Target in Trouble, Closing Stores in Australia (Kmart Wins!)
Channel: Daily Insight
Date: 25/05/2020

I received an email from the Managing Director of Target Australia a couple of days ago. Target is Australia's largest department store chain by store number, but that’s soon to change. Target has just become the latest casualty in Australia's ailing retail sector. Owners of Target, Wesfarmers, announced that up to 75 stores will be closed across Australia, while about 90 stores will be converted to Kmart. Yes, Wesfarmers also own Kmart. It turns out that Target and Kmart, although competitors, are actually just sister companies. Whether you buy stuff from Target or Kmart, Wesfarmers certainly don’t care. They get your money either way. But as it turns out, Aussies prefer Kmart. It’s cheaper. It’s more affordable. And it’s prices are lower. Yes, Aussies love a bargain! And Kmart has successfully delivered that bargain. For example, looking at Lego, we can see that the Harry Potter Hogwarts Express is $139 at Target, but only $119 at Kmart. For this LEGO City Mars Research Shuttle, it’s $49 at Target, but only $39 at Kmart. Generally speaking, when it comes to retail, price wins. And when you’re selling the same product, of course price wins! I don’t know how Wesfarmers run their department store business, but I can’t believe for a second they believed that this sort of price differential could go on for much longer. Of course Target was going to fail if they’re selling exactly the same products at a significantly higher price. In the end, if you sell something for a higher price than Kmart, Kmart wins! 

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