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Two of Australia’s most recognisable retail brands are about to become even more closely linked through a merger creating one $10 billion discount giant.
Wesfarmers is set to fold Target into Kmart in a move it hopes will improve sales and help the department stores share backend technology.
But shoppers shouldn’t notice much of a change with Kmart Group managing director Ian Bailey promising “no impacts” to stores.
Instead he described the move as an “internal reorganisation” following years of operating the two separate businesses closely together.
“With customers now demanding value more than ever, this new operating model will unlock a new level of scale and productivity across both brands, so we can deliver even greater value to our customers in the future,” Bailey said, in a statement.
“For store networks and 50,000 store team members – it’s business as usual – as we continue to focus on providing the best value products to the thousands of customers in Australia and New Zealand who choose to shop at Kmart or Target every day.”
The move outlined to staff on Monday comes as the cost of living crisis forces Australians to become more and more price conscious.
Speaking to the The Australian Financial Review Bailey said there would likely be a “handful of redundancies” but more jobs overall by next year.
He insisted the move was coming from a position of strength, not weakness.
Specifically, he highlighted the technology benefits tighter integration could bring, pointing to a price drop on 1000 Kmart products announced earlier this month, which he said were assisted by merchandise planning tools and a self-navigating inventory scanning robot.
“Kmart and Target are both strong businesses. I don’t see us doing this from a position of weakness. It’s quite the opposite. I’d say we’re strong, but I think there’s an opportunity to really capitalise on this time and find ways to continue to deliver better value for customers,” Bailey told the Financial Review.
“What we found was that running two businesses it was very, very difficult to get the tech into Target, and to get those benefits. This is really why we decided to push the two businesses into one.”
The newspaper reported that Bailey would remain in charge of Kmart Group while Target managing director Richard Pearson becomes retail director leading the strategy and operational side of Wesfarmers’ health unit.
