Much-loved discount retailer Kmart unveiled its 200th Australasian store in Perth last week, reports the West Australian, marking a significant milestone for Wesfarmers-owned department store, which has established dominance in the discount department store space over the past five years.
Kmart’s success has been so prominent the retailer has been accused of “cannibalising” other Wesfarmers-owned department store brand Target, raising concerns over Target’s future as it continues to operate in the shadow of the burgeoning Kmart.
“Today, Kmart is where Target was seven years ago, with Kmart’s first-half earnings in 2016 at $319 million, while Target has slumped to $74 million. Quite simply, Target lost its way and confused its core customer,” wrote retail analyst Gary Mortimer in 2016.
Similarly, Woolworths’ big box retailer Big W has come upon hard times in recent years, recently launching a turnaround strategy retail experts called the company’s “last chance” at a comeback. The business recently faced second half losses of up to $100 million.
Kmart’s 200th store has kept it in the middle of the pack compared with the reach of its competitors: Big W operates 186 stores across the country, while Target had 304 as of the end of 2016.
So how has Kmart’s brand continued to thrive whilst other businesses in the sector falter? Here are three reasons experts believe it has managed to keep ahead of the pack.
1. Store layout
Director of Good Things Marketing Helen Ahrens is a strong believer Kmart’s centralised store design is a big factor in the retailer’s success.
“The decentralised checkout in the centre of the store means customers purchase their items in the middle, and then as they travel out they find more things they need and they purchase them again at the second set of checkouts,” Ahrens told SmartCompany.
“In terms of store layout and merchandising, they’re so far ahead.”
However, shoppers didn’t feel the same way when Kmart announced the new-look stores, with hundreds of complaints being issued on social media after the roll-out, with many customers unhappy around the inconvenience the checkouts placed on both staff and customers.
“What annoys me is when I’ve walked all the way to the front of store to find the self-serve checkouts are closed off…..then have to walk back to the middle to serve myself….then walk out again to have to show my receipt to a worker at the door,” one disgruntled shopper wrote.
2. Kmart keeps it focused and keeps it simple
One of the store’s greatest strengths is its no-nonsense approach to pricing, believes brand advisor Michel Hogan, telling SmartCompany the retailer has become “essentially Australia’s Walmart”.
“Big box retail experiences are much of a muchness, no matter if it’s Target, Kmart or Big W. With that being the case, Kmart had to choose something to compete on, be it product range, quality, or price,” Hogan says.
“If you ask someone who doesn’t necessarily shop there, ‘what do you think of when you think of Kmart?’, they’re going to say ‘that’s the place where you can get really cheap stuff’, and that’s the mark of a strong brand.”
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Ahrens agrees and believes the retailer’s low prices, in conjunction with simple offerings, has really pushed the department store above its competition.
“Its stuff is so simple and clean, they don’t try and tack anything on. It’s just four dollar tubs, that’s it,” she says.
“By focusing on the four dollar tubs, customers come in to buy them, but they also buy $50 worth of other things.”
It’s this approach that both Ahrens and Hogan believe are the biggest takeaways for businesses hoping to emulate Kmart’s success, with Ahrens saying businesses shouldn’t try to focus on everything at once.
“Focus on something steady and have faith in secondary purchasing. If you’re a cafe with really good coffee, then focus on that, and just trust customers will buy other items like breakfast rolls or muffins,” she says.
Hogan agrees, saying to “pick your poison and stay focused”.
“Look at any successful brand, they’ll do this really well. There might be some different colours to it, but your focus should stay firmly entrenched.”
3. The cult of Kmart
Finally, a big part of Kmart’s success is what Ahrens calls the “cult of Kmart”, facilitated by the retailer’s “for everybody” approach.
Kmart has a devoted fanbase both online and in real life, with Facebook pages such as Kmart Bargains and Kmart Hacks having hundreds of thousands of followers.
Ahrens thinks this is due to the retailers careful positioning as a lifestyle brand for anyone, not taking the tact of appealing to a narrow user base.
“It’s a lifestyle brand that’s accessible to everyone, not just one group of people or type of person. They’ve really thought about the customer journey from beginning to end,” she says.
“Their marketing is also excellent, and they’ve got simultaneous communications across all platforms, and they know their target audiences online really well.”