September 17, 2010

Kaufland superstores in expansion overdrive

Kaufland hypermarket facade in Germany (photo: Reinhard Rosendahl)
Aggressive growth: Kaufland wants 1,000 hypermarkets in Europe by the end of this year
This superstore and compact hypermarket discounter is really going places. The Schwarz Group subsidiary intends to open its 1,000th European outlet in Berlin by the end of 2010.

On its German home market, where Kaufland has opened 15 stores this year, the Neckarsulm-based multiple is not content with reaching half of all German households.

Plans to grow the current local store base from 580 to 800 outlets have now been revised upwards to 1,000. This will include a thrust into Northern Germany as well as the greater Berlin and Munich areas.

With a war chest of around €2bn, the dynamic Swabians also intend to power beyond Germany's borders where they already operate more than 400 stores.

Grown big under the radar

Although Kaufland is 36 years old, it has never received the international publicity accorded to its sister company Lidl, the European hard discounter. It has therefore grown up under the radar of many trade commentators and market researchers. Kaufland has surely also been seriously underestimated by international competitors.

Its streamlined format has given the tough-nosed retailer greater flexibility and adaptability than many rivals who operate larger hypermarket formats. They have increasingly struggled with stricter planning authorisation and increasingly convenience-oriented customers over the last decade.

Kaufland's readiness to enter inner city areas is also beginning to raise the pressure on supermarket operators Rewe and Edeka.

Even US giant Walmart was obliged to respect Kaufland during a costly interlude in Germany from 1997 to 2006. Stuck with too small a store base, but with no option to buy other stores, Wal-Mart Germany even found it difficult to renew rental contracts on its existing sites. The Americans doubtless found it humiliating to be told by various lessors that Kaufland would be replacing them instead.

Site cherry-picker

Today, Kaufland is using its conceptual strength to cherry-pick the best sites of faultering rivals. The company is said to be by no means content with the purchase of numerous stores from Metro Group hypermarket subsidiary real,- over the last few years. Apparently, it has already earmarked a further 100-odd sites.

If you add to the mix an aggressive price policy, buttressed by growing pressure on suppliers, then you have a heavy-middleweight champion eager to go up a category and try on the heavyweights.

Surely, we are looking at the hard-punching joker in the European retail ring? International rivals ignore this great white hope at your peril, and don't say you weren't warned.


Related article in German: Lebensmittel Zeitung, no. 37, 17.09.2010, by Hans-Jürgen Schulz & Bernd Biehl


1 Comment (Write a comment)

  1. Lindee L
    Created 17 October, 2014 15:47 | Permanent link

    No great white hope for consumers

    It would be nice if they had some respect for their customers, but it is obvious by their actions in Germany that they do not.

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