Kaufland withdraws from Australia after creating development pipeline

It was hoping to hit the ground running – taking on Aldi, Coles and Woolworths – but Kaufland in Australia has crashed before it even took off.

The retailer announced this morning that it would cancel its local expansion plans to focus on European operations.

The decision comes 20 months since the group appointed Julia Kern, a revered young entrepreneur, as Australian managing director.

Kaufland has since 2017 acquired about two dozen local sites, including a Brisbane shopping centre (pictured, below) and the high profile former Le Cornu furniture outlet, in Adelaide’s Forrestville (the latter which cost $25 million).

Even up until recently, the retailer has been pushing through planning proposals to replace these blocks with “hypermarkets”.

Morayfield Shopping Centre in Brisbane’s Moreton Bay was snapped up by Kaufland in August, 2019.

It has also been advertising for staff.

Other employees are said to be on garden leave having recently quit executive positions to move to Kaufland.

Last year the retailer started building Australia’s biggest distribution centre – estimated to be worth $459 million and measure 115,000 square metres – on a 28 hectare piece of MAB Corporation’s Merrifields Business Park, in Melbourne’s north.

More retail stock set to hit the market

Kaufland said it is now planning an orderly sell down of its Australian real estate. It may also need to assign or quit leases.

It is expected the retailer will complete construction of the warehouse then sell it.

Similarly, Kaufland is expected to finish building, then sell, stores.

The group has a diversified portfolio of completed assets and development sites, mostly each worth eight figure sums.

Many are ex-hardware stores acquired off-market from Bunnings.

Kaufland has been an active purchaser of other sites between 2 and 2.5 hectares, where it intended to build retail complexes with an internal area of more than 4000 square metres.

Kaufland’s development pipeline included stores set to open – initially in 2019, a date later revised to this year.

In Victoria, the company controls property at Chirnside Park, Coolaroo, Dandenong South, Epping, Geelong and Mornington.

Another holding, in Oakleigh South, was set to make way for a retail outlet and its national office headquarters.

Some landlords will be affected by the decision, too, after Kaufland committed to lease space in several shopping centres, including in some cases, areas set to be vacated by Big W.

About 200 of the retailer’s Australian staff were informed about the Kaufland’s decision to withdraw from the local market, today.

The statement was signed off by Frank Schumann, Kaufland International’s acting chief executive, however the message to local workers was delivered personally by Ms Kern.

Shares in each of would-be Australian rivals Woolworths and Coles rose about 3 per cent after the announcement.

Germany based Kaufland is owned by Swartz Group, the world’s fourth largest retailer.

Share or Recommend article

Marc Pallisco

A freelance property analyst and journalist, Marc is a co-founder of realestatesource.com.au.

Marc Pallisco