Kmart stores cannibalised most of the online stores including Target Australia after the struggle in retail continues.
It was announced by the Wesfarmers, as the parent store of Kmart and Target that there’s a drastic plan last year for the 167 Target branches to either be closing or be changed as Kmart outlets, this just means that the affected Target stores will be around 284-odd.
There have been 16 stores that underwent a transformation last year under a worth $800 million restructure. The number of Target’s that will be converted into Kmart stores or KHubs around Australia will be 55 and also some smaller neighbourhood stores that stock products like for kids, home, and clothing.
The managing director of both brands Ian Bailey, flagged Target that could become a bigger business online compared to its physical store.
He told the Sydney Morning Herald that as to what the percentage of online would be, only the time will tell, but they certainly believed that online will be a very, very important part of the Target business and they’re certainly investing in the growth of online for Target. According to him, it’s already a very profitable channel for them, and they think that there’s a lot of potential to grow.
According to Professor Gary Mortimer, retail expert from the Queensland University of Technology, running two discount departments is very challenging for the Wesfarmers because they are essentially attracting the same types of shoppers, Professor Gary Mortimer, retail expert from the Queensland University of Technology.
He also said that ultimately, when one brand delivers a better value proposition to the customers, whether it is Kmart, the other brand will naturally contract as a result and they have seen that over the last several years.
Prof Mortimer also added that the retailer’s strategy has been played out over the last 18 months, and it is “viable”. IncludingThis includes removing their Target Country brands and installing KHubs which enabled regional and rural communities to access Target products via online and delivery.
Mr Bailey on the other hand denied the suggestions that Target could be completely swallowed up by Kmart stores in the future. But compared to the performance of Kmart, the Target post conversions had been ahead of expectations.
It was announced in February that Wesfarmers recorded $5.4 billion in revenue for the broader Kmart Group across the first six months of the financial year.