German Supermarket Giant Kaufland Has Suddenly Ditched Its Plans to Open Stores in Australia

When it was announced in April last year that German supermarket giant Kaufland was expanding to Australia, it was surprising news. Now, almost a year later, the chain has made an announcement that's even more surprising: it's not expanding to Australia.

In a total 180, Kaufland today revealed to the public and its 200 local employees that it would make an "orderly withdrawal" from the Australian market. The reasons for why it has decided to pull the plug on Australia are still a bit vague, with a short statement merely saying that the company wants to concentrate on its "European core markets in the foreseeable future".

The withdraw won't be so simple, either. With plans to open a slew of stores across Australian — including 14 in Victoria and three in Queensland — Kaufland has already purchased numerous properties and even, according to The Sydney Morning Herald, started construction on a store in Adelaide and a huge 115,000-square-metre distribution centre in Melbourne. The Australian reports that the company has already spent hundreds of millions of dollars here. In the statement, acting CEO Frank Schumann apologised for the "disruption" the decision will cause.

Launched in 1984 and now with 1200 European stores to its name, Kaufland is owned by the Schwarz Group — the world's fourth largest retailer. The chain is big in Germany and parts of Eastern Europe, but this was set to be its first foray into a Pacific market as an alternative to Aldi.

The withdrawal has shocked the retail sector — and while it might be good news to Woolworths and Coles, it certainly doesn't reflect well on the current state of the Australian retail market.