26th Jun 2018
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Superstore hailed as ‘Aldi on steroids’ is coming to Australia
Superstore hailed as ‘Aldi on steroids’ is coming to Australia

Hailed as ‘Aldi on steroids’, German discount superstore Kaufland is coming to Australia, promising to “put continued pressure on grocery prices in the sector”.  

The German ‘superhouse’ will open its first store in Adelaide next year and already has plans for a store in Dandenong, Victoria.

The store’s parent company Schwarz Group is the fourth largest supermarket conglomerate in the world.

Supermarkets in Australia have been put on guard, especially lower-priced product dealers Foodworks and IGA. Kaufland’s purchasing power should also ring alarm bells for Coles and Woolworths.

The Australian market has been warmed up to Kaufland’s discount model by its German competitor Aldi.

“Aldi’s growth over the last 17 years was initially a bit of a slow burn and consumers became educated to that European discount model,” said Dr Gary Mortimer from Queensland University of Technology Business School.

“It had brands that were unknown, needing to put a gold coin in a trolley and returning the trolley to get that back and bringing your own bags to the supermarket, but consumers have adjusted.”

He says Aldi’s twice-weekly specials have “educated Australian consumers to realise the products marketed or retailed by Aldi are really good quality”.

“Now [that] the Australian consumer has been educated, Kaufland and Lidl entering the marketplace will be expedited, [and] will move a lot quicker into the marketplace,” said Dr Mortimer.

“That’s one of the reasons why Wesfarmers have spun off their Coles business because the market is going to get highly competitive.

“I would draw some parallels to the UK food and grocery market which has five major supermarkets as well as two German discounters, Aldi and Lidl – that sector in the UK has been really competitive and we’re starting to see that play out in the Australian market.”

Kaufland is taking its expansion into the already competitive Australian market seriously. IGA and Foodworks stores will be watching their backs, as will department stores such as Big W and Kmart, as they will find it difficult to compete or expand.

“The discounter model will start to erode any opportunities IGA and Foodworks have to grow – they are the most exposed in the market as Kaufland enters and Coles and Woolworths move towards trialling smaller format stores.”

“Kaufland is a very large, big box retailer. They are essentially a supermarket attached to a discount department store,” says Dr Mortimer.

“They range anywhere upwards from 60,000 lines – that’s three times the standard lines of a supermarket,” says Dr Mortimer.

A Kaufland store would be double the size of a Coles and Woolworths supermarket, and finding available land may be the biggest challenge it will face in Australia – not direct competition.

Are you looking forward to Kaufland coming to Australia? Do you shop at Aldi? Would you welcome a competitor that could drive prices down even further?

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    COMMENTS

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    Stone the Crows
    27th Jun 2018
    10:19am
    I shop where it is the best quality ,cheapest price ,good specials and have no hesitation of browsing a supermarket and leaving empty handed if i don't find the right prices for me .I work part time but that does not stop me visiting several shops at a time .Great exercise also I might add
    Franky
    27th Jun 2018
    11:14am
    Aldi hasn't expanded to north Queensland yet, but it's my preferred supermarket when I travel south. Competition is sorely needed in Australia.
    Ted Wards
    27th Jun 2018
    11:17am
    Aldi is called Hoffa in Germany as I found out this January. I also shopped Kaufland whilst I was there ans they are no threat. They source their products from places like Thailand and Vietnam. Their so called Australian Barramundi and whiting were very strange colours.
    johninmelb
    27th Jun 2018
    3:07pm
    Don't know who Hoffa is, cannot find them on the net. You must be confusing them with what you think is Aldi.

    It is certainly not Aldi. Aldi is Aldi in Germany - their home country. Only difference is that there are two Aldi's there, Aldi Nord, and Aldi Sud. This was a result of the two Albrecht brothers having a falling out many years ago. The stores have different logos.

    Australian Aldi is a division of Aldi Sud.

    I don't know how to post photos here so can't show you.
    Cowboy Jim
    27th Jun 2018
    7:56pm
    johninmelb - you do know your onions! quite right Aldi was coined from Albrecht Discount. The Albrecht brothers came back from the war to a ruined Germany and thought about a shop trading just in necessary items, and that by the pallet load.
    When one is in the 80s in years one has different ideas, no different between Karl and Theodor, one went to concentrate in the north and the other went south (my home town is in Aldi Sud). But there are quite a few more cut price stores over in Europe. Being retired I do not think I need to chase bulk purchases any longer, so no Kaufhaus for me.
    Gabvik
    28th Jun 2018
    1:00am
    Just to correct Ted Wards' slightly incorrect comment: The correct name is Hofer, the operating name of the supermarket chain Aldi in Austria and Slovenia (not in Germany)
    Greg
    28th Jun 2018
    1:37pm
    Garbage mate - looks like Germany to me

    https://www.aldi-sued.de/de/

    And you don't know where Kaufland will source their Australian sold products - they haven't opened here yet.
    jackie
    27th Jun 2018
    11:19am
    I prefer to shop at the markets....Costco is great for toilet paper and other non perishables.
    Triss
    27th Jun 2018
    12:38pm
    Me too, Jackie, nearly all of my fruit and vegetables are bought from the Farmers’ markets.
    We don’t have a Costco anywhere near us so I haven’t tried that.
    Cowboy Jim
    28th Jun 2018
    4:33pm
    We certainly used the markets as well, jackie, but not everyone lives in the cities and where we retired to there are no official markets as such. We do not have Costco either but we have 2 Aldi stores in the neighborhood as well as Woolies and Coles. By and large we are happy with what we have and do not really need more "shopping experiences".
    Puglet
    27th Jun 2018
    12:05pm
    As far as I can work out Kaufland/Aldi don't/won't pay tax. If I'm right then this a good reason to avoid them. Aldi doesn't sell made in OZ products which is why they are cheap. I'd never buy sea food, vegetables etc from these stores. It does cost more to buy 'made in Australia' but while I can afford it I'll keep supporting Australian products and companies.
    ozziejack
    27th Jun 2018
    12:15pm
    I like buying Australian made goods but I'm afraid that the "Australian" supermarkets are selling loads and loads of overseas goods. Go to the canned vegetables section and look at the countries of origin. The last time I looked there were very few Australian made good at all.

    As far as not paying tax goes I just can't understand how the government allows that to happen. Any company that doesn't pay their rightful taxes should be prosecuted and closed.
    johninmelb
    27th Jun 2018
    3:20pm
    Aldi DOES sell Australian made goods. Almost everything I buy there is made in Australia. Some things are not made in Australia so occasionally we have to buy imported - if we want that stuff.

    Stop being hoodwinked by people with nothing better to do than mouth off about stuff they haven't got a clue about.

    GO DOWN TO ALDI YOURSELF AND READ THE LABELS ON THE PRODUCTS. By all means reject any non-Australian stuff if that's what turns you on, but don't lie to people about the origin of goods in Aldi stores UNTIL YOU PERSONALLY HAVE VERIFIED IT.

    As for the tax question, you just need to get yourself up to date with the business news and stop listening to rubbish spouted by your friends and acquaintances. The situation may not be perfect but they appear to me to be a bit more honest about it than other companies.

    https://www.smh.com.au/business/companies/aldi-signs-up-to-tax-transparency-code-20170614-gwqt4y.html

    https://www.smh.com.au/business/companies/more-aldi-tax-details-come-to-light-20161212-gt96cr.html

    I am no great supporter of Aldi, I do part of my shop there as I am on the pension, so need to save, and their prices are so much better than Coles/Woolworths. But I pick and choose what I buy. What I do find detestable is the constant and unjustifiable lying by people on this site and others about Aldi.
    Anonymous
    27th Jun 2018
    7:20pm
    puglet when do you wake up to yourself, by stating they don't pay taxes, they don't sell Australian products, where have you been living the last 10 years, still under that rock that is suffocating your brains or at least the place they are supposed to be in
    Cowboy Jim
    27th Jun 2018
    8:02pm
    The fresh stuff in Aldi is mostly Australian, Puglet. I really like their pork fillets individually wrapped and marked Australian pork. They are much better than they are used to be 10 years ago and a lot of brand names are now available. As to paying tax, they will have to pay some taxes like payroll. Of course they are not a shareholder company and you will not have any part in it via superannuation.
    missmarple
    27th Jun 2018
    9:24pm
    Puglet when was the last time you shopped at Aldi ? I shop at these stores a lot, my pocket prefers them too, but you are wrong go back and take a good look there are Australian made items in the stores
    Greg
    28th Jun 2018
    1:39pm
    Plenty of Australian product in their stores, go have a look.
    Old Man
    27th Jun 2018
    12:06pm
    Let 'em all in and see who is left standing at the end. The winners will actually be us, the public, who will benefit from a price war and the dislodgement of the duopoly that has ruled for too long. There are those who criticise Aldi for a small range of products but do we really need a full aisle of tuna in tins? Incidentally, check out the tuna tin aisle and I challenge you to find just tuna without any flavours added. Don't get me started on the baked beans aisle.
    KB
    27th Jun 2018
    1:43pm
    We have family owned grocery stores that will be squeezed out of the market if are there any more overseas stores. Prefer to get my groceries online through a company that only supports Australian made produce such as fruit and vegetables. Australians must support Australian farmers.
    neil
    27th Jun 2018
    1:47pm
    AS an Australian living on the old age pension I say welcome them all as long as their prices are competitive; only wish one of 'em would come to Launceston.


    Neil.
    Knows-a-lot
    27th Jun 2018
    5:43pm
    Good - so long as they source Australian produce.
    Mondo
    30th Jun 2018
    2:01am
    Nothing to get excited about for either customers or retailers. I think perhaps the article refers to Kaumarkt, not Kaufland. We are in Germany at the moment where we are travelling using cottages and apartments so shopping in the normal way. We visited the local Kaumarkt today. Its around three times the size of a typical Woolies or Coles, so finding sites will be the initial problem. Kaumarkt is nothing like an Aldi, Nord, Sued or Australiana; not everything in German retailing is like Aldi. In fact there are around eight major supermarket chains, all with their own models.
    Prices in Kaufmarkt are not cheap, in fact several items were considerably dearer than elsewhere nearby. What Kaufmarkt does offer and this is where they could beat Collies is in selection and range and by far, not in home brand products; that's assuming that any non-generics are left by the time Kaufmarkt arrives, thanks to Collies. The herbs and spices section alone occupied a whole isle.
    The non-food part of Kaufmarkt is hardly a department store, much more like a very untidy BigW or Kmart with a bit of Bunnings thrown in, not unlike the muddle of a Spotlight in appearance.
    The Kaufmarkt model is nothing new. Caro of France had hypermarkets in France 30 years ago, we even used to shop in one in ex-communist Hungary 20 plus years ago when living there.
    I think Kaufmarkt would face more challenges than the locals in entering the Australian market, nothing to hold your breath about!


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