ACROSS: At the beginning of 2024, the industry was unanimous in saying that the year would be difficult – that you simply had to hold out until 2025. Has was 2024 for Kaufland?
MICHAEL HIESE: We got off to a good start in 2025 and remain optimistic about current market conditions. The situation is different to the beginning of 2024. Of course, we also started 2024 cautiously, but inflation pressure soon eased, and the interest rate environment improved. Market sentiment continued to brighten over the course of the year, making 2024 successful for Kaufland.
ACROSS: What were the highlights?
HIESE: We’ve been pursuing an ambitious expansion strategy. We opened 45 new stores last year. We established projects with numerous new partners and strengthened our presence, particularly in major cities. We celebrated significant milestones in three countries: our 250th store in Poland, 50th in Croatia, and 80th in Slovakia. Overall, it was a very good year in terms of real estate. One of the highlights was our project in Sofia, Bulgaria, where we opened a highly customized store in a historic market hall. The challenges were enormous, particularly in terms of monument protection, dealing with space constraints, and redeveloping existing buildings. The result is fantastic and is a real highlight of our portfolio. Furthermore, visitor numbers are strong nine months after opening, so the store has also proven to be a very successful retail location.
ACROSS: What was your favorite project in your home market in Germany?
HIESE: Another highlight was our Tuttlingen store, which we redeveloped using a large proportion of recycled building materials. The project exemplifies our commitment to sustainability. We were able to utilize some items, particularly the roof membrane, through our in-house recycling program. Our waste management division collects building materials for manufacturer reprocessing and reuse. In view of the major challenges facing the entire industry, in terms of ESG and sustainability, projects like this are simply fantastic. As part of the Schwarz Group, Kaufland naturally has advantages here, as we’re able to take advantage of many opportunities due to our size and, more importantly, due to our conviction that sustainability drives profitability rather than simply increasing costs.
ACROSS: Kaufland has long been committed to sustainability. Can you gauge your efforts in this respect?
HIESE: That is my third highlight of 2024: At the end of the year, we managed to have all stores that we own EDGE-certified in six of our eight national markets, validating our compliance with the latest sustainability standards. That makes us proud. We’ll complete certification for Germany and Poland this year, which will make our entire store portfolio certified.
ACROSS: Which markets led your expansion in 2024?
HIESE: Germany and Romania showed the strongest growth. In Germany, integrating the Real stores has remained a priority, with several locations still to open. That’s why we have seen very strong store growth in Germany for three consecutive years. Romania offers significant growth potential in terms of our target store count.
ACROSS: Are you considering entry into any new markets?
HIESE: We always evaluate opportunities. As things stand, we don’t plan to enter new markets in 2025. However, we are keeping our eyes and ears open and will be ready to act if the right opportunities arise.
ACROSS: How do different markets compare in terms of profitability?
HIESE: Overall, we are satisfied with performance across all markets. There is no country that we can emphasize in particular. Ultimately, this is a question of the intensity of competition. In some markets, we have a very high market share, while others involve intense competition with a large number of retailers.
ACROSS: What are your priorities this year?
HIESE: As I said, we have two reasons to be optimistic. Firstly, our business performance remains strong. Secondly, market conditions, especially interest rates, support our development. Market sentiment is generally strong, as discussions with market participants show, and confident partners are, of course, necessary for investment. Naturally, political conditions, such as the upcoming elections in Germany and the change of leadership in the USA are of particular economic relevance. However, we need to wait and see what the actual effects of those situations will be as well. I take a critical view of Germany’s economic development, as one of the most important countries in the European Union, and I can clearly see that the mood in Germany is still comparatively poor, although it has improved somewhat. At the same time, we are seeing more promising development, particularly in Eastern Europe, and therefore greater optimism.
ACROSS: What insights have you received from your eastern European partners??
HIESE: In addition to the improved consumer sentiment in Eastern Europe, discussions with regional market participants have revealed the following: They are more optimistic about the situation in Eastern Europe than their Western European counterparts. That is also reflected in their willingness to invest. Increasingly more Eastern European investors have become active in the investment market and have become increasingly involved in major deals, while Western European or Anglo-American capital remains cautious.
ACROSS: Southeast Europe is also very dynamic, especially countries such as Serbia, Montenegro, Bosnia, and Albania. Do you have any plans in that area?
HIESE: Our only Balkan presence is in Croatia, where we are experiencing strong growth. Even the introduction of the euro has not slowed things down. This is undoubtedly due to tourism, and we are certain that we’ll continue to expand there. As far as the other countries mentioned are concerned, we have no immediate plans, but as I said, we are monitoring all European markets.
ACROSS: You pursue a one-stop shopping approach. In other words, your stores are destinations that promise customers everything from a single source.
HIESE: That is clearly our USP and sets us apart, particularly from discounters, which have a strong market position in the CEE region and are continuing to grow. We offer comprehensive product ranges and strong non-food expertise across larger stores. A component of our strategy is to strengthen local presence through partnerships, particularly in concession areas, where we create regional and market-specific concepts.
ACROSS: What is the focus in that regard?
HIESE: We prioritize food and beverage operators, health, and services. One example can be found at our second store in Split, which opened just before Christmas. We were able to attract a local fishmonger for the concession area, which is a real institution in Split. We can clearly see that sales have increased as a result of such partnerships, and the feedback has been very positive. It is precisely this mix of large-group advantages, individualized retail concepts, and regional integration that resonates with customers.
ACROSS: How do you develop and allocate these spaces?
HIESE: Each space is unique and sized according to architecture. Regional leasing teams provide local expertise to identify and attract the most important and promising local players. We aim for a mix of strong, individualized concepts that are then deliberately complemented by regional partners. We’re also expanding our partnerships with operators with whom we already work well in other markets, such as Eat Happy Sushi, which entered the Slovakian market with Kaufland last year. Both sides are very satisfied with the result, and we look forward to expanding that partnership in other locations.
ACROSS: What role does regionality play in the product range beyond the checkout areas?
HIESE: While regionality is important, it presents challenges within our centralized store network concept in terms of purchasing and logistics at the national level. Nevertheless, we incorporate regional specialties and tastes into our product range, for example in the selections at the meat and deli counters. We are particularly keen to work with regional farmers and producers when it comes to fruit and vegetables. Regional products vary depending on location and are coordinated between the stores, the purchasing departments, and regional suppliers.
ACROSS: When you expand: Do you prefer shopping center integration or stand-alone concepts?
HIESE: There is only one rule: We favor the best location. Kaufland’s strength has always been a high degree of flexibility in terms of space and format. That allows us to thrive at shopping centers, retail parks, or stand-alone sites. When we find an appealing location, we collaborate with partners on optimal store planning and the right type of contract. There really is no preference.
ACROSS: How would you rate your cooperation with shopping center management?
HIESE: While each location differs, we always find constructive ways to work together. In Germany, we sometimes manage centers ourselves and can, therefore, contribute our own expertise. In 2023, for example, we provided intensive support for the revitalization of a center in Warsaw, Poland. We have an intrinsic interest in ensuring that the locations work. Though we maintain a confident position as a tenant with specific requirements due to our size, such as the need for separate entrances, we are better placed to achieve our vision than many other tenants. However, no matter how well we perform in a given space, we also recognize that overall center performance affects our success.
ACROSS: Despite the different formats: What does the average store look like?
HIESE: We basically start at 2,000 sq m of retail space. Our average sales area is just over 4,000 sq m. However, for historical reasons, we sometimes have stores with sales areas of up to 8,000 sq m. We feel most comfortable between 2,500 and 3,500 sq m of retail space. That is also the size we are aiming for in our expansion in Central and Eastern European markets.
ACROSS: What’s your food to non-food-ratio?
HIESE: Food certainly dominates, and we clearly define ourselves as a food retailer. Historically, non-food has been significant at Kaufland as we come from a hypermarket background in which the non-food share has reached up to 50 percent. However, we’ve steadily reduced that over several years to a fixed product range. This also sets us apart from discounters’ seasonal or promotional approach.
ACROSS: How are you developing in the digital area? Among other things, you have established a customer card system.
HIESE: The customer card was successfully launched in all our markets. The Kaufland Card is one of the most popular benefit programs in European food retailing. In our eight countries, over 25 million customers have already become Kaufland Card members, and more than 60 percent of them are active users. A customer card is an important instrument for customer loyalty. Having your own customer loyalty program enables you to address customers personally, receive direct feedback, and use the resulting data to react more quickly to trends and design the product range. The possibilities that the card offers in terms of interaction and communication with customers are far from exhausted. We will continue to invest in that area and expand our services.
ACROSS: In addition to the store business, you have an online marketplace. What is your strategy there?
HIESE: The Kaufland marketplace currently operates in five countries and is distinct from our physical retail store range. We expanded this offering to Austria in September 2024, despite having no physical presence there and no plans for any stores. The Kaufland brand enjoys a very high level of recognition in Austria, which really surprised us when we analyzed the market. That was one of the reasons why we decided in favor of the country. So far, the decision has paid off. We are very satisfied with both the launch and Christmas business.
ACROSS: Finally, is there a general target figure in terms of store growth for 2025?
HIESE: We currently have over 1,550 stores and aim to open 40 to 50 stores every year across all countries. We will reach 1,600 stores by 2025.
Michael Hiese
Michael Hiese is Chief Real Estate Officer at Kaufland International
all credits: Kaufland
