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Kmart Brand Anko Generates Global Attention

Anko, created by Australia’s Kmart only a few years ago, has been showing a strong profit result for parent company Wesfarmers, and is now setting its sights on global expansion.

Impressively, Kmart managing director Ian Bailey recently reported the group’s sales had lifted 5 per cent to $6.08bn, and had booked record earnings with a 26.5 per cent jump in profitability.

An article in The Australian Business Review reports that more than 1 billion Anko items are sold each year in Australia and that Anko has the No.1 market share in womens­wear, menswear, children’s wear, home and toys, and is the No.1 or No.2 Australian market leader in every category.

According to the report, 85 per cent of what is now on sale within Kmart stores is Anko, and purchases are not only being made by middle-class, middle-aged parents, it is also becoming popular with Gen Zs, and is playing out across Facebook and TikTok.

In fact, the article says, an Anko summer body butter and body mist exploded online, its spot cleaner became popular thanks to TikTok, and a double-wall insulated drink bottle went viral and had one of the strongest customer responses of last year.

Cleverly, Anko is not just a private label brand that can be put on everything from fry pans to underwear, but a platform for other retailers to hook into to fulfil their private label needs.

In the article, Bailey said he has grand plans for his Anko brand, and talked of the label as turning the traditional relationship between suppliers and retailers on its head.

Brand owners that once sold their products in Kmart stores are now asking him to make products for them to sell in other stores.

“We are doing some work with Mattel, and Mattel like some of our wooden toys and we are effectively licensing our wooden toys to Mattel so they can take those products into new markets for us,” Bailey said.

“If you think about it, this is the world really changing where we used to buy products from suppliers and now we are developing products with the supplier and the supplier is saying, actually can you be our product development company for that category and then we will buy it from you and we will sell them under our brand around the world.”

 

Mattel is ordering its wooden toys and Canadian department store owner Hudson Bay, the oldest company in North America, is piggybacking on Kmart to now have 85 per cent of its own house brand, Zellers, in reality an Anko product.

Bailey also shared some of growing brand powerhouse’s key strategies and pillars in place, which comes down to simplicity.

“The first element is Anko gives us the ability to run one brand across the vast ­majority of the categories we are in, so throughout the entirety of ‘home’ Anko is the only brand,” Bailey said.

“That means we only carry one of any similar item, so we don’t need to carry three or four brands doing the same thing. The advantage that gives us is that it gives us incredible economies of scale because instead of fragmenting our sales across multiple brands, we push it all through one.”

“It means we can have a very complete offer for a category with a relatively small number of SKUs (stock keeping unit). That gives us the ability to be No.1 or No.2 in pretty much every category that we play in terms of market share, despite the fact that we have only got one store (brand) of about 5000sq m.”

“So we’re the No.1 in market share in home and toys, in men’s, women’s and kids clothing for example, and to do that in a relatively small box is because we run one brand.”

 

The next pillar provides a business model that is more than just direct souring from Asian factories to fill up Kmart stores with colourful drink bottles, cushions and men’s underwear.

“Sometimes people say sourcing is really just a cost thing, where you go from buying something from a brand to buying something direct from a factory to save a bit of money. Our business model is so much more than that,” Bailey said.

“We are designing products, we are developing products, we have intellectual property associated with them and then of course we work every single element of the process from product design, manufacturing, international shipping, local shipping, in Australia and New Zealand operations, to ensure we eliminate all of the waste and unnecessary costs.”

“This all boils down to a key rule in retail and which Kmart has now deeply inculcated into its corporate culture. “We can deliver an awesome product to customers at a lower price than anybody else can,” Bailey said.

Anko products are made across key sourcing markets, mainly in Asia, as well as emerging sourcing destinations such as Vietnam, among others. It shares factories with major US and European brands and retailers and can source some products from local suppliers, and operates a technology hub in Bangalore, India, where several hundred Anko employees work around technology and innovation for Kmart and Anko.



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