Modern Australian
Men's Weekly

.

Target's decline is part of a deeper trend

  • Written by Jason Pallant, Lecturer of Marketing, Swinburne University of Technology

Wesfarmers’ decision to close or rebrand up to 167 of its 284 Target and Target Country stores should not come as too much of a surprise.

The once popular store has been ailing for years, outmanoeuvred by its successful and popular sister business, Kmart.

Up to 75 Target and Target Country stores will be closed, with the balance being converted to Kmart stores.

Its decline is due to a combination of poor market positioning, confusing product strategies, a declining middle class consumer market and too much similarity with Kmart. The impacts of COVID-19 are just the icing on the cake.

Read more: How Kmart ate Target: a story of retail cannibalism

Spiralling sales and profit

Wesfarmers acquired both retail chains when it took over the Coles Group in 2007. At the time Target looked the stronger business, and Wesfarmers considered selling all or part of Kmart, or converting stores to the Target brand.

Just as well it decided to invest in Kmart instead.

Since 2012, Target’s profits and sales have deteriorated with Target realising its first loss of A$195 million in 2016.

How Target has performed since then has been obscured by Wesfarmers combining the business into a Department Stores Division including Kmart and Kmart Tyre and Auto Service. Target’s results were thus no longer reported separately.

But Wesfarmers’ 2019 annual report noted its trading performance highlighted “the need for ongoing repositioning to further elevate quality and style, expand its digital capabilities, and differentiate the business from Kmart and other competitors”.

High couture and cheap kettles

One way Target confused shoppers was to offer collaborations with high-end fashion designers like Missoni, Stella McCartney, Dion Lee and Dannii Minogue, alongside $2 kids’ tops and cheap kitchenware.

Target's decline is part of a deeper trend Australian model Nicole Trunfio at the official launch of the ‘Jean Paul Gaultier for Target’ collection in 2016. Julian Smith/AAP

The move frustrated customers unable to secure designer pieces and disenfranchised “value-seeking” customers. Many voted with their wallets, moving to Kmart.

Wesfarmers’ plans to differentiate Target from Kmart involved focusing on higher quality apparel, soft homewares and toys to compete against more specialty and middle market offerings.

But the middle market is a challenging sector. It is now dominated by “fast fashion” players offering on-trend clothing and home furnishing. The pressures have led to the collapse of other middle market chains.

Wesfarmers was very aware of the risks associated with this strategy.Its 2017 annual report stated:

“Target’s strategy has been reset and the business is now focused on progressing changes to the operating model to better position the business to grow earnings into the future. This journey will be undertaken in an increasingly competitive apparel and general merchandise environment”.

Death of department stores

The attempted shift in focus to a middle market department store only created more problems.

Department stores worldwide have faced challenging times in recent years. The past year alone has seen department store icons including Barney’s, Debenhams and JCPenney file for bankruptcy or close for good. Closer to home, Harris Scarfe went into receivership in December 2019, while Myer and David Jones have looked to consolidate stores.

Department stores face many challenges from competition and changing consumer behaviour. However, a broader challenge is a declining middle class that has been the cornerstone of the sector’s customer base.

Target’s strategy to move further into the middle market was always doomed for limited success.

Read more: Death of the department store: don't just blame the internet, it's to do with a dwindling middle class

Pandemic impacts

Adding to department store woes is the COVID-19 pandemic.

Already reeling from a weak Christmas period and the effects of the bushfires, retailers were hoping for a return to spending. Instead, they have been faced with store closures and possibly permanent shifts in consumer behaviour.

While some retailers have simply tried to survive the lockdowns, others are re-evaluating their future. For Wesfarmers, this means shifting focus from the struggling Target to the more popular and profitable Kmart.

But though the pandemic has undoubtedly had an unprecedented and substantial impact on the retail industry, in some cases it only accelerating outcomes already on the cards.

So Target is unlikely to be the last retailer to undergo radical surgery. Retailers like the Accent Group and PAS Group have flagged similar plans.

Expect further announcements as retailers evaluate how to survive.

Authors: Jason Pallant, Lecturer of Marketing, Swinburne University of Technology

Read more https://theconversation.com/dont-blame-covid-19-targets-decline-is-part-of-a-deeper-trend-139205

How To Keep Vase Flowers Fresh Through Australia’s Coldest Months

Winter flowers develop slowly, which gives them stronger structure and longer vase life Heat from indoor environments is the biggest threat to th...

Artificial Intelligence is Powering the Growth of Australian Telehealth Services

Many Australians have traditionally experienced difficulties in accessing timely and quality healthcare, especially those who live in rural or remot...

Powering Shepparton’s Businesses: Expert Commercial Electrical Services You Can Count On

When it comes to running a successful business, having reliable, compliant, and efficient electrical systems is non-negotiable. From small retail ou...

Maximise Efficiency: Cleaner Solar Panels for Optimal Performance

Solar panels are a smart investment in energy efficiency, sustainability, and long-term savings—especially here in Cairns, where the tropical sun ...

7 Common Air Conditioner Issues in Melbourne – And How to Fix Them

Image by freepik Living in Melbourne, we all know how unpredictable the weather can be. One moment it’s cold and windy, the next it’s a scorchin...

Powering Palm QLD with Reliable Electrical Solutions

Image by pvproductions on Freepik When it comes to finding a trustworthy electrician Palm QLD locals can count on, the team at East Coast Sparkies s...

The Smart Way to Grow Online: SEO Management Sydney Businesses Can Rely On

If you’re a Sydney-based business owner, you already know the digital space is crowded. But with the right strategy, you don’t need to shout the...

What Your Car Says About You: The Personality Behind the Vehicle

You can tell a lot about someone by the car they drive—or at least, that’s what people think. True Blue Mobile Mechanics reckon the car says a l...

The Confidence Curve: Why Boudoir Photography Is the Empowerment Trend You Didn’t Know You Needed

Boudoir photography has been quietly taking over social feeds, Pinterest boards, and personal milestones—and for good reason. It’s not just abou...

Understanding Level 2 Electricians: Why Sydney Residents Need Licenced Experts for Complex Electrical Work

When it comes to electrical work around the home or business, not all electricians are created equal. In Sydney, particularly when you're dealing wi...

Retirement Anchored in Model Boat Building for Waterford’s Doug Unsold

WATERFORD — When Doug Unsold sees his ship come in, it’s usually one he’s crafted with his own hands. The 67-year-old retiree from Waterford ...

The Science Behind Alarm Clocks and Your Circadian Rhythm

Waking up on time isn’t just about setting an alarm—it’s about working with your body, not against it. At the heart of every restful night and...

How to Use Plants to Create a Calming Atmosphere in Your Home

In today’s fast-paced world, cultivating a calm, soothing environment at home has never been more important. Whether you live in a busy urban apar...

How Maths Tutoring Can Help Students Master Maths

Mathematics can be a daunting subject for many students, often causing stress and frustration. However, maths tutoring has proven to be an effective...

Refurbished iPads Are Better Than New Ones (Here's Why)

Image by rawpixel.com on Freepik Apple's refurbished iPad program has quietly become one of the best deals in tech. While everyone obsesses over the ...

Your Guide to Finding the Right GP: What Perth City Doctors Offer Today

Choosing a General Practitioner (GP) is one of the most important health decisions you’ll make. Luckily, Perth’s vibrant CBD now hosts a new ge...

Why Every Mining Operation Needs a Robust Safety Management System

Mining is one of the backbones of the Australian economy, particularly in Western Australia. Back in 2019-20, mining contributed 10.4% of Australia...

Australian Classic Literature Enjoys Resurgence

Welcome back to the good old days of storytelling! As the modern world becomes increasingly more demanding, returning to childhood favourites offers...