It has been a tough few years for Australian retailers with more and more brands shutting up shop and vanishing from the high street forever, and now budget retailer Target has announced it is slashing the size and number of stores across the country.
Wesfarmers, who own the discount brand, confirmed the news during an investor’s conference in Sydney on Thursday, revealing executives have made the decision to reduce their overall store network by a total of 20 per cent over the next five years.
Wesfarmers’ department stores chief executive Guy Russo said the move to shut some of the brand’s 305 stores comes in response to a change in customer shopping habits, such as increasing online sales, and to improve the brand’s profitability. While some of the stores will close completely, others will be converted to Kmart stores.
Russo said: “With Target we are advancing a very significant reset, stabilising the earnings, resetting the cost base and improving cash flow generations. Our network plans see some 20 per cent of selling floor area removed from our portfolio, dependent upon trading performance and competitor dynamics.
“This reduction in selling space reflects our focus on improving sales density and accomodating our customer’s evolving shopping patterns.”
Russo went on to thank the Target team for helping to “make Target great again” and confirmed that staff from the affected stores, which have not yet been identified, will be able to transfer to one of Wesfarmers’ other brands, which include Kmart and Officeworks.
But he admitted this may not be possible for stores in more regional areas, saying: “Where it’s a little sadder is when it’s in the country town and there is no other retailer.”
However, while Target will see a reduction in store space, Kmart’s store network is set to grow with Wesfarmers pledging to open as many as 10 new Kmart stores in Australia and New Zealand annually, as well as exploring potential opportunities abroad.
Kmart managing director Ian Bailey said: “We do all this work to design and make products for Australia and New Zealand and then we pitch them against the world class retailers who are offering their products all over the world.
“So if you look at the numbers, why wouldn’t you, you’d be almost crazy not to. How big is the prize? Well the world is enormous.”
The Aussie retail market has struggled in recent years with a number of huge names going into administration or, like Target, opting to cut back on store space nationwide amidst dwindling sales and the rise in online shopping.
Late last year, Aussie handbag brand Oroton ran into financial trouble and entered into voluntary administration, before being saved by a new investor, in the same month that Speciality Fashion Group, which owns Katies, Millers and Rivers, revealed it was closing 300 of its 1000-plus stores following six years of losses.
Other big-name brands such as Topshop, Payless Shoes, Marcs, David Lawrence, Dick Smith have all closed their doors in the past three years.