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Why Kaufland put a 28-year-old in the top Aussie job

Why Kaufland put a 28-year-old in the top Aussie job

German supermarket and liquor chain Kaufland has appointed 28-year-old Julia Kern as the country manager for its Australian operations.

Kern has worked for a number of years at the Germany-based retailer and recently arrived in Australia to take over the reins from Gregor Thomas following the conclusion of his secondment as director of property development for Kauf­land Australia.

According to Kaufland CEO Patrick Kaudewitz: "Julia Kern has qualified for this task on her past performance and her potential. We do not make such decisions lightly. But we are a long way from a youth delusion attested to us. The average age of our board members and executive board members is 43 years."

The Germany head of Kaufland Richard LohmillerLohmiller added: "Julia Kern has been my direct colleague for the last year and a half, she has done an excellent job in the Northern Region and has developed great. And just for comparison: The executives who opened the first markets 50 years ago and pave the way were the same age."

Kaufland, a subsidiary of the Schwarz Group, is the world’s fourth-largest retailer and recently applied for development approval to build a two-storey, $34.6 million supermarket in Adelaide. 

The store will operate from midnight to 9pm on weekdays and close at 5pm on weekends.

The company paid $25 million last year to purchase the former Le Cornu warehouse site on the Anzac Highway.

Kaufland says suppliers have welcomed its arrival

Schwarz Group CEO Klaus Gehrig has told Stimme he is confident about success in Australia because the structure is very European, at least in the metropolitan areas around Brisbane, Sydney, Melbourne and Adelaide.

"The market is promising," he said. "The government would like another dealer to be added and more competition to be created so that prices will drop."

Gehrig added that suppliers - especially the medium-sized ones - have welcomed the arrival of a new market participant.

"So far, they only have two possible buyers," he noted: Woolworths and Coles. "If they choose one, they are bound to it and can not do business with the other."

According to Stimme "the dissatisfaction of the food industry is one of the reasons why the government supports Kaufland so actively in the market entry."

Last month, Kaufland told suppliers to prepare for the opening of its first stores next year.  

The Adelaide store is the first of many planned by the German retailer in Australia. 

Morgan Stanley has warned retailers not to underestimate Kaufland's impact. 

In a note, Morgan Stanley analysts said the market isn’t currently pricing in the impact of the global supermarket chain’s entry into Australia’s $90 million grocery sector.

“We view the nearer-term impacts as greater competition for product supply, new stores, and talent,” analysts said.

“Over the long term, we think Kaufland’s entry is likely to limit market growth, reduce the prospect of margin expansion, and lead to a group price-to-earnings de-rating.”

Morgan Stanley added that Kaufland was in a good position to convert consumers. 

“We think consumers are now more likely to turn to the discounters in the face of food inflation and stretched household budgets — they now have viable alternatives in improved offerings from Aldi and Costco, with Kaufland soon to join.”

Kaufland is owned by the Schwarz Group, a privately-operated German company which also owns discount German supermarket chain Lidl. It describes itself as the world’s fourth largest retailer.

It currently has more than 1230 stores across Germany, the Czech Republic, Poland, Bulgaria, Croatia, Romania and Slovakia. It employs approximately 150,000 employees. Australia will be the first English-speaking country it has tackled. 

In addition to groceries and alcohol, Kaufland also sells general goods such as electronics and kitchen appliances. Unlike Aldi, which mainly stocks its own brands, Kaufland offers thousands of household brands as well as its own labels.

Australia's liquor retail market is already crowded. Roy Morgan reports supermarket-owned chains now account for 72.3% of the total market share, with other alcohol retailers trending either downwards or steady. The independents’ share declined markedly in 2016 (from 12.7% to 10.4%), while duty free stores also suffered (now accounting for just 0.5% of total alcohol retail dollars spent, down from 1.4%). 

Overall, supermarket chains such as Dan Murphy’s, First Choice, Liquorland, BWS and ALDI Liquor amassed $10.5 billion of the total amount spent by Aussies on alcohol in a retail environment in 2016. Hotel bottle shops (such as Thirsty Camel) accounted for $1.8 billion, ahead of independents such as Cellarbrations ($1.5 billion), wine clubs ($0.7 billion) and duty free stores ($0.1 billion).