Supermarket wars: Kaufland ramps up its presence with $459m warehouse
German supermarket giant Kaufland will build a super-sized distribution centre, one of the largest of its kind, in Melbourne's northern industrial suburbs as it ramps up its retail presence in Australia.
Kaufland, part of the world’s fourth-largest grocery conglomerate, will invest $459 million to construct a massive 110,000 square metre, purpose-built, warehouse on land it purchased in Merrifield Business Park, a Mickleham industrial estate owned by MAB Corporation and Gibson Property.
The group has yet to appoint a builder to construct the distribution centre, which will include a temperature-controlled storage area, automated warehousing and a 40-metre high-bay storage area, along with 3600 square metre office space.
It will service a network of "hypermarket” stores the chain has begun building in Australia's eastern states, Kaufland’s managing director Julia Kern said.
The supermarket and general merchandise giant announced its arrival in Australia in 2017 when it snapped up the Le Cornu site in the Adelaide suburb of Forestville for $25 million.
Since then it has gained planning approval for three Victorian stores to be built at Chirnside Park, Dandenong and Epping, with a further three sites - Oakleigh South, Coolaroo, and Mornington - under review by a planning panel.
Kaufland’s hypermarkets are a cross between a supermarket and a Kmart, a one-stop shop selling both supermarket staples and extras like bikes or car maintenance supplies at discount prices.
The chain’s investment in a state-of-the-art distribution centre will send shivers through the country’s fiercely competitive $90-billion grocery sector.
Australia’s "cosy" Coles and Woolworths grocery duopoly is already under siege from Kaufland’s arch rival, German-based Aldi, which is amassing large profits from its 500-odd stores.
"Kaufland will be a one-stop destination supermarket. Our aim is to provide all Australians with more service and choice, highlighted by our principles of simplicity, quality, variety and price,” Ms Kern said.
MAB business parks director Michael Martin said Kaufland's centre will sit alongside other companies MAB had successfully lured to relocate from interstate, including D’Orsogna from Western Australia and Steritech from Queensland, to take advantage of the location.
The bulk of Kaufland’s Victorian store locations were snapped up following a mid-2018 deal with Bunnings Warehouse Property Trust.
Its big-box outlets are typically 20,000 square metres in size with 300 car spaces compared to Woolies and Coles supermarkets which are around 4500 square metres.
Kaufland put its foot on several former Bunnings sites after Bunnings elected to relocate its store to premium sites once occupied by its ill-fated rival, the collapsed Masters hardware chain.
Kaufland is controlled by the giant Schwarz Group in Germany, one of the world's biggest retailers with $US94.5 billion ($135 billion) in retail sales in the 2015/16 financial year, led by German billionaire Dieter Schwarz.