Should Kaufland Exit the International Market in Australia?
The case considers the entry of Germany's leading retailer, Kaufland Warenhandel GmbH & Co KG (Kaufland), known for its hypermarket retail format and low prices, into the Australian market. Before entering Australia in 2016, the retailer had only expanded into Eastern European countries. Australia was its first developed market. In April 2019, a change in chief executive officer (CEO) took place at Kaufland, with the new CEO, Klaus Gehrig, demanding more centralized decision making. In Australia, Kaufland was struggling to get approval for its larger stores. Competitors in Australia, such as Woolworths and Coles, were also gearing up for the competition, with Coles sending a team of executives to study Kaufland's operations in Germany. In November 2019, after a series of weather-related issues in Australia, the retail price of several grocery items increased. Kaufland was still searching for suppliers and working on opening its stores. Experts felt that Kaufland Australia had the potential to make an impact on the grocery market, as higher prices offered by other retailers would lead consumers to shift to it. Going forward, Gehrig faced a challenging decision: Should he revisit the decision to expand into the Australian market? How might his competitors retaliate? Arpita Agnihotri is affiliated with Pennsylvania State University - Harrisburg. Saurabh Bhattacharya is affiliated with Newcastle University.