The internet is going nuts right now saying it’s every mum’s worst nightmare that Kmart could be heading for new owners. We think it’s not necessarily a bad thing.
Yes, there might be changes ahead Kmart fans. The retailer’s owner has been advised to sell the uber successful shopping brand.
But what if it made Target bigger, better and like a whole other Kmart? Two Kmart-style retailers would be better than one… right?
Wesfarmers who own both Kmart and Target has been urged by broker Credit Suisse to sell off Kmart while the store is at “peak valuation” to avoid the store suffering at the expense of a Target revamp.
Target has been struggling for many years and analysts have suggested the only way to save the business is by finding the money that the sale of Kmart could bring and then using the foundations of the Kmart business model to improve it.
Target is interestingly identified as a greater retail opportunity due to its ability to compete with global ‘fast fashion brands’ like H&M and Zara. Further, if Kmart is removed from the retailers portfolio the pricing strategies used by Kmart could then be adopted by Target.
While Wesfarmers own both brands they need to have differentiation between the two and cannot change the retailing and pricing strategy used by flailing Target.
So, what could this mean for shoppers who love Kmart?
- In the short term nothing. The retailer has not commented nor taken the advice of Credit Suisse thus far (and there’s actually no guarantee that they will!)
- If a sale was to go ahead, there’s no reason why a new buyer would change the existing Kmart business model. It’s successful and profitable, so it may not impact shoppers at all.
- If a sale was to go ahead, it could actually be a win for shoppers. Imagine a world where Kmart stays the same and Target becomes more like Kmart. This could actually be shopping heaven.