Australia Markets open in 9 hrs 36 mins

Big global retailer abandons Australia, retail disruption averted

Tristan Harrison
Man holding smartphone with shopping cart icon

A big global retailer has abandoned Australia, which means that ASX retailers have averted disruption.

According to reporting by the Australian Financial Review, global retailing giant Kaufland has decided to quit Australia before it has even made a sale.   

Who is Kaufland? It’s owned by Schwarz Group, the fourth biggest retailer in the world. Kaufland itself is like Costco, you could say it’s a mix of a supermarket and a discount store. Schwarz Group also owns Lidl and Handelshof.

So, who is this good news for? Clearly it’s good for most of the ASX’s biggest retailers like Woolworths Group Ltd (ASX: WOW), Coles Group Limited (ASX: COL), Wesfarmers Ltd (ASX: WES), Metcash Limited (ASX: MTS) and so on. Aldi also avoids the additional competition.

Competition is good for consumers. But it can lower profit margins and/or the market share for the retail businesses.

It was thought that Kaufland would open in late 2019 after acquiring a number of locations across Victoria, South Australia, New South Wales and Queensland. It had also started on a $460 million distribution centre.

Instead, Kaufland is going to be focusing on Europe where it still sees a lot of growth potential.

It remains to be seen if we’ll ever see Lidl here. Aldi has been very successful and I’d imagine that Lidl could do quite well here too. Australia is not a huge market like Europe or North America, but supermarket businesses are able to achieve solid margins here.

Foolish takeaway

Whilst it’s a shame for Kaufland Australia employees, the rest of the retail sector can breathe a sigh of relief that a major competitor will not be coming here. It’s things like this that can help you realise how important having a strong economic moat is.

The post Big global retailer abandons Australia, retail disruption averted appeared first on Motley Fool Australia.

These top ASX shares are some of the best investments on the share market and can help you achieve your financial goals.

Five Of The Best ASX Shares You Could Buy Today

Our Motley Fool experts have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.


More reading

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020