Anko: The AU$8 Billion Success Story Inside Wesfarmers

Highlights:

• Anko's Major Contribution: Anko now accounts for 85% of Kmart's sales, translating to over AU$4 billion in six months, driving significant earnings for Wesfarmers (ASX: WES).
• Global Expansion: Anko has partnered with international retailers like Hudson Bay in Canada, Amazon and Flipkart in India, and Walmart in North America, broadening its global reach.
• Strategic Growth Driver: Anko's success stems from maintaining low prices while meeting consumer demand, positioning it as a key growth driver for Kmart and Wesfarmers.

Kmart's Transformation through Anko

In 2008, Kmart was struggling, but a pivotal trip to the UK ignited a turnaround, leading to the creation of Anko, a thriving home brand. This transformation has propelled Kmart, owned by Wesfarmers (ASX: WES), from a discount retailer to a global brand powerhouse.

Anko's Impact on Wesfarmers

Anko's success was highlighted in Wesfarmers’ recent financial update, revealing that Anko now accounts for 85% of Kmart's sales, translating to over AU$4 billion in six months. Investors are keenly watching its performance ahead of Wesfarmers' next update on August 29. Kmart’s managing director, Ian Bailey, emphasized the brand's significance but remained tight-lipped on details, reflecting its strategic importance.

A Key Player in Wesfarmers' Growth

Ben Gilbert, head of research at Jarden, estimates Anko's value at over $8 billion, attributing it to the brand's ability to maintain low prices while driving significant sales. This strategy has enabled Kmart to offer competitive pricing, such as AU$7.50 for a kettle and AU$2.25 for a kids’ T-shirt, meeting consumer demand for value.

Anko’s Global Expansion

Anko sells over a billion items annually in Australia, with a diverse range including linen, fashion, and toys. It collaborates with 900 manufacturers, adapting quickly to trends. Internationally, Anko has partnered with Canadian retailer Hudson Bay, entered Indian markets through Amazon and Flipkart, and secured a deal with Mattel’s Fisher-Price to offer toys in Walmart stores across North America.

The Future of Anko

Anko's origins trace back to a strategy inspired by UK retailers Primark and Asda. Under the leadership of Ian Bailey, the brand has grown since its official launch in 2019. Bailey views Anko as a critical growth driver for Kmart, emphasizing the strategic benefits of a unified brand, robust data analytics, and efficient product lifecycle management.

Anko’s journey from a home brand to a global phenomenon underscores its pivotal role in Wesfarmers' success.

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