Kmart CEO John Gualtieri will run the combined Kmart and Target stores day-to-day. Other changes include group CFO Aleks Spaseska, who is taking on international supply chain, sourcing and property.
Arjun Puri will move his full attention to Kmart’s home brand, Anko, and head its international expansion push. Anko is selling direct to consumers in India and has a partnership with Canada’s Hudson Bay.
Kmart’s Brad Blyth will continue to lead technology as CIO, including Target’s migration to one set of systems as part of this change.
Mr Bailey said Target and Kmart would remain separate consumer-facing brands with no impact on retail floor staff and only a “handful of redundancies”, mostly in technology and merchandise, noting all changes would occur on the back end of the business.
“We will end up with more jobs in the business a year from now,” he told The Australian Financial Review.
“Kmart and Target are both strong businesses. I don’t see us doing this from a position of weakness. It’s quite the opposite. I’d say we’re strong, but I think there’s an opportunity to really capitalise on this time and find ways to continue to deliver better value for customers.
“What we found was that running two businesses it was very, very difficult to get the tech into Target, and to get those benefits. This is really why we decided to push the two businesses into one.”
With mortgage payments increasing, and budgets under pressure from rising food and utilities – even if rents are capped in Victoria by the state government – the retail sector is battling a challenging environment for households.
Mr Bailey said the group had put through 1000 price drops over the past two weeks, leveraging technology such as merchandise planning tools and using Tory, a self-navigating inventory scanning robot which allows the retailer to top up product on the shop floor.
This is critical to improving sales, according to Mr Bailey, who said staff became more productive spending time on product development rather than administrative duties, and helping to offset many of the cost increases coming through the business.
“This change enables us to push the same technology into Target because we will get to a point when we will have one technology stack,” he said. “We will run one set of processes. It also means then we have a $10 billion business, which further fragments the cost.
“So you can see how all of this plays into our productivity improvement.”
Mr Bailey – who was appointed MD of Kmart Group in 2018 – has been instrumental in the retailer’s turnaround. In 2020, Wesfarmers shed jobs at Target and closed a large chunk of its network, while some stores were converted to the Kmart brand.
Mr Bailey said the two brands would not change their proposition, with Kmart being price-driven and Target largely centred on affordable apparel and soft home furnishings.
Kmart was established in 1969, with the opening of its first store in Burwood, Victoria, while Target started as a Geelong drapery store in 1926. When Wesfarmers acquired Coles Group for $19.3 billion in 2007 it brought in subsidiaries Kmart, Target and Officeworks. Coles was spun-off in 2018, but the smaller three retailers stayed with Wesfarmers.
Wesfarmers is in blackout with full-year financial results due in August. But Mr Bailey said customers were discerning, and wanted deals.
“At Target we picked up a lot of business from particularly the specialty stores,” he said.
