Target stores to close in massive restructure

Andrew Cummings
May 23, 2020

Wesfarmers (WES.AX), the owners of Target and Kmart stores in Australia, said it will close about 150 Target stores, and convert some locations to the Kmart brand under a significant restructuring strategy.

"Following the completion of the first phase of the Target review, Kmart Group has identified a number of actions to accelerate the growth of Kmart", the stock market statement said. There's no word on the other Canberra Target stores.

Revenue at the discount department store was up $241 million or 7.6 per cent to $4.99 billion. "Their target market is Millennials, young families or even a little older".

"With the exception of Target, Wesfarmers' retail businesses are well-positioned to respond to the changes in consumer behaviour and competition associated with this disruption".

Dr Mortimer said Kmart had been saved by Guy Russo, who previously served as the chief executive of Wesfarmers' department stores division and has been credited with the transformation of the once-ailing chain.

Meanwhile, IBISWorld has questioned if today's news could spell the end of Target, claiming it had "underperformed Kmart over the past five years" with sales "declining significantly" after a brief coronavirus-led boost in February and March 2020.

Target's problems were worsened by COVID-19 but began before the health crisis.

"Retailers have an obligation to make tough decisions at this time to ensure their ongoing financial viability, which will allow us to protect retail jobs in the longer term".

Some staff are to be deployed to Kmart stores but the closures and mergers are expected to result in the loss of between 1,000 and 1,300 jobs over the coming year.

The move strikes a blow to what was once among Australia's most durable retail brands and reflects the urgency of brick-and-mortar stores around the world to adapt as sweeping virus-related curbs on movement keep shoppers at home.

"If you look at their marketing it's very clever". The Wesfarmers release noted that "Kmart Group will continue its investment in its digital channels".

The store closure will also come with a reduction of workers at Target, with many being transitioned to the Kmart brand.

"They are in between- not cheap and not expensive and that's a unsafe zone to be in".

"At one point, Target was selling MAC cosmetics and Stella McCartney launches while also selling cheap T-shirts and $7 kettles - that simply confused their core customer and we saw strong cannibalisation of Target sales which went directly back to Kmart". For instance the ads often have a much older woman say 60 and over trying to sell business attire. "Their messing is lost".

"Their marketing is not diverse and is not focused".

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