Kmart and Target are two of Australia’s biggest department store players, but, despite strong online and offline offerings, Target has struggled to keep up with its sister company in FY18.
In the latest quarterly results for Australian conglomerate, Wesfarmers, officials reported a two percent drop in revenue for Target in Q3, with sales dropping to $544 million. Meanwhile, Kmart recorded a strong Q3 result, with a revenue increase of 10.2 percent to $1.24 billion.
Commenting on Wesfarmers overall results in its department category, department stores CEO, Guy Russo said the Q3 results were a reflection of each businesses movements over the quarter, as product lines and price points were reset.
“During the quarter the business continued to focus on improving fashionability and the quality of sales,” Russo said. “While online sales increased and contributions across womenswear and menswear also improved, these were more than offset by declines in general merchandise, as ranges were further reset.”
Target has fallen into a slump in recent years, with sales figures in 2011 coming in at $3.8 billion, falling as low as $1.95 billion by 2017.
Kmart, however, finished the quarter with a bang, having increased customer transactions across every category, driving a result of 10.2 percent overall growth and a 7.7 percent increase in comparable store sales.
“Sales performances through the third quarter were driven by an increase in customer transactions with all categories, except family entertainment achieving double-digit unit growth,” Kmart’s managing director, Ian Bailey said. “This was the result of Kmart’s continued focus on maintaining price leadership as well as an improved product offering.”
Kmart has been in the media a lot over the past 12-months, with Facebook group’s like Kmart Hacks and Kmart Lovers Australia amassing hundreds of thousands of followers, and media outlets like Mamamia regularly publishing articles on the best, most affordable Kmart finds.
In comparison, Target, although popular, receives only a fraction of the attention Kmart does. The ‘cult’ following Kmart has developed, which News.com.au refers to as “Kmart mums” has attributed greatly to the discount department store’s success in recent years.
At a media conference earlier this year, Wesfarmers managing director, Rob Scott told the audience that the company would be “doubling down on the business where we have the biggest point of difference with customers, and that is Kmart”.
IBISWorld analysts believe the growing popularity of Kmart and declining interest in Target is a reflection of how increased competition in the retail market and a decrease in consumer spending over the last few years has worked in Kmart’s favour. Target, on the other hand, typically serves the mid-market, and has suffered from this trend in consumer spending as much as Kmart has benefitted from it.
During FY18’s third quarter Kmart continued to expand, with four store refurbishments being completed, and three new stores opening, including a Target store that was rebranded into a Kmart.