US stores trial helps Kmart get smarter

A small US store trial has helped Kmart solve a big issue for smaller stores: how to move around items efficiently.

Wesfarmers CEO Rob Scott. Picture: Marie Nirme

In Seattle, Washington sits a small store that is just down the road from an Amazon Whole Foods store, the popular US Chick-Fil-A fast food chain, as well as Red Lobster, and across the road from the local Wells Fargo bank.

Called anko, it looks American, sounds American, feels American but is actually a far-flung store owned by Australia’s Kmart chain and its parent Wesfarmers, which has been quietly testing a few supply and logistics theories on shoppers to see what can be learned and brought back to Australia.

It is all about trying to solve the big issue for smaller stores: how to move around a small number of items quickly and at the lowest possible cost.

Kmart chose Seattle a few years ago for its anko store as well as a handful of pop-up stores to be close to cutting edge of IT, e-commerce and retail tech as well as key consultants it was working with to crack the problem of how to ­efficiently and productively run a small-store format that needed to push and pull around small consignments of goods, as opposed to large pallets used by larger format stores.

Anko is the newish private label brand launched by Kmart for a range of categories such as clothing, homeware and toys. The store in Seattle took on that name because the Kmart brand was already in use in the US.

It is a small store, trying to fuse together the online and physical store world with fast checkouts and plenty of tech to help accelerate the supply chain and present shoppers with what they are looking for.

As part of the Target restructure announced on Friday, Wesfarmers chief executive Rob Scott also announced anko would be closing down following its pilot trial with the ideas, technology and skills picked up in Seattle to be rolled out where possible in smaller Kmart stores in Australia.

Customers here may not notice the anko name when they walk in to a store, but the shop’s stock levels and back office will include some of the anko know-how picked up in Seattle.

“We have been trialling some small format offers (in the US) and utilising technology in different ways to address some of the opportunity around small format stores,’’ Mr Scott told The Weekend Australian. Kmart Group managing director Ian Bailey added: “It is really about process and technology that we have been working on in small format stores in the US.

“What it enables us to do is to move single SKUs very efficiently at a store level, so 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. That enables us to create a really good store format with good SKU density and good availability — and that is what customers will see in the Kmart hubs.”