German grocer gets $45m shot in the arm

GERMAN supermarket interloper Kaufland has received a fresh capital injection, taking its local war chest to more than $88 million as begins its assault on the nation’s grocery sector.

Kaufland’s head office in Germany tipped an extra $45 million into its Australian arm earlier this month.

GERMAN supermarket interloper Kaufland has received a fresh capital injection, taking its local war chest to more than $88 million as it begins its assault on the nation’s grocery sector.

Kaufland’s head office in Germany tipped an extra $45 million into its Australian arm earlier this month, corporate filings lodged with the Australian Securities and Investments Commission show.

The capital injection takes Kaufland Australia’s paid-up capital to $88.4 million.

Kaufland surprised many in the retail sector earlier this month by choosing Adelaide to host its first warehouse-style supermarket, shelling out $25 million to buy the 36,000 square metre Le Cornu site on the fringe of the central business district.

Its shopping experience has been described as a mix between Aldi and Costco.

Stores generally span 20,000sq m — more than five times larger than the average Coles or Woolworths — and sell 60,000 goods ranging from cheese slices to car tyres at discount prices.

German grocer Kaufland’s shopping experience has been described as a mix between Aldi and Costco.

It also insists on buying rather than leasing its sites.

Kaufland is part of the Schwarz Group, the fourth largest retailer in the world, which also owns discount grocery chain Lidl.

Lidl is a key rival to Aldi in Germany but is yet to enter the Australia market despite registering various trademarks here. Kaufland’s local website says it has “has an ambitious Australian investment and development program” and it is looking to buy sites ranging from 10,000sq m to 20,000sq m with parking for 200 to 300 cars.

Its arrival adds to the pressures facing Australian grocery heavyweights Woolworths and Coles.

The duo has given up billions of dollars in sales and been forced to slash prices — and profit margins — since the arrival of overseas competitors such as Aldi and Costco. They are also investing in their online offerings as US online giant Amazon prepares to launch in Australia.

Shares in Coles parent Wesfarmers closed 0.7 per cent higher yesterday, a day after it released quarterly sales results that fell flat with investors, at $41.78. Shares in Woolworths climbed 1c to $25.16.

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