No differentiation. Wesfarmers continues to cannibalise their brands.

brand canibalisation, brand differentiation, target kmart

Target gives up on brand differentiation and becomes another Kmart

The remarkable turnaround of Kmart in the past few years has left its competitors scrambling to compete. The strategy has achieved its goal of killing Big W. However, in the fight, Westfarmers has also severally wounded its other discount department brand, Target.

Three years ago, Kmart shifted their brand positioning to ‘making low prices irresistible’. Being the cheapest is always a difficult space to own, especially in retail, but Kmart has successfully done this by focusing on not just being cheap but making made frugal fun and exciting.

With lots of bright colours and movement, the ads bring the products to life and are all timed to upbeat pop tracks. The brand lives up to its promise of making lots of cheap stuff irresistible.

The performance of the Kmart vs Target say it all. The first-half earnings in 2016 show Kmart at $319 million, with Target dropping to $74 million.

Kmart has effectively grabbed much of Target’s customers. Target has been left struggling to find its space in the market. The brand needs a new direction to survive. But rather than invest in the Target brand, Wesfarmers appears to have given up and is now just trying emulate Kmart’s strategy.

Target’s latest campaign seems to have copied just about everything that Kmart is doing. Just about everything, including the upbeat fun approach to low prices feels like a Kmart ad. If you took away the big red target and ask people what brand its for and I suspect most would say Kmart.

Is this part of a brand architecture strategy to effectively merge the Target and Kmart brands over time (effectively kill the Target brand)?

After all, brand consolidation would make sense. It’s hard enough fighting to own the same positioning as a competitor, it really doesn’t make sense when you own both brands.

However, if this is not the strategy and Wesfarmers is committed to keeping the Target brand, it desperately needs to create compelling brand differentiation. Target needs to stand for something, not just copy its big sister.

Michael Hughes

Michael is Managing Partner and Strategy Director at Truly Deeply, a brand agency with 25 years’ experience working with brands to position them for growth. His deep expertise is in unlocking the strategic power of your brand to create a differentiated, compelling and authentic brand proposition that will engage all your audiences. Michael has extensive experience working across Australia and the Middle East working with leading Australian and International organisations across just about every sector.

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