German discount-supermarket giant Kaufland has cracked open a multimillion-dollar piggy bank of funds, gearing up to open six new sites despite significant opposition from small-business owners.
The $100 billion multinational dismissed the concerns of Australian small-business owners over increased competition, telling them instead to “raise the bar” on quality and price.
The European hypermarket’s local arm received a capital injection of $145 million from its German parent company, the Schwarz Group, topping up the initial $43 million it received in 2017 to begin the company’s Aussie expansion.
This money will reportedly be used to purchase and set up stores on six sites across Melbourne, with the first three to be located in Chirnside Park, Dandenong and Epping. The following three will be located in Oakleigh South, Coolaroo and Mornington.
Additionally, the company has begun hiring staff for these stores, looking for area managers, store managers and other related staff, reports The Australian.
“This capital increase reflects the importance and long-term commitment to our expansion. It marks our continual investment in Australia both now and for the future, through the creation of jobs, competition and opportunity,” a Kaufland spokesperson told SmartCompany in a statement.
The Victorian state government’s Department of Environment, Land, Water and Planning have established an advisory committee to provide advice and recommendations on the proposed rollout of the six stores.
The advisory committee’s “Terms of Reference” note Kaufland believes it needs to enter the Australian market with a “critical mass” of stores, and that the rollout of such stores would provide a “significant economic and employment benefit across the state”.
However, community activist groups have sprung up in opposition to the proposed rollouts, with one such group, ‘Guarding our Gateway’, staunchly opposing the proposed site on the Mornington Peninsula. The group opposes the development on numerous grounds, one being that the 20-metre Kaufland sign will be the “first thing people will see when driving into Mornington, the gateway to the Mornington Peninsula”.
The opposition group also criticises the state government for “overriding” typical planning processes by establishing an advisory panel, noting development such as these would usually be placed in the hands of local government. Additionally, the Guarding our Gateway group claim small businesses in the area will be “under threat” from Kaufland.
“The introduction into the market of a ‘big player’ will see aggressive marketing strategies, buying power and their proposed large presence at the ‘gateway’ into Mornington grab business away from the main street shops and the homemaker centre,” the group state.
A similar ‘Save Our Shops’ campaign has also been established, run by local small businesses in Victoria who claim Kaufland will “destroy” them. The campaign is calling on Victorian Premier Daniel Andrews to give power back to local councils and disband the overarching planning committee.
In a statement, a spokesperson for Kaufland said the company was “committed to working with local communities in an honest, transparent and fair way”, but told small businesses they will need to “raise the bar”.
“When the market grows, so will we, and so will our competitors. When a new player enters the retail market, it encourages everyone to raise the bar in terms of quality, service and choice,” they said.