Officeworks, which recently axed several senior buying executives, is undergoing a major strategic shift that industry insiders say could see the retailer move further toward house brands and lower-cost Asian-made products.

The move comes as parent company Wesfarmers and its retail divisions, including Kmart, Target, Bunnings and Officeworks, voice growing concern over the rapid rise of Chinese e-commerce giants Temu and Shein in Australia.

Several suppliers told ChannelNews that locally designed and developed products are increasingly being replaced with cheaper Chinese-manufactured goods, a trend they claim is leading to job losses and reduced revenues for Australian companies.

Investigations by ChannelNews suggest the shift is particularly evident in the accessories market, where major trade shows such as the Canton Fair are now key sourcing grounds for Australian retailers and distributors.

Wesfarmers CEO Rob Scott has partly blamed the growth of Temu and Shein for the failure of the group’s local online marketplace, Catch, which was closed earlier this year. He argues that an “uneven playing field” has emerged in retail, putting established Australian retailers at a disadvantage — despite the group’s own heavy reliance on Chinese manufacturing.

Earlier this year, Officeworks’ new CEO John Gualtieri (seen below) restructured the retailer’s leadership, removing Chief Commercial Officer Jim Berndelis, General Manager of Merchandise Jarryd McCarthy and Head of Commercial Strategy Troy Verhagen. Sources say Gualtieri is now steering Officeworks toward a private-label strategy similar to Kmart and Target, where Wesfarmers’ own Anko brand dominates product ranges and margins.

Scott has described Temu and Shein as a threat that “keeps him awake at night.”

A key supplier to both Bunnings and Officeworks told ChannelNews that the issue lies in pricing, not sourcing and Wesfarmers “obsession” with profits and keeping investors happy at the cost of locally sourced products.

“Bunnings and Officeworks have been selling cheap Chinese products for years — the difference is the markup. Temu is offering almost identical products, often from the same factories, but at a fraction of the price,” the supplier said.

The rise of ultra-low-cost imports has unsettled other Australian retailers as well. The Australian recently reported comments from Adairs CEO Elle Roseby, who said her company’s designs are routinely copied and sold online at cut-rate prices.

“We employ around 1,600 people across Australia and New Zealand, we pay taxes, and we invest in ethical supply chains,” Ms Roseby said. “Temu and Shein operate on models we can’t compete with — nor would we want to.”

Scott has echoed similar concerns, arguing that taxation and regulation gaps distort competition.

“When regulation and taxes unfairly disadvantage some businesses, it leads to higher prices and puts Australian jobs at risk,” he said.

Despite this, Wesfarmers continues to expand its private-label operations. Kmart’s Anko brand — which now accounts for around 85 per cent of Kmart’s sales, generating more than $4 billion in six months and is manufactured almost entirely overseas.

The brand has recently expanded through partnerships with Hudson Bay in Canada, Walmart in the US, and Amazon and Flipkart in India.

Officeworks has also come under scrutiny for its product sourcing. Earlier this year, ChannelNews revealed it had been selling multiple models of Chinese-made security cameras from brands such as Hikvision and EZVIZ — both banned in the US and other countries for security risks. Following that report, the retailer replaced the range with products from TP-Link, another Chinese manufacturer whose networking gear is restricted in the US.

Meanwhile, Wesfarmers subsidiary Bunnings is among the partners of News Corp Australia’s “Back Australia” campaign, which aims to promote local manufacturing — a move some critics have called ironic given the retailer’s heavy dependence on imported Chinese goods.

Market data illustrates the scale of the challenge. Roy Morgan Research estimates Temu’s annual Australian sales at about $2.6 billion for fiscal 2025, up from $1.6 billion a year earlier. Shein’s sales have climbed to roughly $1.3 billion. Since launching in Australia in March 2023, Temu’s local presence has grown thirteenfold and now accounts for about five per cent of all e-commerce spending, according to Australia Post.

Temu was also the most downloaded free app of 2024 and remains among the top-ranked on Apple’s App Store.

Australian Retailers Association CEO Chris Rodwell says retailers welcome competition but warn that global platforms must be held to the same standards.

“Competition drives innovation and affordability,” Rodwell said. “But the playing field must be level. Ultra-low-cost platforms like Temu and Shein are growing rapidly, yet they aren’t held to the same standards as local retailers who pay taxes, employ Australians, and comply with safety and environmental rules.”

Some in the industry, including Roseby, are calling for government action similar to measures introduced in France, which impose penalties on importers of short-life-cycle products.

“Australia’s generous provisions for low-value imports mean these products enter with minimal duty or oversight,” Roseby said. “That’s an issue we can’t ignore.”