Wesfarmers’ Target is being folded into its discount stablemate Kmart, creating a singular $10 billion business with the aim of boosting returns as value offerings become more desirable to shoppers battling the rising cost of living.

A management rejig being outlined to staff on Monday afternoon will result in Target MD Richard Pearson moving to a new role within Wesfarmers’ health unit. Mr Pearson will become its retail director leading the strategy and operational side of the division, including its Priceline chain and loyalty program. Ian Bailey retains oversight of the enlarged Kmart group.