Kmart has acknowledged the competition it faces from low-cost online retailers as it unveils a strategy to engage better with younger customers.

Chinese sites like Temu and Shein, which offer fast fashion, are increasingly encroaching on Kmart’s low-cost retail model – especially with Gen Z and younger Gen Alpha.

Temu and Shein have joined Amazon and eBay as chief competitors to Kmart’s market share.

Kmart’s new group managing director Aleks Spaseska has revealed the discount retailer’s plan to double its turnover to $20 billion in the face of increasing competition from overseas outlets.

Spaseska told Nine Newspapers that Kmart plans to further develop its women’s, men’s and youth apparel ranges and beauty products, as well as ramping up electronics, toys and collectables.

It will also deepen social media engagement as part of a broader goal to double its business in under 10 years.

Expanding Kmart’s popular low-cost home brand Anko is at the heart of the plan, alongside a major rethink of store layout and customer engagement.

In an effort to maximise sales and promote brand loyalty with younger customers, Kmart has begun experimenting with layouts that bring clothing and beauty to the front of its outlets.

“The biggest difference you’ll notice is in the apparel and beauty offer in the store,” Spaseska was quoted as saying.

“If you go into women’s apparel today, you’ll see we mostly sell all the tops together, the bottoms together, the dresses together,” she said. 

“When you walk the store in the new format, there’s much more co-ordination through women’s apparel, which allows customers to be much more inspired and helps with outfit building.

Spaseska said the biggest changes were to apparel and beauty. Photo: Wesfarmers

“We’ve also brought beauty to the front of the store as well.”

Kmart’s Mount Gravatt store in Brisbane was the first to be refurbished in the new format late last year. Spaseska said the changes had already brought a sales bump.

Kmart has earmarked four more stores for the layout redesign in the next month. If the changes continue to show positive results, every Kmart store will eventually be refurbished in the new style.

The retailer will also focus on expanding its range of cleaning items, household accessories and appliances such as hair curlers.

In the new layout, bigger items like bikes and car seats are moved off the shop floor room into storerooms for ‘click and collect’. That makes make more room for clothing and beauty products.

Kmart is also opening a major new distribution centre in Sydney’s west.

Spaseska told News Corp she was confident discount retail chains could do well, even when better economic times return and consumers feel compelled to spend more on premium fashion, apparel, homewares and household goods.

“What we can see is that Kmart is really a brand for everyone. So we’ve got very good levels of engagement across all customer demographics and across all levels, and they’re spending with us, and we’re seeing growth across all of those customer cohorts,” she said.

Wesfarmers-owned Kmart recorded in $11.1 billion in sales for the 2024 financial year with profits of almost $960 million.