Kmart is the “silent assassin” of Australian retail

Angus Kidman 23 January 2017

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"A little bit like IKEA without the arguments."

A few weeks ago, I noted that big box retailers like Kmart were going to have a tough time competing with Amazon in Australia if they didn't get their act together on delivery. But one analyst firm is arguing that Kmart is actually the company to beat in Australian retail, describing it as a "silent assassin".

In a recent blog post, Forrester Research analyst Tom Champion noted that Kmart has mastered the art of in-store design in a way that its rivals, most particularly Big W and Target, haven't. "Kmart has been gracefully reinventing itself while its peers are getting squeezed out of the picture," Champion wrote, pointing to Kmart's 14% year-on-year revenue growth.

The key, Champion argues, is the way in which Kmart addresses shopper needs in its store design:

Kmart's transformation isn't necessarily obvious. If you walk into a Kmart today, it can seem busy, a little loud, full of "cheap stuff". But if you've just moved into your first flat, you might go to the "Home World" section of one of its recently renovated stores. Within two square metres, you can find pots and pans, bath mats, a barbeque, and light bulbs — suddenly, you're not shopping for necessities, you're creating a vision of your new home. It's little bit like Ikea without the arguments.

That's a helpful approach for in-store shopping, but it won't make much difference for people who want to shop online in the first place. Champion notes that Kmart has deliberately downplayed its digital ambitions, focusing on small improvements and making sure its core business is profitable.

One way that Kmart might improve its delivery performance while also minimising the threat from Amazon? Signing up for Amazon's Fulfilled By Amazon program. Whatever Kmart does, it's going to be a pivotal year for Australian online shopping.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears Monday through Friday on finder.com.au.

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