German grocery chain Kaufland, a subsidiary of retail company Schwarz Gruppe, plans to set up a distribution center in Melbourne's north as part of its move into Victoria, Australia.

Kaufland revealed an initial commitment of $459 million to bring stores to Victoria, with three already approved for Dandenong, Chirnside Park as well as Epping.

A new distribution center will be constructed in Mickleham as Kaufland seeks to inaugurate stores across the country in the coming years. The project is expected to create 1600 jobs.

Additionally, a further three stores are proposed for Oakleigh South, Coolaroo and Mornington, subject to approval.