Kaufland has pulled the pin on online retail only one year since launching its digital business due to concerns around operational cost, leaving a greater e-commerce pie for Coles and Woolies in Australia.
Future profitability was the other reason Kaufland said it will be closing its e-commerce operations. The news comes after it became known that the German hypermarket chain’s Hamburg online store launch was not going to happen. Its online retail service only operates in Berlin, but it has now decided to cease e-commerce entirely.
This comes after plans for its first Netherlands store were denied by the Deventer council due to concerns of the impact to other local businesses. “We’re mainly talking about a very huge supermarket, which is expected to deprive all other supermarkets in Deventer of a great deal of turnover,” a municipality spokesman told the local De Stentor newspaper.
Last week German’s other discount supermarket Lidl announced that it would not pursue online retail for the time being. Retail analysts at IDG Retail Analysis say this is a reflection on the struggle discount retailers are having with the online retail space in terms of profitability. “The move reflects the difficulty that discount retailers are having in making online grocery financially viable in Germany, with Lidl announcing last month they would also be withdrawing from the online grocery market for the time being,” IDG said in a statement.
Last month Kaufland announced it would open its second hypermarket in Australia followings its purchase of an ex-Bunnings site for $16.4 million which will become its new storefront.
This isn’t its first site, with Kaufland forking out a further $25 million for a super site in Adelaide’s CBD fringe in September. In the last year , it has spent considerable resources to analyse the Australian market for feasibility and scout locations for its “super” markets, which are on average four to five times larger than its competition Coles and Woolies.
Kaufland is similar to Costco, only without the membership. Its Australian stores will reportedly span 20,000 square meters, which is just under five acres, selling everything from fuits, chocolate, diapers and luggage, to computers and and ladders.
Australia is the first English speaking country that the Schwartz Group-owned retailer has opened in, despite it operating over 1,230 stores in eastern and central European countries.