leadership, Retail

Kmart chief says the retailer is “failing” customers and will only reach sales targets if the team remains “dissatisfied”

Emma Koehn /

Kmart is posting big wins in a challenging retail environment, but managing director Ian Bailey has marked “dissatisfaction” as a driving force as he leads the company into the next stage of its growth.

And it’s an approach that one leadership expert says SMEs can learn from when setting up their businesses for future success.

Inside Retail reports the discount department store chief told a Property Council of Australia event in Sydney last week that customers want “more information from us” and a “super shopping experience”, and Kmart is “failing to deliver”.

This is despite Kmart recently posted strong revenue growth for its parent company Wesfarmers. In 2017, earnings at Kmart increased 17.7%, to $553 million, in what then group chief executive Richard Goyder described as a “very strong result”.

However, Bailey says there’s still plenty of work to do within the business, and things will slide backwards unless there’s constant striving for service improvement.

He told the event that if Kmart wants to post 10% sales growth over the next year, the retailer would have to up its performance in terms of product offer and service improvements in the year ahead.

“We can only do that if we are dissatisfied,” Bailey said.

His comments come despite Kmart emerging as the stronger of Wesfarmers’ department store chains, with the company coming out on top in customer satisfaction rankings.

In 2017, Kmart led the charge in Roy Morgan’s customer satisfaction measurements, with an 87.6% satisfaction rate. The most recent Roy Morgan customer satisfaction numbers, released this week, saw Kmart just beaten by Costco in the fight for the most satisfied customers, but Kmart still posted an increase in customer satisfaction: its rating is 88.3%.

Bailey has said dissatisfaction will play a significant part in doubling the company’s sales figures over the next few years, as constant evolution has become critical to succeeding in a world where many think department store retailing is “doomed”.

Leadership expert Pollyanna Lenkic says Bailey’s words might not be full of celebration for his company’s wins, but these observations are useful because they “are quite future focused”.

“He’s not saying the team is not delivering, he’s saying Kmart as an entity is failing to provide exactly what the customer wants. This takes it away from the individual and leads to creative, forward thinking,” she says.

Focus on the legacy your team can produce

When motivating staff for success, leaders need to focus on both celebrating wins and milestones and looking for long-term improvements, Lenkic says.

Business owners have the best chance of taking their staff with them on the journey if they frame challenges as team efforts that will lead to a long-term legacy.

She praises Bailey for his comments because of the use of the word “we”, which implies all Kmart staff are on a mission for future improvement.

“The language you use when talking about this is very important — you want to make it inclusive,” she says.

Even if your business has celebrated significant success in the past, the best leaders focus on a “change mindset” within their staff, she says.

“You have to make people change fit and say, ‘even if you might not like changes that are coming, you need to evolve as a business’.”

She observes Kmart is focused on longer-term success, and says smaller businesses can also motivate their staff to keep improving by taking that same long-term focus.

“Ask, ‘what’s your legacy?’ If you create something for the next stage [of your business] that ends up serving your goal, then you’re leaving a legacy,” she says.  

Encouraging staff to focus on the impact they want to leave on clients and customers can create enough buy-in to drive people forward, even when your business is already going well, she says.

“If you’re creating a better focus on your customers and some legacy leadership, then that excites people,” she says.  

NOW READ: How to follow Kmart’s lead and build your own troop of social media influencers 

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Emma Koehn

Emma Koehn is a former senior journalist at SmartCompany.

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