• The last full-size Kmart in the U.S. closed in October after years of decline.
• But in Australia, the store’s namesake is going strong.
• With its own brand and popular social media, the chain has reinvented itself.

The closing of a Kmart store in Bridgehampton, New York, in October marked the end of an era for the iconic chain.

Kmart, once a discount retailer with more than 2,000 locations nationwide, was famous for its low prices and “Blue Light Specials.”

But the chain I’ve seen sales decline for years While it struggles to compete with rivals like Walmart and Target, and E-commerce giants like Amazon.

There is now only one Kmart store left on the US mainland, tucked away inside an At Home store in southwest Miami.

But on the other side of the world, things couldn’t be more different; Kmart’s Australian namesake is growing rapidly.

The Australian company, which previously had a common shareholding with the US version but is no longer affiliated with it, first opened in Melbourne in 1969.

The Wesfarmers-owned chain currently operates more than 300 stores in Australia and New Zealand and employs around 40,000 people.

Kmart Group, which includes both Kmart and Target Australia, saw its revenue rise almost 5% in the last financial year, from around $10.6 billion to $11.1 billion. cost of living crisis And supply chain issues.

Gary Mortimer, a professor at Queensland University of Technology who specializes in food retailing, retail marketing and consumer behavior, told Business Insider that a key factor in Kmart’s success is its core brand, Anko.

Anko, which started as a kitchen appliance line before expanding to include products such as stationery, home decor and clothing, often copies more expensive brands at cheaper prices.

Anko now accounts for 85% of Kmart’s sales in Australia and has become one of the country’s most popular brands. Mortimer said it was “no mean feat”.

“They had to maintain the low price, but they also had to maintain pretty good quality, because I don’t think consumers would accept the low price if the product was going to break down in three to six months,” Mortimer said.

in conversation NRF (National Retail Federation) 2024: Retail’s BIG ShowIan Bailey, chief executive of Kmart Group, echoed this point.

“We really wanted to create an environment where customers felt like they didn’t have to compromise. And we found that to be a very strong driver for our business,” he said.

Bailey said at NRF 2024 that the brand was also helping Kmart Australia gain better data on its products and consumer trends and improve demand forecasts.

“The quality of data we get from one brand is phenomenal,” he said.

“Because we run a single product and then pretty much run a daily pricing model, the net result is incredibly clean data,” he continued. “And this allows us to be very good at forecasting demand, which means we can have excellent availability with relatively low stock levels. This then gives us the ability to start testing new products and deliver them because we have enough equipment on hand.” The inventory capacity to do that.”

Anko’s success was such that it helped Kmart Australia reinvent itself from a traditional retailer to a contract manufacturer and supplier, and the company went on to introduce the brand to other international markets, including Canada, Singapore and the Philippines.

Anastasia Lloyd-Wallis, COO of Retail Doctor Group, a Sydney-based consultancy, told BI that Kmart is also focusing on creating positive in-store experiences to drive growth and Resurgence of in-store shopping after the pandemic.

Kmart achieves this through its bargain prices and consistent delivery of new items, Lloyd-Wallis said, adding that the experiential aspect helps differentiate Kmart from its online competitors.

Social media has enabled such experiences and new products to reach shoppers as the company taps into the creator craze.

“We see this with things like Kmart hacks,” where creators show off how they work Use Kmart products in new ways to help with their daily lives, Lloyd-Wallis said.

Now you can find instagram Accounts dedicated to sharing such tips.

The company was also quick to take on viral products and produce its own versions at deeply discounted prices.

In one instance, Kmart began selling a version of a popular “sunset lamp” online for AU$27 (about $18) that was selling for AU$1,500 (about $990), news.com.au reported.

A race to the bottom

So far Kmart Australia has weathered the e-commerce storm, thanks in part to the geographical challenges companies like Amazon face in Australia.

Australia is the world’s sixth largest country by area, but its population is relatively small (27.1 million people as of March 2024), most of whom live in remote areas.

Mortimer said Kmart’s advantage here is that it is “decentralized” with stores across the country.

It also uses “K hub” microstores, which offer locals in regional locations access to some of Kmart’s best-selling products, as well as a place to order online from the full range of both Kmart and Target Australia.

But Kmart still faces challenges.

For starters, Amazon isn’t out of the game.

Amazon Australia gained 1.1 million new customers in the 12 months to June, with 7.9 million Australians aged 14 and over shopping on the site at least once a year, according to market research firm Roy Morgan.

Kmart will also be wary of Chinese fast fashion retailers. Temu And Shein Budget-conscious customers are increasingly looking for cheaper prices.

Data from Roy Morgan in August shows the number of Australians aged 14 and over who have shopped at least once in the last 12 months from Temu and Shein was 3.8 million and 2 million respectively.

It looks like Kmart Australia may find itself in a price race to the bottom.

“These figures confirm that the ‘downward trade’ phenomenon is real,” said Laura Demasi, head of retail research and social and consumer trends at Roy Morgan. in question. “Every month, more and more Australians – both young and old – are turning to these platforms to stretch their dollars further, diverting billions of dollars away from Australian retailers.”