Kmart and Target to merge into $10b dual-brand retail giant

Kmart and Target are being turned into a singular $10 billion retail business – but there is one big reason customers probably won’t notice.

Kmart and Target are being turned into a dual-brand retail giant.

Both owned by Wesfarmers, Target is being folded into Kmart to create a singular $10 billion business.

But news.com.au can confirm from a customer point of view, things will look the same.

Target and Kmart stores will keep their names and remain separate stores.

News.com.au understands Kmart and Target offices, technology and other back end processes customers don’t see will be combined as part of the move to a singular business.

The company said there would be a “handful of redundancies”.

Kmart and Target are set to merge. Picture: NCA NewsWire / Dean Martin

“The announcements today are an internal reorganisation of our support offices and there are no impacts to the Kmart or Target stores,” Kmart Group managing director Ian Bailey said in a statement.

“With customers now demanding value more than ever, this new operating model will unlock a new level of scale and productivity across both brands, so we can deliver even greater value to our customers in the future.

“For store networks and 50,000 store team members – it’s business as usual – as we continue to focus on providing the best value products to the thousands of customers in Australia and New Zealand who choose to shop at Kmart or Target every day.”

The Australian Financial Review first reported on Monday afternoon that Kmart and Target would be combined into a $10 billion business.

It reported Kmart chief executive John Gualtieri will run the stores day-to-day, while Target managing director Richard Pearson is moving into a new role within Wesfarmers.

The change is part of a $10 billion move. Picture: David Clark

Mr Bailey told the media outlet there would only be a “handful of redundancies”, mostly in technology and merchandise, with all changes in the back end of the business.

“We will end up with more jobs in the business a year from now,” he said.

“Kmart and Target are both strong businesses. I don’t see us doing this from a position of weakness. It’s quite the opposite. I’d say we’re strong, but I think there’s an opportunity to really capitalise on this time and find ways to continue to deliver better value for customers.

“What we found was that running two businesses it was very, very difficult to get the tech into Target, and to get those benefits. This is really why we decided to push the two businesses into one.”

Mr Bailey said even with the change, Kmart would keep its price-driven focus and Target would continue to be largely centred on affordable apparel and soft home furnishings.

Kmart raked in an astonishing $475 million in profits for the six months to December 31, 2022, helping Wesfarmers post a whopping profit of $1.39bn.

There were 19 Target stores converted to Kmart stores during this time, with initial trading results “exceeding expectations”.

Wesfarmers is in a blackout period ahead of its full-year financial results due in August.