Aldi rival Kaufland sets its sights on Australia

GROCERY shopping could soon become a whole lot cheaper, with Aldi’s biggest rival Kaufland plotting a move Down Under.

GROCERY shopping could soon become a whole lot cheaper, with a German discounter reportedly headed down under.

The parent company of supermarket chain Kaufland, an Aldi rival known for its aggressive discounting, recently moved to trademark its brand name in Australia, Fairfax Media reports.

Along with discounter Lidl, Kaufland is owned by the Schwarz Group, which lays claim to €34.5 billion ($49.4 billion) of Germany’s grocery market — with the combined market share putting the group ahead of Aldi’s €27.8 billion.

Owned by the notoriously private billionaire Dieter Schwarz, the son of founder Josef Schwarz, the group is understood to be conducting a feasibility study of the proposed expansion.

The move, if successful, could shake up Australia’s $90 billion grocery market with even more competition for heavyweights Woolworths and Coles.

ALDI’S PLAYBOOK FOR SUCCESS

Retail veteran Brittain Ladd, an Amazon executive who specialises in supply chain and logistics, believes shoppers will be the biggest winners if the Schwarz group follows Aldi’s lead and brings either Kaufland, Lidl or both supermarkets to Australia.

“After years of having no choice but to choose between Coles and Woolworths, consumers embraced Aldi’s low prices when they entered the market in 2001,” Mr Ladd said in a recent blog post.

“Australian consumers will benefit from having the two best discounters in the world operating throughout the continent.”

He said Aldi had “provided the playbook for success” and the Schwarz group was sure to follow.

“Based on the results from multiple consumer surveys, Australian consumers have a desire for options and low prices,” Mr Ladd wrote.

FEARS FOR COLES AND WOOLIES

But not everyone is pleased with the idea. Retail entrepreneur Dick Smith said the arrival of another German discounter would spell the end of Australian-owned supermarkets — and that shoppers would be left with far less choice as a result.

Already under pressure from Aldi, which has been steadily drawing customers away from them, the major supermarkets have been scrambling to follow the German chain’s lead with cheaper essentials and revamped home brands.

Woolworths recently introduced a new range of what have been labelled “phantom” private label products, copying Aldi’s approach in using brand names in place of the old “Woolworths Select” logo.

Mr Smith predicted that these efforts would ultimately prove futile, telling news.com.au: “I would imagine the two German companies would end up running Coles and Woolworths out of business.”

The only way they could compete, he said, would be to “very quickly sack about 80 per cent of their staff” and follow the business model employed by Aldi and Kaufland.

“They’d have to reduce their product range from 30,000 down to about 2000, and then they would have a hope of competing,” Mr Smith said.

AN ‘ALL-OUT PRICE WAR’

Mr Ladd said the biggest losers would be independent grocers, followed by Woolworths and Coles.

“Using history as a guide, when Aldi and Lidl both enter a market, traditional supermarkets immediately attempt to compete on price with little success,” he said.

“All indications point to an all-out price war breaking out as Coles and Woolworths will attempt to hold onto market share with neither being successful over the long run.”

Independent grocers would “slowly but surely disappear from the landscape”, he said.

For Dick Smith, who wants Australian shoppers to buy locally made and owned products, another German discounter would spell disaster.

“At least with Coles and Woolworths, the money stays here,” he said.

He said while Schwarz group would “make a fortune here”, it would be at the consumer’s expense.

“We’ll end up with far cheaper prices, but no choice — the freedom of choice will go,” Mr Smith said, calling on Australians to consider the impact of sending millions of dollars to a private company in Germany.

“It’s extreme capitalism, it’s what I predicted and in the end we’ll end up in a situation where someone like Trump gets elected, because people will be so disillusioned by there being no local jobs.”

[e-mail]