Discount chains Target and BIG W seem to be in hot water, while Kmart is thriving. Why do you think this is happening?
Losing its CEO hadn’t made things any easier for Woolworths-owned Big W. Sally McDonald was to be a major part of the company’s turnaround strategy when she commenced the role only ten months ago.
Frustration in the difficulty for the company to improve its fortunes is sited as a major reason for McDonald’s departure. Her predecessor Alistair McGeorge lasted a little more than12 months in the role.
Big W’s first quarter sales were down by 5.7 percent, which follows a full-year loss of $15 million.
Westfarmers-owned Target is also struggling to find its footing amongst the discount chain stores in Australia, with a whopping $195 million loss for FY16.
Kmart boss Guy Russo was promoted to oversee both chains recently, and has been revamping Target’s focus on clothing. The company also admitted its mistake in abandoning its mid-year toy sale last year, which is one of the main reasons why revenue fell.
Russo says a new business model can bring Target back and beat the global giants, however this may prove difficult. Being a local clothing retailer has its challenges. DJs gave it a shot and didn’t go too well. Myer and Just Jeans tried as well, and Bettina Liano… well they went broke. Pity, as my favourite Bettina jeans are on its last leg now.
Jean Paul Gaultier for Target Launch
But to show that all discount chains aren’t struggling, have a look at Kmart, which is also owned by Westfarmers.
The company’s sales are up by 14 percent over the last 12 months, with more than $5 billion dollars turnover. Profit is not only strong at $470 million dollars, but it’s also growing.
So with this in mind, why are shoppers turning their backs on Target and Big W but they are quite happy to shop to Kmart? The most likely answer is that discount clothing has become hotter and hotter, since the likes of H&M, Topshop and Uniqlo have begun rolling out in Australia.
And while Big W and Target have been focusing on clothing, Kmart have been putting some eggs in other baskets , like its revamped homewares and décor category, as well as its new “designer-feel” stationery offering to shoppers.
But no doubt, you may have better answers on this than me. I’d love to know why you think Kmart is beating the other discount chain stores by far. If you’d like to share, post your comments in the box below.