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Kmart eyes strong partners, with Canada the first step into global markets

Overseas shoppers will soon be able to get their hands on Kmart homebrand goods.

Overseas shoppers will soon be able to get their hands on Kmart homebrand goods. Photo: AAP

Australian retailer Kmart is taking its home brand to the world, testing the Anko product range in overseas markets.

Kmart managing director Ian Bailey revealed on Tuesday that the department store is looking to expand its customer base beyond Australia and New Zealand – and Canada will be the first stop.

Rather than opening brick-and-mortar stores overseas or expanding its online retail shipping options, Kmart will partner with local retailers, who will stock products from its Anko range.

Inflation helping Kmart’s case

Gary Mortimer, consumer and retail expert at the Queensland University of Technology, said Canada is a great test case for Kmart, with a population slightly larger than Australia (38 million v 25 million) and slowing inflation.

If they were to enter larger markets like the US, which has a population of about 332 million, the retailer “may not have been able to scale up quick enough”.

But if the Canada deal is a success, it will open a lot of doors.

“If they can make it successful in Canada, then they can probably make it successful elsewhere,” he said.

Kmart is already enjoying huge success locally, with Wesfarmers’ 2023 half-year results showing the retailer’s pre-tax earnings increased 114 per cent to $475 million.

There are even social media groups dedicated to getting the most out of the retailer’s products, including Facebook groups such as the almost 548,000-member strong group ‘Kmart Home Decor & Hacks Australia’, and ‘Kmart Mums Australia’ with more than 385,000 members.

Kmart is already popular with international visitors to Australia. Source: TND/TikTok/@kayywuerf/@thejordanagrace

Dr Mortimer pinned the retailer’s ability to keep customers flowing through its doors amid the cost-of-living crunch on its commitment to offering good-quality products at low prices.

Meanwhile, competitors Target and Big W appear to be turning their focus to the middle market, home to department stores like Harris Scarfe.

Kmart’s low prices are especially attractive given the retailer has a knack for being extremely on trend, and is making progress on the ethicality of its supply chain, ranking in the top 20 per cent of companies assessed as part of Baptist World Aid’s Ethical Fashion Guide.

“They clearly understand that there is an appetite within the market. Households do want reasonably good-quality products … but they don’t want to pay a lot for them,” Dr Mortimer said.

“So one of the challenges for retailers is trying to get that price-value proposition really well positioned to their market. I think Kmart’s done that really well.”

Select products

Kmart’s Canadian partner will be announced in about two weeks’ time, and while details are being kept under wraps for now, it likely won’t be a mom and pop-type shop.

“Whether it’s in Canada or whether it’s elsewhere, [the retailers we’re speaking with] are always large-scale retailers,” Mr Bailey told TND.

“We want to go into work with a significant partner in each of the markets that we go into, who have the potential to develop meaningful market share over time.”

But just because Kmart is looking for large partners doesn’t mean its international foray will go ahead with the ‘go big or go home’ mentality.

Quite the opposite; rather than offering the bulk of its 20,000-plus product range, the retailer will mainly be offering Anko’s clothing, toys and homewares.

Mr Bailey said Kmart will be looking to fill the gaps where its partner’s product range might not be as strong.

“We’re going to start small and then what we’ll do is, as we get confidence and evidence of success, then we’ll look to grow quickly from that point,” he said.

Canada was chosen as the first international market to see Kmart products hit its shores since New Zealand in 1998 because there was already an “awareness” of the brand, Mr Bailey said.

Kmart is mainly focusing on Europe for its next partnerships, and is also in conversation with potential partners in Asia and the US – although Mr Bailey said the US is not an “immediate priority”.

“Canada is No.1. Our product goes live with [our partner] retailer at the end of this month,” he said at a Melbourne Fashion Festival event on Tuesday.

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