News Missing the Target: Retail giant sacrificed for Kmart’s success

Missing the Target: Retail giant sacrificed for Kmart’s success

Target has been sacrificed for Kmart, experts say. Photo: TND
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It started with drapes.

Dress fabrics, manchester, furnishings. Target was a business built on a simple premise: ‘half the profit, twice the turn over’.

In 1926, George Lindsay and Alex McKenzie had an idea to sell quality goods at a cheap price in what was then the sleepy town of Geelong.

Nearly a century later, Target announced it would close down or convert 167 stores, while up to 1300 people are set to lose their jobs.

The empire first grew out of Victoria before it was bought by Myer Emporium, later Coles Myer Limited, in the 1960s – and expanded to more than 300 locations.

During that time, the red and white logo was recognisable to every Australian. Target became a household name.

It’s been 94 years since Lindsay and McKenzie opened the first store.

While Target won some battles in the fight to be Australia’s most beloved mid-priced department store, it has officially lost the war.

Crowning of Kmart

Target’s closing is more a tale of Kmart’s success, said senior lecturer in marketing at Curtin University, Dr Billy Sung.

“One of the major things here is that target is actually the victim of Kmart’s success,” he said.

“The mother company, Wesfarmers, have created a habit for consumers to buy from Kmart.

Kmart now releases trend inspiration lookbooks like this. Photo: Kmart

“Target doesn’t have a unique selling proposition. There are no unique values so what we’re seeing here is brand cannibalisation. Kmart basically took over.”

Wesfarmers acquired Kmart and Target in 2007 as part of a takeover of Coles group.

From there, the war was on.

Big W Owned by the rival Woolworths Group.

Kmart Known as a daggy brand with dingy stores.

Target – The top dog.

All three vied for dominance from customers looking for a bargain.

“Since 2012 the Target business has steadily declined,” said professor of Marketing at Queensland University of Technology Gary Mortimer.

“Their first major loss was in 2016 when the business lost $195 million and, ever since then, Wesfarmers has attempted to reinvigorate it,” he said.

“They’ve done a number of things, they’ve done a collaboration with high-end fashion designers, like Dion Lee and John Paul-Gaultier, who was going to do a run of home furnishings.”

But the collaborations just confused customers and weakened the brand said senior lecturer in marketing at the University of Tasmania Dr Louise Grimmer.

“Some of the collaborations were a great success but I think through partnerships with various designers including Stella McCartney and Danni Minogue, the brand ‘lost its way’ and confused consumers,” she said.

One of Target’s first collaborations in 2007 with designer Joshua Goot. Photo: AAP

“What did Target really stand for? Did it offer reasonably priced clothing, footwear and household items or was it about more expensive fashion designed with Rachael Zheng or homewares from Missoni?

“The problem with collaborating with higher-end designers is that they diluted the brand … and it never really recovered.”

As Target was floundering, Kmart blossomed.

Who was Target targeting?

Under the stewardship of then chief-executive Guy Russo, the once-daggy Kmart chain was reborn.

Checkouts were moved into the middle of the stores, the buying team dropped Playstations and bought in pastel pink pillows and fake plants.

Kmart became cool.

Meanwhile, the influx of global fast-fashion brands like H&M and Zara was another nail in the red-and-white coffin.

“Target then attempted to move or reposition their business as a low-cost value proposition, so we saw an influx of cheap T-shirts, cheap kitchen wear at a very strong price point,” Professor Mortimer said. 

“But it tended to replicate the Kmart offer, those middle-market consumers that shopped at Target simply left and ended up shopping at Myer or global fast-fashion retailers and the value-seeking customer simply migrated to Kmart.

Kmart’s trendy and cheap styles built it a cult-like following. Photo: Kmart

“The Kmart product is cheap and cheerful but on-trend. Customers who shop at Kmart are almost Kmart fans.

“There are plenty of Facebook sites such as Kmart hacks or Kmart mums, plenty of stories of being able to makeover a lounge room for under $100.”

The writing was on the wall. But Wesfarmers couldn’t let go.

They had picked Kmart up, brushed it off and created a cult-like following. Why couldn’t they do the same for Target?

Pull off the same trick twice

Kmart saviour Guy Russo was bought in to try and resuscitate the floundering brand, but it was too little too late.

“He attempted to do a Kmart image on Target,” Professor Mortimer said. 

“There were bulk stacks of $7 toasters, $7 kettles, $2 kid polo shirts.

“But what happened was you ended up with a conglomerate like Wesfarmers running two different discount department stores competing for the same customers.

“The stronger brand will always win, it’s Darwin’s law.”

Wesfarmers had three options. Close it down completely, change up it’s offering or merge it – with the latter eventually winning out.

“It’s a tough decision that’s Wesfarmers has had to make, but it’s the right one,” Professor Mortimer said. 

target jobs david littleproud
Target is to convert or close half of its stores across Australia – at a cost of up to 1300 jobs.

“They should have done it four years ago. Wesfarmers management team wanted to give, I guess, different managing directors the opportunity to turn it around.

“But ultimately I think Wesfarmers has made the right decision to invest their business to the more successful Kmart product.

“We won’t see a Target brand coming back.”

Dr Grimmer said consumers would be sad, but they had ‘already voted with their feet’.

“Even though it has been anticipated for some time, this is a really sad day for Australian retailing and especially for Target staff,” she said.

“It’s also really sad for consumers, especially those in country towns where the Target Country stores may be closing completely.”

Target has begun its transition to Kmart, communicating the changes on Friday.

In a statement, a spokesperson for the store said they were committed to leading the online shopping sphere in the future.

“We believe that Target has a future as a leading retailer in Australia and we know it is loved by so many, but a number of actions are required to ensure it is fit for purpose in a competitive, challenging and dynamic market, including a smaller number of stores and a stronger online business.”