Anko: Intriguing new-format Kmart store being trialled in the US

Kmart has been quietly testing a new store design in the US under a completely different name, and it provides a big clue to Kmart’s future.

It’s owned by Kmart, it’s certainly full of Kmart products but you won’t see the Kmart name anywhere. It’s also 12,500km away from the next nearest Kmart.

Far away in the US state of Washington, the Australian-based retail chain has been conducting a quiet experiment under an unknown brand.

And that experiment could have a big impact during the next 12 months as Kmart converts almost 100 ailing Target stores to its own name.

For the last 18 months, eager shoppers in Seattle have been able to buy reasonably priced T-shirts and toys; manchester and mugs; and pots and pans from a store that is marketed as selling “globally inspired designs” that are “born in Australia”.

Much is made of the brand’s Australian roots. US magazine House Beautiful had a peek inside and described the chain as an “Australian-based department store that offers affordable style for the home and family”.

It was “Target (the US Target that is) meets Ikea”, the mag said.

But the name above the door, “Anko,” is not one many Aussies would recognise. There are no Anko stores on this side of the ocean.

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To work out what Anko is, the first thing to know is Kmart Australia and New Zealand’s owner Wesfarmers wouldn’t have been able to use the name Kmart in the US even if it wanted to. That’s because there is already a Kmart chain in the US, now on its last legs, that owns the trademark over there.

Anko: Kmart, but not as we know it. Pictures: Anko/Kmart/Instagram

The dedicated Kmart shopper may be familiar with the Anko own brand which can be found in stores in Australia. Picture: Kmart.

So, they plumped for Anko instead. If it does sound like you’ve heard it before that’s because it’s one of Kmart’s major private labels. Sniff around any Kmart store and you’ll see heaps of Anko products.

Kmart explained the name Anko as being an “evolution” of its former “& Co” brands, including “Home & Co” and “Kids & Co.” but with the inclusion of a K for Kmart.

Despite the name, if an Aussie shopper were to step into a US Anko store it would feel like familiar territory, like a slimmed down Kmart on the opposite side of the Pacific. Many of the products are exactly the same Anko products you would get in a Kmart store here, be that plates, clothes or toys. Indeed, if you look online, even the product photos are the same.

The prices aren’t the same though. A collapsible storage cube is $5 at Kmart and $US5 at Anko – that actually means Australians are paying more for the same product.

Spot the difference – a product on Kmart’s website. Pictures: Anko/Kmart/Instagram

The same product on Anko’s website. Pictures: Anko/Kmart/Instagram

AMERICAN STORE’S TRUE PURPOSE

There are differences too. Anko stores, the first of three opened in October 2018, are smaller than your average Kmart.

You also won’t find any giant slabs of Cadbury chocolate or rows of cut-price kettles and vacuum cleaners. And Anko holds lots of weird and wonderful events you’d never find at a Kmart including cookie dough pop up giveaways; calligraphy workshops and even a cat cafe where you can adopt a moggy.

The stores are more colourful and smarter with an “elevated presentation and strong product curation,” the firm said. New style checkouts are designed to get people in and out quicker, and the stores are designed to “connect the digital and physical experience”.

But the real difference is what Kmart’s true intentions are with Anko. Wesfarmers and Kmart haven’t talked a huge amount about their boutique offshoot. In various investor documents when it’s mentioned at all, it’s referred to as “US research and development stores”.

Anko – the research and development stores owned by Kmart Australia in Seattle, USA. Pictures: Anko/Kmart/Instagram

Perhaps stung by the financial disaster that was Wesfarmers’ expansion of Bunnings to Britain, that could be a convenient way to dampen expectations about the chain should it falter.

However, the firm has insisted Anko was never an attempt to break into the competitive US market. Rather, it’s part of a plan to test out new ideas that could be rolled out across Australia. It’s a trial of a smaller format store, something Wesfarmers – that also owns Target and Officeworks as well as Bunnings and Kmart – has little experience of.

BLUEPRINT FOR KMART HUB

Setting up shop in Seattle gave Kmart the ability to try out new ideas with less scrutiny from domestic shoppers while being in the backyard of some of the US’ most important technology firms. That was a benefit, said Kmart chief executive officer Ian Bailey, as it allowed the company to hone the back-end tech to make small stores work more efficiently.

“If you think about a Kmart store today, we move cartons and we move pallets and that is how the supply chain works. If you go to a small format store that then just leads to too much of any one item, so what we have developed is a mechanism and a way of moving product very quickly in small volumes at low cost,” he told The Australian.

You’ll soon see what has been learnt in this small collection of stores in Seattle, on this side of the Pacific from Seymour to Scone.

Last week, Wesfarmers announced that almost 100 Target stores would be converted to “Kmart Hub” stores, a format that doesn’t exist in Australia yet.

“The conversion of suitable Target Country stores to small format Kmart Hub stores will leverage Kmart Group’s leanings from trialling small format Anko stores in the US while providing regional customers with increased access to a selected range of Kmart’s home, apparel and general merchandise products,” the company said on Friday.

Asked whether having the usual Kmart format and a clutch of smaller stores would “over complicate” the company, Wesfarmers’ boss Rob Scott admitted it was a concern.

“We're very paranoid about that so we wanted to make sure we knew how to run these stores before we made the call to make the conversion. And we feel like we'd learnt enough from the work we were doing in Anko that we could run these efficiently without distracting the core business from the big stores”.

Target Country’s converted to Kmart will have an Anko style makeover.

You probably won’t be able enjoy a cat cafe or calligraphy workshop, but Kmart hopes their Anko experience will help ensure its new Hub stores will have the optimum number of product lines and they won’t run out of that stock leaving gaps on the shelves.

And with that knowledge now gleaned, there is no more need for Anko. It’s sayonara Seattle shoppers.

Wesfarmers has said it will close all its Anko stores within months, ahead of the first Kmart Hub opening in regional Australia.

Americans who have been bewitched by their local department store that was “born in Australia” will soon have to find somewhere else to pick up a few pillows and plates – and do their calligraphy workshops.