German discount supermarket giant Kaufland has submitted a development application to Toowoomba Regional Council to build a retail centre including a supermarket, pub and bottle shop.
The plans, for the site at 353-359 Anzac Avenue, Harristown, include a detailed assessment document which outlines the case for why the Council should approve the plans. As well as highlighting many of the local economic benefits of the retail centre, the assessment report also details what are sure to be Kaufland’s key arguments in its bid to build similar sites around Australia.
The report, submitted by Norling Consulting on behalf of Kaufland, states: “The high concentration in the market leads to high barriers to entry, less variety and higher costs for consumers. Although concentration is expected in supermarket industries, when compared to other high-income economies worldwide, Australia is still significantly more concentrated, according to Grattan, 2017.
As a comparison of concentration, the top three players in Australia hold almost 77 per cent of the market, whereas in Germany, the top three players only hold 60 per cent and the top three in the United States hold just under 40 per cent.
“The high concentration coupled with lack of competition make it easier for inefficient firms to survive, which ultimately reduces the benefits to consumers.
“Norling Consulting considers that the entry of Kaufland to Australia and Toowoomba would provide strong price competition in a similar way to the entry of ALDI has done. Permitting new entrants, such as Kaufland, to enter the market would increase competition and improve the cost, variety and potentially the quality of products to consumers, which would consequently achieve the goals of the ACCC, Harper Review and Australian Competition Policies.
“This is a factor that should be given some weight in the town planning assessment of this application.”
The proposed Kaufland Store incorporates a unique tenancy structure that incorporates the main supermarket tenancy and other complementary uses, including a small hotel, bottle shop and shop (e.g. Hairdresser/barber, key cutter, mail saloon, etc.) in separate tenancies.
The proposed uses are to include Shopping Centre, Shop, Food and Drink Outlet and Hotel. The proposed plan provides for a Gross Floor Area (GFA) of 6,764m2 and a Net Lettable Area (NLA) of 6,276m2. With 350m² allocated to a Hotel and 480m² allocated for supporting shops, the NLA of the supermarket is 5,446 m².
The report added: “From a Community perspective, a large store such as Kaufland would increase both direct and indirect employment opportunities as well as a greater choice of goods at lower prices due to increased competition, which implies a community need for the proposed development.
“Furthermore, the most productive and busy supermarkets observed in Toowoomba were ALDIs and a Drakes, indicating the community’s propensity for affordable prices and variety that are not being provided by either of the major supermarkets, Coles or Woolworths.”
In concluding its report, Norling Consulting said: “Overall, the Toowoomba Regional Planning Scheme requires a demonstration of need and impact for the proposed Kaufland Store as it is not an intended use for the Specialised Centre (Specialist Retail Centre Precinct).
“This report has shown that there is sufficient demand and consequently an economic, community and planning need for the proposed development. Furthermore, the overall impact of the Kaufland Store will be minor with an average impact of 2.6 per cent across all the relevant Centres Network, which is clearly not enough to affect the viability of any of the centres, nor would it adversely impact on the Centres Hierarchy.”
Kaufland is the world’s fourth largest retailer with a turnover of €80bn ($130bn). Part of the Schwarz Group, Kaufland opened its first store in Germany in 1984 and has since grown to almost 1300 stores with 150,000 employees across seven European countries. Kaufland has said it intend to open its first Australian store in 2021.