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Aldi Vs Kaufland War Set To Hurt CE & Appliance Retailers

The emerging battle between German supermarket powerhouses Kaufland and Aldi in Australia is set to impact consumer electronics and appliance retailers many who have already moved to restructure their house brand products.

Kaufland like Aldo is a German global goliath with both Companies known for their cheap consumer electronics and appliances. During the next 12 months the Company plans to open between 8 and 12 stores with this bumped up to 2021.

Unlike Aldi who will often sell 10,000 TV’s or 8,000 house branded appliances such as Bauhn or Sterling of a weekend, Kaufland has been known to shift large volumes of branded appliances from Companies such as Bosch, Philips, Braun, Black & Decker and Tefal.

ChannelNews understands that Kaufland buyers have already approached several distributors in Australia who handle overseas European brands locally.

The Company has already applied for development applications with several local Councils including nine sites in Victoria and had been given approval to go ahead with stores in Oakleigh South, in the city’s south east, and Coolaroo, in Melbourne’s north.

Three stores located in Dandenong, Epping and Chirnside Park were announced in March.

It already has six locations on the drawing board in South Australia with their target of 20 stores set to be “easily reached” according to analysts.

A major supplier to Aldi has already been stopped from supplying to Kaufland in Australia according to sources.

In Australia both JB Hi Fi and The Good Guys have moved the liability for house brand products to third party distributors such as Tempo in Melbourne and The Crest Company in Queensland.

Queensland University of Technology marketing professor Dr Gary Mortimer told News Corporation recently “If we went back even as recent as six months, the initial indication was that they would launch somewhere between eight and 12 stores in 2020.Now it looks like they’ve decided to push that out to 2021 and capture more sites.”

Kaufland stores are huge more like a US Costco store with the early Australian stores set to be to 20,000 square metres, that’s up to 15 times bigger than an Aldi and five times bigger than a big Coles or Woolworths.

According to observers’ large areas will be set up for consumer electronics, tools, gardening and appliances that some claim could be cheaper than what Aldi is currently selling similar goods for due in part because of their global buying power.

Also, the Kaufland range is different to Aldi with many of their branded appliances and consumer electronics products already sold in Australia by the likes of Harvey Norman, The Good Guys, JB Hi Fi and Betta Electrical.

While Aldi only stocks around 1300 different items, mostly their own brands. Kaufland has more like 40,000, according to consultants McKinsey, and it sells real brands significantly cheaper than Australian retailers.

An audit of several Kaufland sites in Europe revealed appliances being sold at up to 50% cheaper than mainstream appliance retailers in Australia.

Dr Mortimer says the inclusion of such a massive retailer into the market is a vote of confidence for business conditions, further negating claims made by David Jones boss Ian Moir that the sector was failing in Australia.

“When a global retailer makes a conscious decision to enter the Australian market, it tends to reject the arguments that there’s a retail recession,” he said.

“Clearly Kaufland understand that the market is ripe for exploitation.”

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