Target Australia could shift towards becoming a mostly online retailer as many outlets continue to be transformed into Kmart stores.
Ian Bailey, managing director at Kmart and Target said the much-loved Australian brand could become a bigger business online compared to physical stores in the future.
“As to what the percentage [online] would be, time will tell, but I certainly believe online will be a very, very important part of the Target business and we’re certainly investing in the growth of online for Target,” he said.
“It’s already a very profitable channel for us, and we think it has a lot of potential to grow.”
Wesfarmers, which owns the two retail giants, made the decision last year for 167 Target stores to be axed or turned into Kmart stores as part of an $800 million dollar restructure.
Although Target has been consistently underperforming, Ian said the brand would not be completely absorbed by Kmart in the future.
“That would be very unlikely. The Target brand is a very powerful brand and we see it as a great asset,” he said.
“As we focus on a smaller, simpler and more focused Target … it gives us the ability to be more precise than we’ve been historically.”
The performance of stores converted to Kmart from Target has been higher than expected, but Target still remains a popular choice for shoppers, he said.
Kmart is now focusing on resolving stock issues to prevent future shortages by investing in new technology and increasing stock levels after shoppers stripped shelves bare during the height of the pandemic.
The extreme shortages were due to Kmart’s decision to reduce its stock intake around March and April last year – just before the pandemic induced e-commerce boom sent sales skyrocketing.
In February, Wesfarmers recorded $5.4 billion in revenue for the broader Kmart Group across the first six months of the financial year.