Store conversions on the cards.
Wesfarmers chief executive, Richard Goyder says the company plans to have fewer but stronger Target stores and more Kmart outlets, as department store chief executive Guy Russo kicks off a strategic review.
Goyder told media on Thursday, “People are underestimating the opportunities and over-estimating the extent of the (merger).”
“Where there are opportunities to share things in a way that it doesn’t detract from the brands, we will do it because it makes sense. In five to 10 years’ time, we will have a very strong department store business, both Kmart and Target will have their own brand, their own image,” he said.
“We will continue to operate both businesses in the market. We have a strong pipeline of new stores going to open for Kmart in coming years and we are not planning on opening as many new Target stores.
“There will be some Target stores converted into Kmart, and probably some Kmart stores converted into Target, but I would expect over the next five years that the representation will be greater Kmart stores than Target,” Goyder added.
Target currently has more than 300 stores in Australia, while Kmart has more than 200 stores in Australia and New Zealand. Two loss-making Target stores have already been converted into Kmart.
Goyder said there would always been an overlap in what Target and Kmart offered, and hinted at possible category changes for Target.
More details on Target’s turnaround plan will be revealed by Wesfarmers in a strategy day on June 22, 2016.