TECHNOLOGY

Why Target failed in trying to be both a high-end and a discounter, and 75 of them were closed


For many years there was a joke that Target was really pronounced "Tar-jey" with a French accent.

It was the department store where the popular TV characters Kath and Kim passed the Fountain Lakes to challenge the perception that they were financially and stylistically challenged Bogans from the Melbourne suburbs.

Although Target was a discounter, he had always tried to position himself as a slightly more sophisticated alternative to Kmart or Big W. Designer Stella McCartney's “sustainable” textile line seemed fashionable and environmentally friendly.

In the end, consumers chose Kmart, which is clearly a discounter and whose sales are more resilient than Target during an economic downturn.

Times have changed in Australia and beyond.

For many years there was a joke that Target was really pronounced "Tar-jay" with a French accent. The Broadway store in Glebe in central Sydney is pictured on May 22, 2020

Times have changed in Australia and beyond - no one cares whether they are judged for hunting for bargains. The day that Westfarmers announced that 75 Target stores were closing, Kmart sold toasters for $ 15

Times have changed in Australia and beyond – no one cares whether they are judged for hunting for bargains. The day that Westfarmers announced that 75 Target stores were closing, Kmart sold toasters for $ 15

In comparison, the goal was to sell toasters for $ 25, which contributed to the perception that they were more expensive than Kmart

In comparison, the goal was to sell toasters for $ 25, which contributed to the perception that they were more expensive than Kmart

Very few buyers care whether they are looking for bargains and avoid traditional prestige department stores like Myer and David Jones.

What will happen to Target?

The parent company Wesfarmers closes 75 stores, including 25 larger and 50 country stores

The remaining 92 Target stores will be converted to Kmarts, including 40 large stores and 52 country stores

Some Target Country stores are being converted into smaller Kmart Hub stores

Changes will occur in the next 12 months, the majority in 2021

The Kmart Group is providing $ 120 million to $ 170 million in restructuring costs to reflect the closure and conversion of its target businesses

Source: Wesfarmers announcement on the Australian Stock Exchange, May 22, 2020

The rise of the German supermarket brand Aldi and its popularity among wealthy baby boomers clearly shows this.

Bunnings also has the hardware room to himself after Woolworths’s Masters Home Improvement experiment failed because customers thought it was too easy for these simple DIY projects.

No wonder that Wesfarmers' retail conglomerate will close up to 75 Target stores in the next 12 months and convert 92 remaining to Kmarts.

On the day of the announcement, Kmart sold toasters for $ 15 to $ 10 less than Target.

The goal was also to sell microwaves for $ 69, compared to $ 48 at Kmart, which contributed to the perception that it was much more expensive.

A Kmart store on Broadway in central Sydney was also busy as a nearby destination was quiet.

Daisy Feller, senior industry analyst at IBISWorld, said Target's attempt to be an upscale discounter had confused potential customers.

Kmart is clearly a discounter whose sales are more resilient than Target's during an economic downturn. The Kmart store on Broadway in Sydney (pictured) was much busier than a nearby target

Kmart is clearly a discounter whose sales are more resilient than Target's during an economic downturn. The Kmart store on Broadway in Sydney (pictured) was much busier than a nearby target

Although Target was a discounter, he had always tried to position himself as a slightly more sophisticated alternative to Kmart or Big W. A kmart is shown on Broadway

Although Target was a discounter, he had always tried to position himself as a slightly more sophisticated alternative to Kmart or Big W. A kmart is shown on Broadway

"Target was still trying to reach this everyday, very accessible market while it was high fashion – it's confusing for people," she told Daily Mail Australia.

"You don't know where you fit in your life."

Target's collaboration with Stella McCartney, daughter of Beatles singer and songwriter Paul McCartney, has probably turned the penny pinching shopper off.

"There are initiatives with Stella McCartney that are almost trying to position themselves in the upper price segment while at the same time reaching the discount segment," said Ms. Feller.

When it came to saving money, consumers only preferred a discount store that pretended to choose Kmart and avoid Target.

"Consumers prefer something that markets itself as a discount rather than high-end and discount at the same time," said Ms. Feller.

Daisy Feller, senior industry analyst at IBISWorld, said Target's attempt to be an upscale discounter had confused potential customers. An almost empty Target store on Broadway is shown

Daisy Feller, senior industry analyst at IBISWorld, said Target's attempt to be an upscale discounter had confused potential customers. An almost empty Target store on Broadway is shown

The goal was also to sell microwaves for $ 69, compared to $ 48 at Kmart, which contributed to the perception that it was much more expensive

The goal was also to sell microwaves for $ 69, compared to $ 48 at Kmart, which contributed to the perception that it was much more expensive

Ian Bailey, CEO of Kmart, said Target will be downsized with "fewer stores and more online business." Kmart is shown on Broadway

Ian Bailey, CEO of Kmart, said Target will be downsized with "fewer stores and more online business." Kmart is shown on Broadway

CLOSE CONFIRMED TARGETS

NSW::

Armidale, early mid-2021

Campbelltown, July 2020

Cooma, early mid-2021

Cootamundra, early mid-2021

Corowa, early mid-2021

Deniliquin, early mid-2021

Forbes, early mid-2021

Leeton, early 2021

Merimbula, early mid-2021

Morisset, mid 2021

Narrabri, early mid-2021

Nowra, early mid-2021

Salamander Bay, early mid-2021

Scone, early mid-2021

Wagga Wagga, early mid 2021

Winmalee, early mid-2021

VIC::

Bacchus Marsh, early mid-2021

Bairnsdale, early mid-2021

Benalla, mid 2021

Colac, early mid-2021

Kerang, mid 2021

Langwarrin, early mid-2021

Maryborough, early mid-2021

Myrtleford, early mid-2021

Traralgon, early mid-2021

Warragul, early mid-2021

ACTION::

Weston Creek, early mid-2021

QLD::

Atherton, early 2021

Beaudesert, early mid 2021

Biloela, early 2021

Casino Retail Center, early mid 2021

Clifton Beach, early mid-2021

Emerald, early mid-2021

Goonellabah, early 2021

Kippa Ring, early 2021

Longreach, early mid-2021

Moranbah, early mid-2021

Murgon, mid 2021

Murwillumbah, early 2021

WA::

Busselton, early 2021

Karratha, early mid-2021

Kununurra, early mid-2021

Manjimup, early mid-2021

Margaret River, early mid-2021

Meadow Springs, August 2020

Merredin, early mid-2021

Narrogin, early mid-2021

SAT::

Clare, early mid-2021

Millicent, early 2021

Naracoorte, early mid-2021

Pasadena, June 2020

Port Lincoln, early 2021

TAS::

Devenport, early mid-2021

Rob Scott, managing director of Wesfarmers, admitted that Target was a weak link when he announced the closure of 75 Target stores on Friday.

"The retail sector has seen significant structural changes and disruptions for some time now, and we expect this trend to continue," he told the Australian Stock Exchange on Friday.

"With the exception of Target, Wesfarmers' retail stores are well positioned to respond to changes in consumer behavior and competition associated with this disruption."

Westfarmers, which also owns Bunnings and Officeworks, informed the ASX that it wanted to deal with the "unsustainable financial performance of Target".

Ian Bailey, CEO of Kmart, said Target will be downsized with "fewer stores and more online business."

Ms. Feller said the Target name could disappear entirely and end a brand that started with a curtain shop in Geelong in 1926.

"It is possible that they will let it run out completely," she said.

In the end, consumers chose Kmart, which is clearly a discounter and whose sales are more resilient than Target during an economic downturn. The photo shows a target jacket that is sold in downtown Sydney for $ 39

In the end, consumers chose Kmart, which is clearly a discounter and whose sales are more resilient than Target during an economic downturn. The photo shows a target jacket that is sold in downtown Sydney for $ 39

Westfarmers, which also owns Bunnings and Officeworks, informed the ASX that it wanted to deal with the "unsustainable financial performance of Target". Pictured is a jacket that is sold at Kmart for $ 20, almost half the price at Target

Westfarmers, which also owns Bunnings and Officeworks, informed the ASX that it wanted to deal with the "unsustainable financial performance of Target". Pictured is a jacket that is sold at Kmart for $ 20, almost half the price at Target

Ironically, Target survived when the small group of remaining stores were turned into stores that were clearly upscale.

& # 39; This is definitely an option. This would solve the problem of confusing brand positioning – consumers would see it as a completely different business than Kmart and not just another Kmart, ”said Ms. Feller.

Mark Schiavello, the national retail leader at BDO, said Australian consumers would likely prefer discounters in their region as corona viruses were lifted.

"When life returns to normal, people will spend money again, but their behavior will change from prestige shopping to practical everyday items," he told Daily Mail Australia.

“Retailers should expect the majority of people to remain budget-conscious for some time to come, as the impact of the pandemic is still felt in our society.

"Local shopping will be a big comeback after COVID."

Target employees have the opportunity to be employed in the remodeled Kmart branches or in other parts of the Wesfarmers group. Pictured is a Kmart store on Broadway

Target employees have the opportunity to be employed in the remodeled Kmart branches or in other parts of the Wesfarmers group. Pictured is a Kmart store on Broadway

Mark Schiavello, the national retail leader at BDO, said Australian consumers would likely prefer discounters in their region as corona viruses were lifted. Kmart is shown on Broadway in Sydney

Mark Schiavello, the national retail leader at BDO, said Australian consumers would likely prefer discounters in their region as corona viruses were lifted. Kmart is shown on Broadway in Sydney

TARGET TRANSACTIONS CONVERTED TO KMART TRANSACTIONS

NSW::

Bega, early mid-2021

Bowral, early 2021

Gunnedah, early 2021

Katoomba, early 2021

Moree, early 2021

Mudgee, early 2021

Picton, early 2021

Tumut, early 2021

Ulladulla, early 2021

Windsor Town S / C, early 2021

Yass, early 2021

QLD::

Ayr, early mid 2021

Beerwah, early mid-2021

Bowen, early 2021

Charters Towers, early 2021

Chinchilla, early 2021

Dalby, early 2021

Gatton, early 2021

Goondiwindi, early 2021

Gympie, early 2021

Ingham, early 2021

Mareeba, early 2021

Noosa Junction, early 2021

Ocean Shores Village Ctr, early 2021

Port Douglas, early 2021

Roma, early 2021

Sarina, early 2021

Stanthorpe, early 2021

Warwick, early 2021

Yamba, early 2021

Yeppoon, early 2021

VIC::

Ararat, early mid-2021

Castlemaine, September 2020

Cobram, July 2020

Echuca, July 2020

Hamilton, early 2021

Kyabram, September 2020

Entrance to the lake, early 2021

Leongatha, early 2021

Mansfield, early 2021

Portland, early 2021

Seymour, early 2021

Woodend, September 2020

Yarrawonga, early 2021

SAT::

Berri, early 2021

Murray Bridge, early 2021

Port Augusta, early 2021

Victor Harbor, early 2021

WA::

Esperance, early 2021

Geraldton, early mid 2021

Northam, early 2021

Pinjarra, early 2021

NT::

Katherine, early 2021

Target employees have the opportunity to be employed in the remodeled Kmart branches or in other parts of the Wesfarmers group.

& # 39; All team members in Target stores who are planning to switch to Kmart are offered the opportunity to join the growing Kmart team. For other affected Target team members, we will work with them to identify and offer other implementation opportunities in Kmart, Catch, Bunnings and Officeworks as these companies continue to grow, ”said a spokeswoman.

The Australian retail sector remains in trouble as sales dropped a record 17.9 percent in April after a record 8.5 percent increase in March as a buyer before the coronavirus locks on toilet paper, noodles and hoard rice.

In the worst economic crisis since the Great Depression of the 1930s, it's hardly hip to be fashionable when it comes to shopping.

Target employees have the opportunity to be employed in the remodeled Kmart branches or in other parts of the Wesfarmers group

Target employees have the opportunity to be employed in the remodeled Kmart branches or in other parts of the Wesfarmers group

Although Target is a discounter, he tried to position himself as an upscale retailer by selling the "sustainable" textiles from fashion designer Stella McCartney to appeal to ethical buyers

Although Target is a discounter, he tried to position himself as an upscale retailer by selling the "sustainable" textiles from fashion designer Stella McCartney to appeal to ethical buyers

The goal was the kind of place that Kath and Kim could get to the Fountain Lakes without admitting that they were budget-conscious fools on the outskirts. The comedians Jane Turner and Gina Riley are pictured as mother Kath Day-Knight with her daughter Kim

The goal was the kind of place that Kath and Kim could get to the Fountain Lakes without admitting that they were budget-conscious fools on the outskirts. The comedians Jane Turner and Gina Riley are pictured as mother Kath Day-Knight with her daughter Kim

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