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Why Target failed in its attempt to be both a high end and a discount store with 75 of them closing

For years, there was a running joke that Target was really pronounced ‘Tar-jay’ with a French accent.

It was the popular department store TV characters that Kath and Kim flocked to in Fountain Lakes to challenge the perception that they were financially and stylistically challenged bogans from the Melbourne suburbs.

Despite being a discount store, she’d always tried to position herself as a slightly more expensive alternative to Kmart or Big W, using designer Stella McCartney’s ‘sustainable’ textile range to look fashionable and eco-friendly.

Ultimately, consumers chose Kmart, an unambiguous discount store, with more resilient sales than Target during an economic downturn.

Times have changed in Australia and beyond.

For years, there was a running joke that Target was really pronounced 'Tar-jay' with a French accent. Pictured is the Broadway store in Glebe in inland Sydney on May 22, 2020

For years, there was a running joke that Target was really pronounced ‘Tar-jay’ with a French accent. Pictured is the Broadway store in Glebe in inland Sydney on May 22, 2020

Times have changed in Australia and beyond - no one cares if they are judged on bargain chasing. On the day Westfarmers announced closing 75 Target stores, Kmart sold toasters for $ 15

Times have changed in Australia and beyond - no one cares if they are judged on bargain chasing. On the day Westfarmers announced closing 75 Target stores, Kmart sold toasters for $ 15

Times have changed in Australia and beyond – no one cares if they are judged on bargain chasing. On the day Westfarmers announced closing 75 Target stores, Kmart sold toasters for $ 15

The goal, by comparison, was to sell toasters for $ 25, adding to the perception that it was more expensive than Kmart

The goal, by comparison, was to sell toasters for $ 25, adding to the perception that it was more expensive than Kmart

The goal, by comparison, was to sell toasters for $ 25, which made perception more expensive than Kmart

Very few shoppers care if they are judged on chasing bargains and shunning traditional prestige department stores like Myer and David Jones.

What will happen to Target?

Parent company Wesfarmers closes 75 stores, including 25 larger and 50 country outlets

The remaining 92 Target stores are being converted into Kmarts, including 40 major stores and 52 country outlets

Some Target Country stores will be converted to smaller Kmart Hub stores

Changes will take place in the next 12 months, the majority in 2021

Kmart Group set aside $ 120 million to $ 170 million in restructuring costs to reflect Target store closings and conversions

Source: Wesfarmers announcement to the Australian Securities Exchange, May 22, 2020

The rise of the German supermarket brand Aldi and its popularity among affluent baby boomers demonstrates that fact quite clearly.

Bunnings also has the hardware space to itself, after Woolworths’ Masters Home Improvement experiment failed because customers thought it was too trendy for those simple DIY projects.

So it’s no surprise that the retail conglomerate Wesfarmers closes up to 75 Target stores and converts 92 remaining stores into Kmarts in the next 12 months.

On the day of the announcement, Kmart sold toasters for $ 15- $ 10 less than Target.

Target also sold microwaves for $ 69, compared to $ 48 at Kmart, adding to the perception that it was much more expensive.

A Kmart store on Broadway in downtown Sydney was also busy because a nearby Target was quiet.

Daisy Feller, senior analyst at IBISWorld, said Target’s attempt to become a more expensive discount store had confused potential customers.

Kmart, unambiguously a discount store, with more resilient sales than Target during an economic downturn. The Kmart store on Broadway in Sydney (pictured) was much busier than a nearby Target

Kmart, unambiguously a discount store, with more resilient sales than Target during an economic downturn. The Kmart store on Broadway in Sydney (pictured) was much busier than a nearby Target

Kmart, unambiguously a discount store, with more resilient sales than Target during an economic downturn. The Kmart store on Broadway in Sydney (pictured) was much busier than a nearby Target

Target, despite being a discount store, had always tried to position itself as a slightly more expensive alternative to Kmart or Big W. Pictured is a Kmart on Broadway

Target, despite being a discount store, had always tried to position itself as a slightly more expensive alternative to Kmart or Big W. Pictured is a Kmart on Broadway

Target, despite being a discount store, had always tried to position itself as a slightly more expensive alternative to Kmart or Big W. Pictured is a Kmart on Broadway

“Target was still trying to reach that everyday, highly accessible market while it was high fashion – it’s confusing to people,” she told Daily Mail Australia.

“You don’t know where you fit in your life.”

Target’s partnership with Stella McCartney, the daughter of Beatles lead singer and songwriter Paul McCartney, likely knocked out the penny-pinching shopper.

“It’s initiatives with Stella McCartney that are almost trying to position themselves higher while hitting that discount segment,” said Ms. Feller.

When it came to saving money, consumers simply preferred a discount store that was no different by choosing Kmart and Shunning Target.

“Consumers prefer something that markets itself as a pure discount rather than both high-end and discount at the same time,” said Feller.

Daisy Feller, senior analyst at IBISWorld, said Target's attempt to become a more expensive discount store had confused potential customers. Depicted is an almost empty Target store on Broadway

Daisy Feller, senior analyst at IBISWorld, said Target's attempt to become a more expensive discount store had confused potential customers. Depicted is an almost empty Target store on Broadway

Daisy Feller, senior analyst at IBISWorld, said Target’s attempt to become a more expensive discount store had confused potential customers. Depicted is an almost empty Target store on Broadway

Target also sold microwaves for $ 69, compared to $ 48 at Kmart, adding to the perception that it was much more expensive

Target also sold microwaves for $ 69, compared to $ 48 at Kmart, adding to the perception that it was much more expensive

Target also sold microwaves for $ 69, compared to $ 48 at Kmart, adding to the perception that it was much more expensive

Kmart director Ian Bailey said Target would be downsized by 'a smaller number of stores and a stronger online business.' Kmart is shown on Broadway

Kmart director Ian Bailey said Target would be downsized by 'a smaller number of stores and a stronger online business.' Kmart is shown on Broadway

Kmart director Ian Bailey said Target would be downsized by ‘a smaller number of stores and a stronger online business.’ Kmart is shown on Broadway

CLOSE CONFIRMED OBJECTIVES

NSW:

Armidale, early mid-2021

Campbelltown, July 2020

Cooma, early mid-2021

Cootamundra, early mid-2021

Corowa, early mid-2021

Deniliquin, early mid-2021

Forbes, early mid-2021

Leeton, early 2021

Merimbula, early mid-2021

Morisset, early mid-2021

Narrabri, beginning mid-2021

Nowra, beginning in mid-2021

Salamander Bay, early mid-2021

Scone, early mid-2021

Wagga Wagga, beginning mid-2021

Winmalee, early mid-2021

VIC:

Bacchus Marsh, early mid-2021

Bairnsdale, early mid-2021

Benalla, mid 2021

Colac, early mid-2021

Kerang, early mid-2021

Langwarrin, early mid-2021

Maryborough, early mid-2021

Myrtleford, early mid-2021

Traralgon, early mid-2021

Warragul, beginning in mid-2021

TO TRADE:

Weston Creek, early mid-2021

QLD:

Atherton, early 2021

Beaudesert, early mid-2021

Biloela, early 2021

Casino Retail Center, beginning mid-2021

Clifton Beach, early mid-2021

Emerald, early mid-2021

Goonellabah, early 2021

Kippa Ring, early 2021

Longreach, early mid-2021

Moranbah, early mid-2021

Murgon, early mid-2021

Murwillumbah, early 2021

WA:

Busselton, early 2021

Karratha, early mid-2021

Kununurra, early mid-2021

Manjimup, early mid-2021

Margaret River, early mid-2021

Meadow Springs, August 2020

Merredin, early mid-2021

Narrogin, early mid-2021

SA:

Clare, early mid-2021

Millicent, early 2021

Naracoorte, early mid-2021

Pasadena, June 2020

Port Lincoln, early 2021

BAG:

Devenport, beginning mid-2021

Rob Scott, director of Wesfarmers, admitted Target was a weak link, as he announced the closing of 75 Target stores on Friday.

“Retail has seen significant structural change and disruption for some time now and we expect this trend to continue,” he told the Australian Securities Exchange on Friday.

“With the exception of Target, Wesfarmers’ retail businesses are well positioned to respond to the changes in consumer behavior and competition that accompany this disruption.”

Westfarmers, which also owns Bunnings and Officeworks, told the ASX that it wanted to address Target’s unsustainable financial performance.

Kmart director Ian Bailey said Target would be downsized by ‘a smaller number of stores and a stronger online business.’

Ms Feller said the target name could disappear completely.

“It is possible they are phasing it out completely,” she said.

Ultimately, consumers chose Kmart, an unambiguous discount store, with more resilient sales than Target during an economic downturn. Shown is a Target jacket selling for $ 39 in downtown Sydney

Ultimately, consumers chose Kmart, an unambiguous discount store, with more resilient sales than Target during an economic downturn. Shown is a Target jacket selling for $ 39 in downtown Sydney

Ultimately, consumers chose Kmart, an unambiguous discount store, with more resilient sales than Target during an economic downturn. Shown is a Target jacket selling for $ 39 in downtown Sydney

Westfarmers, which also owns Bunnings and Officeworks, told the ASX that it wanted to address Target's unsustainable financial performance. Shown is a jacket sold for $ 20 at Kmart, almost half the price of a jacket at Target

Westfarmers, which also owns Bunnings and Officeworks, told the ASX that it wanted to address Target's unsustainable financial performance. Shown is a jacket sold for $ 20 at Kmart, almost half the price of a jacket at Target

Westfarmers, which also owns Bunnings and Officeworks, told the ASX that it wanted to address Target’s unsustainable financial performance. Shown is a jacket sold for $ 20 at Kmart, almost half the price of a jacket at Target

Ironically, Target could survive as the small group of leftover stores in stores that were undeniably more expensive.

“That is certainly a possibility. That would help confuse the brand positioning issue – consumers would see them as a completely different store than Kmart rather than just another Kmart, ”said Feller.

Mark Schiavello, the national retail leader at business consulting firm BDO, said Australian consumers would likely prefer discount stores in their area because restrictions on coronavirus were not lifted.

“As life returns to a new normal, people will spend money again, but their behavior will shift from prestigious purchases to practical, everyday items,” he told Daily Mail Australia.

“Retailers can expect that the majority of people will be budget conscious in the near future, because the consequences of the pandemic can still be felt in our society.

“Local shopping is going to make a big comeback for COVID.”

Target employees will have the opportunity to work in the converted Kmart stores or in other parts of the Wesfarmers group. Pictured is a Kmart store on Broadway

Target employees will have the opportunity to work in the converted Kmart stores or in other parts of the Wesfarmers group. Pictured is a Kmart store on Broadway

Target employees will have the opportunity to work in the converted Kmart stores or in other parts of the Wesfarmers group. Pictured is a Kmart store on Broadway

Mark Schiavello, the national retail leader at business consulting firm BDO, said Australian consumers would likely prefer discount stores in their area because the coronavirus restrictions had not been lifted. Pictured is Kmart on Broadway in Sydney

Mark Schiavello, the national retail leader at business consulting firm BDO, said Australian consumers would likely prefer discount stores in their area because the coronavirus restrictions had not been lifted. Pictured is Kmart on Broadway in Sydney

Mark Schiavello, the national retail leader at business consulting firm BDO, said Australian consumers would likely prefer discount stores in their area because restrictions on coronavirus were not lifted. Pictured is Kmart on Broadway in Sydney

GOALS CONVERTED TO KMART SHOPS

NSW:

Bega, start mid-2021

Bowral, early 2021

Gunnedah, early 2021

Katoomba, early 2021

Moree, early 2021

Mudgee, early 2021

Picton, early 2021

Tumut, early 2021

Ulladulla, early 2021

Windsor Town S / C, early 2021

Yass, early 2021

QLD:

Ayr, early mid-2021

Beerwah, early mid-2021

Bowen, early 2021

Charters Towers, early 2021

Chinchilla, early 2021

Dalby, early 2021

Gatton, early 2021

Goondiwindi, early 2021

Gympie, early 2021

Ingham, early 2021

Mareeba, early 2021

Noosa Junction, early 2021

Ocean Shores Village Ctr, early 2021

Port Douglas, early 2021

Roma, early 2021

Sarina, early 2021

Stanthorpe, early 2021

Warwick, early 2021

Yamba, early 2021

Yeppoon, early 2021

VIC:

Ararat, early mid-2021

Castlemaine, September 2020

Cobram, July 2020

Echuca, July 2020

Hamilton, early 2021

Kyabram, September 2020

Lakes Entrance, early 2021

Leongatha, early 2021

Mansfield, early 2021

Portland, early 2021

Seymour, early 2021

Woodend, September 2020

Yarrawonga, early 2021

SA:

Berri, early 2021

Murray Bridge, early 2021

Port Augusta, early 2021

Victor Harbor, early 2021

WA:

Esperance, early 2021

Geraldton, early mid-2021

Northam, early 2021

Pinjarra, early 2021

NT:

Katherine, early 2021

Target employees will have the opportunity to work in the converted Kmart stores or in other parts of the Wesfarmers group.

“All team members in Target stores scheduled for conversion to Kmart will have the opportunity to join the growing Kmart team, for other affected Target team members we will work with them to provide other relocation opportunities in Kmart, Catch, Bunnings and Officeworks as these companies continue to grow, “said a spokeswoman.

Retailing in Australia is still in a dire state with a record decline of 17.9 percent in April, after a record 8.5 percent in March when shoppers picked up toilet paper, pasta and rice before shutting down the corona virus.

Being fashionable is hardly in vogue when it comes to shopping during the worst economic crisis since the Great Depression of the 1930s.

Target employees will have the opportunity to work in the converted Kmart stores or in other parts of the Wesfarmers group

Target employees will have the opportunity to work in the converted Kmart stores or in other parts of the Wesfarmers group

Target employees will have the opportunity to work in the converted Kmart stores or in other parts of the Wesfarmers group

Despite being a discount store, Target tried to position itself as more expensive by selling fashion designer Stella McCartney's 'sustainable' textiles to bring in the ethically minded shoppers

Despite being a discount store, Target tried to position itself as more expensive by selling fashion designer Stella McCartney's 'sustainable' textiles to bring in the ethically minded shoppers

Despite being a discount store, Target tried to position itself as more expensive by selling fashion designer Stella McCartney’s ‘sustainable’ textiles to bring in the ethically minded shoppers

Target was the kind of place Kath and Kim could come to Fountain Lakes without admitting that the budget-conscious swamps were in the suburbs. In the photo the comedians Jane Turner and Gina Riley as mother Kath Day-Knight with her daughter Kim

Target was the kind of place Kath and Kim could come to Fountain Lakes without admitting that the budget-conscious swamps were in the suburbs. In the photo the comedians Jane Turner and Gina Riley as mother Kath Day-Knight with her daughter Kim

Target was the kind of place Kath and Kim could come to Fountain Lakes without admitting that the budget-conscious swamps were in the suburbs. In the photo the comedians Jane Turner and Gina Riley as mother Kath Day-Knight with her daughter Kim

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