- Wesfarmers is converting some of its Target stores into Kmart stores.
- The company will also shut between 10 and 25 large Target stores and 50 Target Country stores as the business struggles amid the coronavirus pandemic.
- Last month, Wesfarmers highlighted that while Kmart was profitable, “Target’s earnings have decreased significantly.”
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Wesfarmers is closing some of its Target stores and converting others into Kmart stores as the brand continues to struggle amid the pandemic.
Following a review into its Target stores, Westfarmers decided to convert between 10 and 40 suitable Target and Target Country stores into Kmarts, subject to support from landlords. However, Wesfarmers will be shutting between 10 and 25 Target stores and 50 Target Country stores. It will also reduce the size of Target’s store support office.
Target has struggled during the coronavirus pandemic. In April, Wesfarmers identified that while Kmart was profitable, Target’s earnings had “decreased significantly.”
Wesfarmers also saw an uptick in activity at Bunnings and Officeworks.
“Over the last two months, Bunnings and Officeworks have experienced significant demand growth as customers and their families spent more time working, learning and relaxing at home,” Wesfarmers said at the time.
As Target struggled, Wesfarmers fast tracked its review into the retailer, landing on the decision to close or convert some of its stores. In a statement, Wesfarmers said the conversion will provide “improved financial performance” for the Kmart group and improve Target’s viability.
“The actions announced reflect our continued focus on investing in Kmart, a business with a compelling customer offer and strong competitive advantages, while also improving the viability of Target by addressing some of its structural challenges by simplifying the business model,” Wesfarmers managing director Rob Scott said in a statement.
The store changes are set to happen over the next 12 months, with most of them scheduled for 2021.
Amid the store closures, Wesfarmers will invest in the company’s digital platforms as continues to see strong growth in online sales across Kmart Group. As Aussies opt to shop online during the pandemic, Wesfarmers pointed to opportunities across its suite of online offerings including its click and collect option and its Kmart, Target and Catch online stores.
What about the workers?
Wesfarmers said team members at the soon-to-be converted Target stores will get an employment offer from Kmart. Those affected by store closures will be considered for new roles at Kmart and Catch. There’s also the possibility of redeployment at Bunnings and Officeworks.
But for those who aren’t able to be redeployed, they’ll access to support services as well as their entitlements.
Kmart Group Managing Director Ian Bailey described the decision to reduce Target stores as difficult but necessary.
“Leveraging the strengths of the Kmart Group, we have made a significant effort to avoid store closures, retain our valued team members, keep serving our customers and supporting our suppliers,” he said in a statement.
“Unfortunately, the disruptive and competitive nature of the retail sector requires us to make some difficult decisions to ensure we have a viable Target business into the future, while continuing the strong growth of Kmart and Catch.
“We continue to believe that Target has a future as a leading retail brand in Australia and is much loved by many customers, but a number of actions and changes 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.”
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