday of the news that the company would be making “an orderly withdrawal” from the market. Kaufland Australia’s LinkedIn page shows they were still advertising for local staff as recently as two weeks ago.

What is yet to be known is what will happen to the sites where construction has already begun, including the distribution centre in Mickleham which has had significant work undertaken since last June.

Since first making the move into Australia, Kaufland has encountered mixed feelings. For example, in Victoria it was embraced by the State Government, which was pleased to see investment in the economy and the creation of up to 1600 local jobs. At the same time, many community members and small businesses strongly campaigned against the retailer.

Announcing the exit, Schumann thanked Kaufland’s business partners, staff and the government, and said: “This was not an easy decision for us. We always felt welcome in Australia.”

Just months earlier, Kaufland had responded to community submissions against their proposed Mornington site by highlighting the ‘parochial’ views of the Australian public.

The response also said: “It is unfortunate that some members of the community have reacted to the entrant of a foreign company into the Australian retail market with not only fear but open hostility.”

Morgan Stanley had previously estimated Kaufland’s Australian penetration could see as many as 295 stores in the country. The original expected launch was late 2019, which was then pushed to 2021.