Devastating news for all Kmart shoppers
Kmart has been around since 1969 but the future of the iconic store is now unclear. Retail analysts have told Wesfarmers, the owners of the discount store, to sell Kmart in its current condition so that Target can be saved.
The analysts from Credit Suisse believe that Kmart’s success provides a prime opportunity to sell the store at ‘peak valuation’.
Credit Suisse have also warned Wesfarmers that they are playing a "zero-sum game" by having two family department stores in competition against each other.
Analyst Grant Saligari believes the success of Kmart is likely to end, so the billions earned in the sale of Kmart could be used to improve Target.
“The approach has a reasonable chance of capturing the upside value of both businesses,” he said.
Associate Professor in Marketing and International Business at the QUT Business School Dr Gary Mortimer, believes that the recommendation from Credit Suisse has shortcomings.
“They have looked at just the market, and not the consumer," Dr Mortimer told Daily Mail Australia.
“They haven't thought of the impact it would have long term, as Target has really lost its power in the marketplace because it doesn't know what it wants to be.”
Kmart’s popularity with the Australian public has made the discount giant increase sales significantly in the last few years.
In 2016, Kmart made $5.2 billion in revenue which was an increase of 28 per cent since 2012. Target has suffered a decrease of 7.5 per cent since 2012 and made a revenue of $3.5 billion in 2016.