Kmart and Target will merge into a $10 billion mega-business
- 167 Target stores were closed or converted to Kmart in 2020
- Now the operation of the two businesses is merging.
Three years after 167 Target stores closed or converted to Kmart stores, parent company Wesfarmers is merging management of the two businesses.
Target will merge with Kmart to create a $10 billion business with the goal of delivering better value for customers and higher profits for Wesfarmers.
Ian Bailey, who became the managing director of Kmart Group in 2018, said the two stores will continue to operate as separate brands, with Kmart remaining price-driven and Target focusing primarily on affordable clothing and home furnishings.
He said the changes will happen behind the scenes in areas like technology and purchasing, with only a “handful of layoffs.”
Bailey expects the current cost of living crisis affecting Australians to last a bit longer.
“I see the value in really being front and center for a long time,” he told the Australian Financial Review. “What we’re seeing is that when we can consistently find good products at great prices, then there’s a lot of demand.”
Three years after 167 Target stores closed or converted to Kmart stores (pictured), parent company Wesfarmers is merging the operation of the two stores.
Target (pictured) joins Kmart to create a $10 billion business with the goal of delivering better value to customers and higher profits for Wesfarmers
Despite some initial job losses, Bailey expects the overall level of employment to grow 12 months from now.
“I would say we are strong, but I think there is an opportunity to really capitalize on this time and find ways to continue to provide better value for customers,” he said.
The merger came about because running the two businesses separately made it difficult to improve the use of technology at Target.
“This is really why we decided to merge the two businesses into one,” Bailey said, adding that the merger is critical to improving sales.
“This change allows us to push the same technology at Target because we’ll get to a point where we’ll have a stack of technology.”
Bailey, who is credited with leading the turnaround in Kmart’s fortunes in recent years, said the merger of the two outlets into a $10 billion entity will lead to significant cost savings and productivity improvements.
Ian Bailey (pictured), who became Kmart’s CEO in 2018, said the two stores will continue to operate, with Kmart still being driven by price and Target focused primarily on affordable clothing and home furnishings.
In 2020, 167 Target stores were permanently closed or converted to Kmarts after the chain suffered a $67 million sales drop.
Target personnel were offered jobs at Kmart or other Wesfarmers companies, including Bunnings and Officeworks.
The closures and conversions reportedly cost the company between $120 million and $170 million.
Another $140 million was used for one-stop-store conversion and destocking costs.