‘Honeymoon is over’: Kmart owner ready to win in bargain hunt as COVID spending ebbs

The boss of Bunnings and Kmart operator Wesfarmers says cost-of-living pressures are driving more shoppers to its budget-focused brands, putting it in a strong position in volatile retail conditions.

Rob Scott told investors at the company’s strategy day on Tuesday that Wesfarmers had long been predicting that consumer spending would revert to more normal levels after the pandemic, and that a focus on value would become critical to shoppers.

“I would say that now the honeymoon is very much over,” he said. “It was very predictable, and I feel that our businesses are very well-prepared. We’ve been expecting this for the last 18 months or more.”

Scott was upbeat about trading at Wesfarmers’ key brands, which include Target, Bunnings and Kmart, saying that their focus on everyday essentials put the company in a strong position.

“We expect value to become even more important for customers, and we are seeing that today … with more customers trading down within categories and increasing their share of spend in more value-orientated products,” he said.

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“This benefits us not just in reinforcing the core of what our businesses do, but we’re also seeing a trading down into some of our businesses, which is improving the number of customers that are trading with us.”

Wesfarmers is not the only retail giant pointing out the continued focus on value in the current retail environment. Coles and Woolworths have also highlighted the success of their homebrand ranges as shoppers look to stretch their dollars further.

Recent spending surveys also suggest consumers are waiting to shop at sales events, with data from Roy Morgan and the Australian Retailers Association released on Tuesday indicating Australians will spend $9.3 billion at end-of-financial-year sales – up $500 million on last year.