Kmart: A Wesfarmers Subsidiary's Market Strategy (2024-2029)

Desklib provides past papers and solved assignments for students. This report analyzes Kmart's market strategy.

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Group Task

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Executive summary
The report is based on the planning of the company's strategy for the next 5 years in
the market and industry. This report is based on the Kmart subsidiary of the
Wesfarmers. The Wesfarmers is the largest company in Australia which operates in
different industries selling different products like chemical, apparels, fertilizers,
automotive and safety products. The Wesfarmers is a retail conglomerate which was
founded in 1914. the report is basically focusing on the Kmart products and services
offered in the Australian market. The company strategy for the future will be to
provide the best quality products at affordable prices.

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Table of Contents
Executive summary........................................................................................................2
Introduction....................................................................................................................3
Wesfarmers.....................................................................................................................4
Conclusion....................................................................................................................12
References....................................................................................................................13

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Introduction
This report focuses on the company strategy of the Kmart, Wesfarmers in the retail
industry and their market demand and supply. The Kmart is the subsidiary of the
Wesfarmers which is the largest company in Australia. The Kmart deals in different
products and services provided in the Australian market. The market strategy of the
company is always focused on improving the customer's satisfaction and accessibility
to affordable products. The market determinants of the company's demand and supply
are also influenced by different factors.

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Wesfarmers
Wesfarmers is an Australian conglomerate which is based in Perth, capital of the
Western Australia and deals in chemicals, fertilizers, apparels, coal mining, safety
products for industries and retail. It has many subsidiaries including Kmart, Bunnings
warehouse, Coles supermarkets, coles express, Kleenheart etc. The company was
founded in 1914 and was earlier served as a public company. It is a conglomerate
industry which is defined as a combination of two or more corporations operating in
several industries under a single corporate group. The Wesfarmers is the parent
company with many subsidiaries in the market. This report will be considering the
subsidiary of the Wesfarmers that is Kmart(Roberts, 2015). The areas served by the
company include Australia, India, Ireland, New Zealand and the United Kingdom.
The CEO of the Wesfarmers is Rob Scott and Michael Chaney is the chairman of the
company. It is the largest private employer in Australia.
Kmart
Kmart is the subsidiary of the Wesfarmers in the retail industry of Australia. They
offer general merchandise, apparels, and home items. The latest records showed that
the company has 228 stores which are serving from 50 years, 1969. Headquarter of
the company is located in the Victoria, Australia. They offer low price products for
the Australian people.
The Kmart retail stores are the leading company in the retail industry which has been
continuously working towards customer involvement and satisfaction. The
introduction of the new markets and entry of many foreign companies have increased
the competition. The companies are trying their best to attract the customers of the
market. The company are using different market strategies for increasing their market
reach and position. The Australian consumers are becoming sophisticated and
demanding with the increasing number of players in the market. The factors which are
affecting the Australian retail industry are the capacity of people to spend more on
high-quality products. The retail market of Australia has seen positive growth over the
worldwide market and has led the business world.

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(Figure1: retail industry statistics)(Ibisworld.com.au, 2019)
The above figure shows that the retail industry in Australia is maintaining the
momentum which is driven by the social and economic developments. The main
reason for the growth of retail industry is increasing use of online features, increasing
purchasing power, rising population and economic growth (Roberts, 2014). Australia
has a flexible market which has may have sudden rise and downfall in the market.
(Figure2: Gross Domestic Rate chart, Australia)(Statista.com, 2019)

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The retail industry is continuously contributing to GDP in Australia economy from
the past which is improving the health and economy of the country. The international
market and new technology are helping them in the development of the Australian
retail industry. The increasing demand for other methods of purchase like the online
business is increasing the business in the country.
Characteristics of the retail industry
This report is considering the apparel retail stores of the Kmart, Wesfarmers. The
retail industry of the apparels in Australia is experiencing great changes and ups-
downs in their market. The apparel market of the company is featured to provide
affordable price products and clothes that are attracted by large customers.
The retail industry has been characterized by different factors and features which is
contributing to the development of the Australian market. The market structure of the
retail industry of the Australian market is highly competitive because of the
globalization and increased entry of the foreign parties (Abhayawansa and Guthrie,
2014). The retail industry is really diverse as the industry is now facing national and
international competition in the market. The diversity of the retail market is also based
on different customers which have different needs and wants. The retail industry has
many options for the products and services with differentiating pricing. The retail
industry is a heterogeneous industry as the sector has many products and services that
are offered to the customers. The clothing products of the company are affected by
many changes in the taste and fashion. The customers of the company are also
changing their company according to the services offered. The customers are now
interested in the companies which offer a variety of products with the best quality and
affordable prices. The technological changes like e-commerce have also affected the
market structure of the retail industry. The retail industry is difficult to understand
them for their market structure as the industry is really diverse with new players. The
market has some concentrated businesses which are the key players in the retail
industry. The retail industry of Australia is having a monopolistic market structure
which has different suppliers and companies which are large and have concentrated
the power. They offer a variety of products and have separate pricing policy.

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(Figure3: Top leaders in the retail industry)(Economic Structure and Performance
of the Australian Retail Industry. 2019)
The major leaders of the retail market are the Woolworth and BHP which have been
the ruling companies in the retail market. The market of the retail industry has some
major companies which have the concentrated power in the market and the customers
keep switching between these according to their needs. The major leaders of the
market have different offers and marketing techniques to attract the customers. The
customers of the retail market are very demanding and need low price products to
keep the customer loyalty. These leaders keep offering different products and offers to
attract the customers. The Woolworth has gained 28.3 million customers in past years
and Wesfarmers has gained 20 million customers. These have very tough competition
which creates highly reactive business environment (Economides and Tåg, 2012).

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Determinants of demand and supply
The determinants of the demand can be a taste of the consumers, population of the
country, the income of the consumers and prices of the related goods. These are some
of the determinants of the demand in the retail market of Australia. The Australian
market has dynamic and diverse market conditions which have been changing with
time and technology. The most effective determinant is the population of the country.
The population of Australia is changing and increasing at fast speed. The population
increase is affecting the retail industry of the country. The increased population is
increasing the demand for the products of the country. The Kmart is offering different
products like the apparels, general merchandise and home items. These products are
affecting the market share of the retail market. The need for an increased population is
increasing the demand for these products (Verhoef, et, al., 2015). The other most
important determinant in the retail industry is the income of the consumer group. The
income of the customer influences the products and services bought. The people with
high income can afford to buy expensive and better quality products whereas people
with low income tend to buy cheaper products and comparatively low-quality
products. The high-income group mostly prefers to buy the products with high quality
and satisfaction without thinking for the price of it whereas the lower income groups
are not able to purchase high-quality products. Australia is experiencing a high rate of
economic growth which is increasing the purchasing power of the people. The people
with high purchasing power are able to buy more expensive products. The company
can increase the prices of the products with innovation and improvement.
The supply of the products is also influenced by some of the factors which affect the
retail market of the industry. The retail industry of Australia has been affected by the
technological changes in the business. The change in technology due to introduction
of the online purchasing power of consumers. The studies have shown that the online
business of Australia has increased a lot. The people are now buying products and
services over their smart-phones and other platforms. The companies are introducing
new online portals to attract the customers in Australia. The people are comfortable to
buy the products online and even the payment methods have been changed and
improved. The availability of the online sources of purchasing also affects the
company's supply. The other factor which affects the supply of the products are the
prices of the resources of their production (Lohr, 2012). The resources used for the

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production of the products and services also affect the supply of the company. If the
prices of the resources are increased, the supply of the products will be decreased as
the company will try to cut down their production and have lesser production. The
lesser production brings leftward shift in the supply curve. The supply will increase if
the prices of the resources decrease. The supply increase will bring down the prices
and vice-a-versa. The customers will be attracted to low priced products and services.
Demand elasticity
The demand for the clothing and general merchandise is not every elastic or it can be
said that it is inelastic as the demand for these items is not affected by the change in
prices. These items are the basic necessities of the human which are always purchased
whether the prices is high or low. The utility of the products is not changed with
increasing the prices. The degree to which supply and demand react to the rise or drop
in the prices is called as elasticity. The elasticity of the apparels and general
merchandise is low. The factors which affect the demand elasticity of the products
and services can be the availability of the substitutes, necessity and time. The
availability of the substitutes in the market will make the elasticity of the clothing and
general merchandise. The substitutes in the market affect the demand of the products.
The competitor's same line of products and other goods can be purchased if the price
of the other product increases. The products having many substitutes will have more
inelastic behavior. The people have many choices which can be purchased by the
customers (Hildenbrand, 2014). The time of the demand also affects the elasticity of
the products and services of the company. The time when the demand for the products
is high makes the elasticity curve more rigid. During the time of events, occasions and
season, the demand for the products increases, this will make the customer buy the
products even the prices are high. The necessity also affects the elasticity of the
products and services. The necessity of the products and supply affects the consumer
choice and taste. The clothes are the necessity for the people so it does not affect the
consumer choice and preference. The people now buy the latest trends in the products
and goods according to the leading fashion and taste. The changes in the fashion and
taste will always make the customer buy them.

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Online retailing
The introduction of the online services and platforms to buy the products and services
has changed the market analysis of the Kmart and Wesfarmers. The online retailing
has increased the reach of the company. The globalization has increased the options
buyers and sellers in the market. The online retailing has increased the diversity of the
market and customer power. The customers are now more powerful in the country
which affects the products and services supply (Laudon and Traver, 2013). The
company has to supply the need and wants of the consumers with effective pricing.
The company can provide the products and services at the ease of any geographical
location. The advantages of the online retaining for Kmart:
 Easy access to different markets: the online retailing has made the entry in the
new market very easy as now Kmart online feature is available in different
countries and people can purchase the products and customers from anywhere.
The market structure is also getting affected by the introduction of the internet in
the market.
 Reduced overheads: Kmart has gained the advantage of reduced cost on
overheads and expenses. The company has introduced new online websites and
apps for the selling of the products and services to the customers. The company
can now reduce the burden of employees recruiting and customer interactions.
 Rapid growth: Kmart is growing with the introduction of the online retailing.
The company is growing to different parts of the world. the traditional selling has
many constraints which have been removed in the online business. The company
can easily attract customers with the low-cost offering.
 Customer intelligence: Kmart is now able to understand the needs and demands
of the customers better and effectively. They can produce better quality products
and according to the preference of the customers. The customers now can
communicate with the company easily.

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(Figure3: Online Retailing in past years)(Economic Structure and Performance of
the Australian Retail Industry. 2019)
The market demand has been affected by the online retailing as now consumers prefer
to buy the products online. The traditional market stores and shops are less attractive
to the customers now. The company has to introduce many new functions in their
company to maintain online competition. There are many new online brands which
have offering different offers to the company. The customer is now engaging in the
internet activities of buying and selling the products. The market price of the products
is not affected by the introduction of online means. The company is now selling them
on their websites and mobile applications (Ruttan and Thirtle, 2014). They are now
easily accessible from the user's hand. The increased competition has affected the
market supply of the products and goods in the market. The frauds and damages on
the online purchasing are also affecting the market. The people still buy from the
traditional stores which might not have access to the internet. The payment failures
and issues also make the internet business, a troublesome experience. There are also
many legal issues which affect the company products. The demand and supply of the
products also increase during the offers and discounts.