Target and Kmart network changes

In late May, Wesfarmers announced significant changes to the Target and Kmart store networks, with the aim of making Target more commercially viable. A number of actions will be taken over the next year to address the unsustainable financial performance of Target and accelerate the growth of Kmart, including the conversion of a number of Targets to Kmart stores and the closure of Target stores not suited for conversion.

We are very aware this will have a significant impact, most importantly on our team members, customers and on regional communities, where Target Country stores will close and not convert to a new, small format Kmart Hub store.

Since announcing this change, Wesfarmers and Kmart Group have received many messages of concern but also recognition that businesses need to be sustainable in the long term. Target has struggled for many years and has incurred very significant losses. In its current form, it is not viable. Its costs are too high, including the cost of operating and supplying a large network of physical stores in regional Australia of varying sizes stocking varying ranges. These problems are not unique to Target. For a number of years, there has been ongoing disruption in the retail sector impacting many retailers. Over the last decade, Target has also faced significant competition from new international retailers, online retailers and other department stores, including Kmart which has been a disrupter itself in this sector.

Within Wesfarmers, we have made every effort to find a sustainable path forward for Target.  However, it is now impossible to continue to run Target at the current size. Rather than close the business, we considered many options to avoid store closures and retain our people where we can. In regional Australia, about half Target Country stores, 52, are suited to being converted to smaller format Kmart Hub stores.  These meet a range of criteria including location, population catchments and store size.

Regrettably, many regional sites are not suitable for conversion and those impacted communities have been advised that we cannot revisit the decision.

We acknowledge this is a tough time for some of our team members and customers, and we are supporting them as best we can, including identifying redeployment opportunities in other Wesfarmers businesses. We continue to focus on improving Target’s online offer and we’re working hard to retain the convenience our customers currently have access to in store, by providing a range of online pickup and delivery options.

We know redeployment within our Group won’t be possible everywhere but across Wesfarmers we are confident we will be able to create more jobs for Australians over the next year, including in regional Australia, even with the unfortunate Target closures. We can only create this growth in jobs because, with the support of our valued team members, we have sustainable and competitive businesses.