I heard recently that Westfarmers are rebranding their floundering Target stores under the Kmart brand.
And watch as #karget is born.
This breaks house of brands, Westfarmers, well-worn strategy of keeping their retail brands separate and actively competing with each other (Low, 2016).
For six years both brands have tried to differentiate themselves in a fiercely competitive retail market, but it seems Kmart is to have the last laugh (Hatch, 2015).
From a crumbling business verging on collapse five years ago (Harper, 2015), Kmart knew that to successfully sell products and cement long-terms loyalty, it had to reinvigorate its brand story and approach to product quality and customer service.
Guy Russo, Kmart Managing Director, inherited a miss-guided business model, with too many products and a confusing price structure and turned the brand into a ‘profitable purveyor of cut-price chic’ (Harper, 2015).
So before an overhauled brand campaign was launched work was done in back of house.
Kmart moved away from in-store sales and reduced the number of suppliers, resulting in a dramatic drop of product lines from 50 000 to around 12 000. The immense savings now allows Kmart to keep prices low 365 days of the year.
Improving instore experience.
Kmart sits in the middle of the goods to services continuum (Iacobucci, 2014:69), where the company offers a mix of goods and services making the instore experience integral to satisfying customer expectations.
Within a tightly fought competitor set, service was a key differentiator for the Brand. Physical evidence are those things that are apparent to a customer used to judge the quality of the service (Smith & Saker, 1992) so it was critical is was managed well.
When Russo took charge there was an immediate insistence on clean stores (Harper, 2015). The shop fit-outs were ageing and store layouts were confusing and unappealing. He set about making massive changes to stores, and as a result, a bold new store layout was launched that divides the store by rooms in the home rather than by categories. The approach is unique in the retail sector and is said to be “more intuitive, easy to navigate, and encourages some serious impulse buying” (Harper 2015).
New cut-price-chic product range.
A shift in product offer was also identified as a key factor to enhancing customer satisfaction.
Driven by a top down approach (Iaobucci, 2014:91), the company saw the need for change when brand tracking showed that customers loved shopping the brand, but they were reluctant to tell others that they shopped there (Burrowes, 2013).
With a focus on “suburban street style” and a more streamlined “back to basics” product range (Burrowes, 2013), Kmart’s own store brand was introduced to replace many of the big brands.
Brand association overhaul.
The distinctive in-store physical space, new product range, along with the everyday low price strategy was gloriously launched to the market with a heavy marketing spend.
The heritage of the logo brought with it a high level of customer awareness, so it remained unchanged while the brand associations were evolved to enhance loyalty.
Marketing and advertising campaigns moved the brand away from targeting everyone, to speak specifically to mothers and the brand personality ignited through simplified TV spots featuring just a handful of products and a catchy pop song to draw attention to the low price strategy.
Social media has also been incredibly effective for the brand. “Kmart hacks” (Burrowes, 2013) and DIY home styling ideas trend often from content generated by women to share with like-minded Kmart fans.
The result has been the dawn of an authentic online community, shifting customer expectations of quality, and ultimately establishing Kmart as an aspirational brand.
Mr Goyder, Westfarmers Managing Director, said Kmart had won market share from “a broad range of competitors, not just Target” (Low, 2016) and he is convinced the two brands could grow at the same time.
I suppose time will tell. Long live #karget.
Burrowes T (2013) ‘Making Kmart Irresistable’ Mumbrella, 10 September, viewed 20 May https://mumbrella.com.au/making-kmart-irresistible-177408
Harper J (2015) ‘Kmart chief Guy Russo is a man for all seasons’ Herald Sun, 24 December, viewed 10 May <http://www.heraldsun.com.au/business/kmart-chief-guy-russo-is-a-man-for-all-seasons/story-fni0dcne-1226789086424>
Hatch P. (2016)’Target and Kmart merger will lose sales to Big W, Westfarmers warned’ Sydney Morning Herald, 20 April, viewed 10 May http://www.smh.com.au/business/retail/target-and-kmart-merger-will-lose-sales-to-big-w-wesfarmers-warned-20160419-go9stk.html#ixzz49fEA8aTi
Iacobucci D. (2014) ‘Marketing Management (MM4)’, South-Western, Cenage Learning, Mason USA, 4th Edition, p26-64.
Low C (2016) ‘Karget will lead to smaller Target and bigger Kmart’ Sydney Morning Herald , 21 April, viewed 14 May http://www.smh.com.au/business/retail/karget-will-lead-to-smaller-target-and-bigger-kmart-20160421-gobrlg.html#ixzz49fDpJeUw
Rubio N, Villasenor N & Oubina J (2015) ‘Consumer identification with store brands: differences between consumers according to their brand loyalty’, Business Research Quarterly, April-June, Vol, 18 Issue 2, p11-126.
Smith, G, Saker, J, 1992, “Developing Marketing Strategy in the Not-for-Profit Sector’, Library Management, vol. 13.4, no. 6.