The world’s fourth largest retailer has abandoned all Australian development plans and now its properties are on the market.
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.
Last week, Woolworths has announced that it will be divesting Endeavour Drinks alongside the ALH Group within half a year after successfully merging the two businesses.
Now called Endeavour Group, it has been measured to be the largest combined segment that spans both the drinks and hospitality sectors. Woolworths is expected to continue holding an 84% stake in the business during the second half of the year, but will eventually just hold a minority stake after demerging.
The decision was said to be for the sake of simplifying and streamlining Woolworths’ core grocery business and it was certainly a good move as far as its shareholders see.
However, retail analysts and thought leaders are also noticing that the grocery giant is actually exhibiting a familiar pattern of behaviour.
“We already had the demerger of Coles from Wesfarmers. Now, Woolworths’ streamlining its operations in a likewise manner,“ said Phil Chapman, director of retailer lease consulting firm Lease1. “It is clear that the Big 2 are preparing for the new wave of competition from foreign giant Kaufland. Retailers who rely on supermarket traffic need to be aware that the pressure is building.”
Kaufland is part of the fourth largest grocery conglomerate in the world and made its move into the Australian market back in March earlier this year. Industry analysts have observed that its arrival has prompted immediate response from the country’s famed Big 2 in the form of ramped up efforts to streamline their respective businesses. These include simplifying their organisational structure and preparing for more digitisation across several areas of their company.
And without a doubt, this may extend to retailers who position themselves close to the Big 2’s many giant supermarkets. Kaufland’s inevitable clash may require them to either seek new ways to depend on getting foot traffic outside with less dependence on grocers or reposition themselves to gain from Kaufland’s arrival.
Kaufland Australia has celebrated commencing construction of its distribution centre in Mickleham, Victoria. The facility, with a total projected investment of $255 million, will utilise state-of-the-art technologies across automation, sustainability and efficiency, and create 600 new jobs for the area.
In a joint sod turning, Kaufland Australia directors Maximilian Wiedmann and Patrick Bezner thanked Hume City Council for its work ensuring the distribution centre met all planning and approval requirements.
“We would like to thank everyone who has helped us achieve this exciting milestone. To Hume City Council and to Merrifield Business Park, we are very grateful and proud to be standing alongside you today,” Mr Wiedmann said.
On completion, Kaufland’s distribution centre will have more than 117,000 square metres of building area and 130 loading docks.
“Australia is one of the fastest growing regions in the world, and we are excited to grow with it. Our distribution centre will be the beating heart of our supply chain and will ensure we provide an uncompromising quality food store for our customers,” Mr Wiedmann said.
In March 2019, Kaufland Australia announced the approval of its first three stores in Victoria at Dandenong, Epping and Chirnside Park. Kaufland Australia has also received planning approval for two sites in South Australia.
Kaufland, one of the world’s largest supermarket chains, has confirmed it will open its first Australian distribution centre at Merrifield Business Park in Melbourne’s north.
The supermarket chain has purchased a large 28-hectare site on which it plans to construct a 110,000 square metre purpose-built distribution centre that will service their stores.
The facility will be one of the largest of its kind in Australia and feature extensive temperature controlled storage, the latest automated warehousing with a 40 metre high-bay storage as well as a 3,600 square metre office. The total investment in the facility is upwards of $450 million.
The facility is expected to bring an additional estimated 600 jobs to the local area upon completion.
The retailer, which is owned by Schwarz Group, the fourth largest retail chain in the world, selected Merrifield Business Park due to its strategic location on the Hume Freeway and proximity to Melbourne.
It is the fourth major deal for MAB Corporation and its partner Gibson Property Corporation at Merrifield Business Park, with Kaufland joining Dulux, D’Orsogna and Steritech in Victoria’s largest business park.
A Kaufland spokesperson said: “Our new state of the art distribution centre at Merrifield Business Park will be the company’s single biggest investment in Australia and enable Kaufland’s expansion. Merrifield was selected for its strategic location and ability to cater for future expansion of the facility.”