Forget Amazon — Kmart Has Already Disrupted Australian Retail

In the lead-up to Mount Vesuvius’ catastrophic eruption — as foreshocks became more frequent and the air grew tainted — the citizens of Pompeii gossiped about a celestial force set to punish them for their sins. Around 2,000 years later, and there’s the same apocalyptic mood around Amazon’s looming impact on retail in Australia.

But while Amazon’s eventual launch will certainly disrupt incumbents, don’t overlook the impact of another silent assassin: Kmart.

Kmart has been gracefully reinventing itself while its peers are getting squeezed out of the picture. Last year, Kmart achieved a market-leading 14% increase in revenue while also achieving the top increase nationwide in its Customer Experience Index (CX Index™) score
 
This is no coincidence. Forrester has confirmed the link between customer experience improvement and revenue growth. It leads to customers who spend more, recommend you to others more, and stick with you. But what is really surprising is the hypnotic way Kmart achieved this.
 
Retailers typically pursue attention-grabbing approaches to transformation by investing in “retail theatre” — digital kiosks, Giftoriums with personalized Nutella jar stations, location-based beacons, iPad-wielding store assistants. These make for memorable experiences, but do they really drive customer loyalty?
 
Kmart’s transformation isn’t necessarily obvious. If you walk into a Kmart today, it can seem busy, a little loud, full of “cheap stuff”. But if you’ve just moved into your first flat, you might go to the “Home World” section of one of its recently renovated stores. Within two square meters, you can find pots and pans, bath mats, a barbeque, and light bulbs — suddenly, you’re not shopping for necessities, you’re creating a vision of your new home. It’s little bit like Ikea without the arguments.
 
Kmart has masterfully translated its brand promise into experiences — and that’s not easy to do. For the in-store layout, that means designing around customer need. But it also does direct sourcing to help sell higher-quality items at the same low price point, and it affects what Kmart prioritizes internally. 
 
For example, you won’t find a powerful digital Kmart presence. It’s taking incremental digital steps — a deliberate decision by CEO Guy Russo, who wants to get the core business right first.
 
Kmart’s revival does not mean that it’s Amazon-proof. But the transformation is a reminder that incumbents can disrupt industries too, especially via the fertile battleground of experience. 
 

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