Kmart to use Wesfarmers' OneDigital capabilities

Kmart Group intends to avail itself of the burgeoning digital capabilities being developed by parent Wesfarmers' centralised data and digital division, OneDigital.

The variety retailer's managing director Ian Bailey told analysts during a Wesfarmers strategy briefing day that it will “collaborate on shared initiatives where it makes sense”.

“We will increasingly be leveraging OneDigital capabilities to enhance our customer insights, access new channels to market and accelerate new capabilities such as centralised online fulfillment,” Bailey said.

With “21 million Australians living now within 10 kilometres of a Kmart” Bailey said emerging capabilities in technology and data “unlock” potential benefits.

“Kmart has invested in a number of technology platforms and data assets, which will enable ongoing operational improvements designed to grow revenue and reduce operational.

“In an environment where inflation is present and value is going to become increasingly important, these capabilities provide the ability for Kmart to extend its leadership on price.”

Kmart is now shifting focus to “growing share of wallet”, eyeing plans to increase engagement both in-store and online.

“Kmart's strategic priorities over the medium-to-long term focus on leveraging our unique competitive advantages and emerging digital capabilities to grow our share of wallet," Bailey said.

“Kmart will leverage its product development capabilities, and digitise the sourcing and supply chain to deliver better products at even lower prices.”

This strategy “will be delivered by accelerating our online offer, personalising the customer experience, and digitising the in-store operating model.”

Bailey said digital capabilities will also provide the “ability to launch new categories as online exclusives”, as Kmart has “a strong track record of exiting declining categories and introducing or expanding gross categories”.

"Building a hybrid fulfilment model"

As online demand has risen, Bailey said Kmart is “building a hybrid fulfillment model that will enable low cost and fast deliveries to customers.”

“The first step towards this will be to leverage Catch's new fulfillment facility in NSW to fulfill a portion of kmart.com.au orders," he said.

“We expect to launch this in the first quarter of FY23, later this year.”

Bailey added Kmart’s successful pilot of radiofrequency identification (RFID) inventory tracking technology should lead to “better inventory integrity" and digitisation of the backfill process "will lead to higher sales.”

“We expect to complete the rollout of this technology across all stores by the end of calendar 2022 and see material benefits in both sales and cost of doing business over the medium term through the future applications.”