Coles And Woolworths will be rejoicing but Aussie shoppers will surely be disappointed in the decision of German supermarket chain Kaufland to pull out from Australia.
We were super excited to report last year about plans of the international supermarket powerhouse to expand and disrupt Australian retail.
Kaufland had been putting down stakes in local areas with intentions to open nine stores in Victoria, including Oakleigh South, in the city’s south east, and Coolaroo, in Melbourne’s north.
However, the supermarket enterprise has made the shock decision to withdraw its plans to open stores locally, which has left 200 employees in uncertainty.
Kaufland announced it would be undertaking an ‘orderly withdrawal’ from Australia to focus on growth in Europe.
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“This was not an easy decision for us. We always felt welcome in Australia,” Frank Schumann, acting CEO of Kaufland International said, as reported in the Brisbane Times.
“In Europe, we see a great deal of growth potential. We will actively shape the consolidation of the European retail sector, thus further reinforcing our leading position.”
Mr Schumann apologised to employees for the ‘disruption this decision will cause’.
This will be a big blow to our economy with the German giant expected to inject up to half a billion dollars into Victoria alone and create over 2,400 jobs.
Kaufland has reportedly invested as much as $500 million into Australia already, which includes a $255 million distribution centre in Melbourne which was still under construction and a $24 million store in South Australia.
The new major player was to provide welcome competition for existing supermarkets. Retail experts predicted the chain would undercut Coles and Woolworths by five to 15 per cent.
Kaufland said its investments would be ‘discussed with the relevant parties in coming days’.
Investors have speculated that the company has encountered more challenges than expected while setting up their infrastructure in Australia. In addition, Kaufland has been struggling to compete in the European market and they most likely want to focus on getting their primary retail market back in line, without being distracted by Australian operations.
Jobs In Limbo
The company had already hired 200 Aussie staff members, after a job listing which enticed employees with a “$171,000 Package + BMW + Career Progression!”. Those people will now be left in the lurch.
The German rival was all set to mix things up a bit, especially since it was planning to sell a full range of rock-bottom priced department store goods and be a cross between a supermarket and stores such as Kmart and Target.
We’re really disappointed with Kaufland’s news. What do you think about the company’s decision? Tell us in the comments below.