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An introduction to Kaufland Australia


In 2017 Kaufland purchased its first store site in Australia, in Adelaide (SMH). Since then they have purchased more store sites and recently announced plans to build a $459 million warehouse in Victoria (SMH). With Kaufland in the process of establishing operations in Australia this quick blog provides an introduction to Kaufland Australia.

Kaufland Global

The Schwarz Gruppe is a privately owned company that operates the Lidl and Kaufland brands. Deloitte (Global Powers of Retailing 2018) research estimates that Schwarz Gruppe was the 4th largest retailer in the world in FY2016.

IGD reported that the Schwarz Gruppe turnover in 2017/18 financial year was EUR 96.9B (approx. AUD $154B). IGD reported Lidl sales of EUR 74.6B (approx. AUD $119B) and Kaufland EUR 22.3B (approx. AUD $35B).

At a supplier briefing (February 2019) Kaufland Australia reported Kaufland Global sales of AUD $35B, from 1,280 stores with 153,000 employees. All these stores were located in Central and Eastern Europe (CEE). Kaufland has market share of 6 – 16% in these markets.

Some trade contacts in Europe, that understand the Kaufland brand noted:

  • Positioned as a ‘discounter’ (like Aldi in Australia)
  • Consumers like the concept of buying major brands at ‘discounter’ retail prices   
  • ‘Famous for’ their fresh baked goods (in store) and wine range
Kaufland Bakery
Kaufland Bakery – Europe

My trade contacts in Europe also noted that to achieve ‘discounter’ retail prices Kaufland will negotiate on cost prices from branded suppliers. For example, in late 2018 Kaufland delisted 480 Unilever products after Unilever tried to implement price increases (Inside Retail, January 2019). Reuters (December 2018) reported that a Kaufland statement read:

Unilever, from Kaufland’s point of view, seeks to use its formidable market position to influence retailers and optimize its own returns,

On a positive note Kaufland buyers are normally receptive to NPD / innovations. They like to disrupt categories with innovation. Kaufland also work with a variety of suppliers of differing sizes / capabilities.

Kaufland Australia Start Up

As Kaufland continues to establish operations in Australia more details will become available.

Realcommercial (March 2019) reported that Kaufland will build a 110,000 sq metre DC (distribution centre) in Merrifield Business Park, Mickleham, Victoria. Realcommercial (March 2019) also reported that Kaufland Australia will open their first 3 stores in Victoria (Chirnside Park, Dandenong, Epping). The next three stores (awaiting planning approval) are in Mornington, Oakleigh and Coolaroo.

Personally, this reminds me of how both Aldi and Costco entered the Australian market. They firstly established a small number of stores in a region to test their ranges / concept etc. Secondly, they established their first DC to supply these stores and then over time grew by entering other regions and building more DCs to support the additional stores.

Kaufland stores

As advertised on their website, , Kaufland are looking for large sites (25 – 30,000 sqm) to develop. Kaufland would prefer to build a free-standing store, on ground level, with its own carparking. Kaufland will consider smaller sites, 17,000 sqm plus, where they would have an elevated store, with carparking underneath, but still free standing. For Australian shoppers these stores would be similar in concept to Bunnings and Costco stores in Australia.

Kaufland Australia range / concept

Our aim is to provide all Australians with more service and choice, highlighted by our principles of simplicity, quality, variety and price,”

Julia Kern, Managing Director, Kaufland Australia

Source: Realcommercial (March 2019)

The exact range for Australia is still under development. Based on Kauflands’ European stores the following range could be developed for Australia. The SKU count may be 25 – 30,000 SKUs. There will be a mix of PL (private label) and branded products. All categories will include PL.

As highlighted previously Kaufland is positioned as a ‘discounter’. Unlike Aldi, Kaufland PL ranges will be deep and in store they will offer a breadth of products, such as in store bakery and butcher / deli. For Australian shoppers the ranging would be similar in concept to a full service supermarket, such as Coles and Woolworths.

Kaufland Butcher / Deli
Kaufland Butcher / Deli – Europe

Kaufland has developed a number of PL brands. K Classic is the basic / entry brand. K 2 Go is ready to eat. K Free is the ‘free from’ range. K Exquisit is the premium / sophisticated brand. Bevola is a speciality brand for H&B (health and beauty) ranges such as hair products, baby care and mens grooming. These PL brands could be offered in Australia.

For branded ranges Kaufland will be unique by having a ‘discounter’ or EDLP (everyday low price) strategy. Australian retailers normally use a mix of EDLP, e.g. Coles ‘down, down’, and high / low pricing for branded ranges.

“Our aim is to showcase the best of Australian produce, alongside the best international products, supported by the private label range of a discount supermarket, all at a price point that is accessible to everyone.”

Kaufland spokeswomen

Source: Realcommercial (March 2019)

Kaufland Australia PL Buying Process

After discussions, with my local trade contacts, the following points have been made.

When choosing a PL product Kaufland buyers primary focus is product Quality. They want to range the best quality product in the market. Secondly, they expect the product / packaging to be retailer and consumer friendly. For example, packed in shelf friendly packaging. Finally, they do expect low cost prices so they can offer their consumers low retail prices everyday.

The process is simple and very detailed. Kaufland are known to contact potential suppliers for a product / category and enter into initial discussions. Kaufland will supply a product specification so potential suppliers can then tender for a supply contract.

It appears Kaufland are methodically going through a long list of products / categories. Kaufland has entered into agreements for some products / categories but is yet to start the process across all product categories (April 2019).

The Kaufland opportunity for suppliers

This quick blog has given a basic overview of what Kaufland could offer Australian shoppers. Many people believe the offer / concept is correct for the Australian shopper. A realistic expectation is that over time (10 years +) Kaufland could achieve 10%+ market share in Australia.

If Australian PL suppliers can meet Kaufland clear expectations of high quality products with low cost prices, then those suppliers could create a mutually beneficial long term relationship with Kaufland today. In addition to the sales opportunity in Australia, Kaufland could also offer Australian suppliers the opportunity to enter other markets O/S (overseas).

For Australian branded suppliers Kaufland offers the opportunity to maximise distribution and long term sales. Once the ‘numbers are crunched’ it could be financially beneficial for branded suppliers to support Kauflands’ ‘discounter’ / EDLP pricing strategy, rather than (fully?) funding very aggressive price promotions.

Good luck to the team at Kaufland with the launch in Australia and to all the suppliers partnering with Kaufland Australia.

The information provided in this blog post was general in nature. If you require more information I offer a free initial consultation by completing a contact us form.