What will happen once Kaufland is gone for good?

24 January 2020, Written by David Simmons

What will happen once Kaufland is gone for good?

Kaufland was meant to be the heroic European supermarket to land in Australia and give its competitors a bit of a shake up.

Instead, like a German high school exchange student, the 'hypermarket' announced its departure before we even got to know it properly.

The company announced its departure from the Australian market on Wednesday afternoon, citing the group's focus on its European business as its top priority.

Dreams of foreign, low-priced groceries washed away like tears in the rain...

But is isn't as if the German supermarket's attempts to crack the Australian market didn't bear fruit; the chain had a solid land portfolio, was in the middle of constructing a distribution centre and key retail outlets, and had a beefy exec with names like Mark Hewlett, Timothy Walsh and Richard Ubers picked to lead the team down under.

And with talk of an Australian Competition and Consumer Commission (ACCC) investigation potentially in the works into Kaufland's exit, things are certainly going to get exciting over the next weeks.

But what exactly happens next?

First, there's the pressing issue of land.

The company spent $25 million on a key site in South Australia (which Adelaide locals know as the maligned, abandoned and neglected former Le Cornu site). Reportedly concrete is still being transported to that very site and construction is continuing as usual.

In addition, there's a $450 million distribution centre in Victoria that's well underway to being complete.

According to a Kaufland spokesperson these sites will be dealt with as part of the German company's "orderly winddown" of its Australian operations.

"Kaufland will take stock of where they are with each of [the sites]. There's reports of concrete being delivered to the site in Adelaide, and understandably it would be because contracts are in place and construction is underway, but the company will review its position on each of those sites and determine what's the best way forward," says the spokesperson.

As for the distribution centre, the spokesperson says it is well and truly out of the ground.

"A site like that would probably continue to completion and be sold or other parties might come along and take it on."

"In an orderly wind down it's a question of making the best of what's happened, and [Kaufland] might make money along the way."

In terms of the staff, the Kaufland spokesperson was not able to shed light specifically on the futures of Hewlett, Walsh or Umbers, but insisted that staff have received "very good" packages.

Additionally, the spokesperson says it is still too early to know which staff will be required to remain part of the team that conducts the windup of the Australian arm of Kaufland.

Finally, there's the latest revelation that the ACCC has its eyes on Kaufland as it leaves the country.

According to ACCC chair Rod Sims the watchdog has some concerns, casting even more fog over what has been a sudden and bewildering exit from the German giant.

"Agreements between competitors not to supply certainly raises cartel concerns and the law is pretty clear on this," says Sims.

"We would be extremely keen to talk to anybody who has any information about this, we have very sophisticated processes for protecting the identity of anyone who does come forward."

Kaufland was unable to comment on the statement from Sims.

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Business News Australia

Author: David Simmons





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