“They had a lot of challenges in distribution and delivery, particularly in Melbourne, and there were a lot of cases of someone ordering something, paying for it and then finding out it wasn’t available, so they had to do refunds,” he said.
To prevent the website from crashing, Kmart was forced to create a virtual queue, which drew backlash from customers.
“People aren’t waiting online to go to Kmart,” Pallant said.
So when Kmart announced last week that it had started selling thousands of apparel, homeware, furniture and other products under its own brand Anko on Catch, another Wesfarmers business within Kmart Group, analysts welcomed the boost in digital capabilities.
“This move by Kmart is really tapping into the incredible growth in online shopping we saw in 2020 as a result of Covid-19,” said Dr Lousie Grimmer, a retail expert and senior lecturer in marketing at the University of Tasmania.
“In addition to their own online store, making products available via Catch is really just about providing another channel for consumers to be able to shop the Kmart brand and take advantage of Catch’s digital capabilities and market share,” she said.
Pallant said the partnership is unlikely to have a massive impact, but he described it as a good move.
“The point is around experimenting with different types of distribution,” he said.
Too much choice, not enough intent
Department stores have notoriously struggled to find their footing in the age of e-commerce. When online shopping first started to take off, many department store chains were hindered by legacy software systems and a lack of digital know-how. And while that has mostly changed, Grimmer points out that many customers have “found other online retailers to shop with” in the interim.
The product offering in department stores also makes it harder for this sector to capture online shoppers, she said.
“I think one of the challenges for department stores selling products online is the sheer number and range of products on offer – we know many consumers suffer from choice overload and it is often the smaller stores offering specialised products or carefully curated offerings that actually do really well online with a certain group of consumers,” Grimmer said. “I think this will always be a challenge for department stores selling online.”
Indeed, Pallant says shoppers tend to go to department stores when they don’t know exactly what they want to buy, while they head online when they have something specific in mind.
“Kmart is the place where you’re not sure what you want, and you end up buying stuff you didn’t necessarily expect,” he said. “It’s the opposite of the online experience, where it’s easier when you know exactly what you’re looking for.”
During Covid-19, however, shoppers were forced to shop online for all but the essentials. For Pallant, that disruption helps to explain Kmart’s new partnership with Catch.
“What Covid has shown is that we’re learning to shop in all sorts of different categories and types of retail online,” he said.
When it comes to digital, the next step for department store retailers like Kmart will be to get better at product recommendations to inspire and engage customers.
“Previously, retailers might have recommended the same product, but in a different colour, but increasingly, there’s more data behind it. You might want this other thing that doesn’t seem related on the surface,” Pallant said.
“There’s a discovery aspect that you get from walking around a physical store. The really good e-commerce sites are getting better at trying to inspire the customer to spend more time on the page and discover things they wouldn’t have otherwise.”
The holy grail for Pallant is when retailers stop showing customers ads for a product they’ve already purchased, and start showing them the next thing they should buy instead.
“But there’s a long way to go until we get there,” he said.