German supermarket chain Kaufland to leave Aussie market

After announcing bold plans to challenge Coles and Woolworths, a German retail chain has made a shock exit from Australia — leaving 200 employees in limbo.

The German retail giant which threatened to shake up Coles and Woolworths is pulling out of the Australian market without opening a store.

The German retail giant which threatened to shake up Coles and Woolworths is pulling out of the Australian market without opening a store.

Kaufland – described as a cross between Aldi and Costco – today announced it would “undertake an orderly withdrawal from the Australian market” as it concentrates on its core business in Europe.

The retailer’s 200 Australian employees were informed of the decision earlier today, Kaufland said in a statement.

The future of Kaufland’s existing Australian investments, including properties purchased for retail outlets and distribution infrastructure, will be discussed with relevant parties in the coming days, the statement said.

Kaufland was hoping to base its national headquarters among a mega store in Oakleigh South.

Kaufland International chief Frank Schumann said the decision to withdraw from the Australian market was in no way a reflection of the efforts of its local employees or management, or the support the retail challenger has received from the Australian business community or governments.

“This was not an easy decision for us,” Mr Schumann said.

“We always felt welcome in Australia. We would like to thank our employees and we apologise for the disruption this decision will cause.

Artist's impression of how the Kaufland stores were going to look like.

“We would also like to thank our business partners, who offered us great support over the last few years. We would also like to thank the government for being very open-minded to our projects.”

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

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It had been expected to open as many as 14 stores in Victoria with the first set to open in 2021.

Its 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.

Its decision to withdraw from the Australian market adds to the pall over the local retail sector, although supermarket giants Coles and Woolworth will be breathing a sigh of relief.