Australian value department store Kmart is currently undergoing a fabric consolidation strategy, which has halved the number of fabric options in its library.
Kmart managing director Ian Bailey said its fabric consolidation approach is aimed to reduce end-to-end costs.
“Fabric consolidation is now embedded into the Kmart operating model and has delivered material reductions in costs through streamlining fabric options by helping us to more than halve the number of fabric options in our library,” Bailey said.
“Customer choice remains unaffected as there is no impact on range breadth. Indeed, our fabric consolidation initiative has enhanced our customer offering in apparel through improved consistency and fabric quality while continuing to meet the customer demand for value.”
Bailey said the initiative complements the brand’s overall aim to digitise its sourcing and supply chain operations.
The long-term strategy involves reducing lead times in product development, improving the ability to match supply with demand, and reducing end-to-end costs to hold its low-price cost position.
“We have made good progress from these initiatives in the last 12 months,” Bailey said. “For example, our use of 3D design and prototyping has delivered promising sales increases in pilot departments. We are now actively scaling this tool across apparel, whilst also reducing lead times and costs.
“Our use of overseas stock buffering has reduced all our lead times by almost 30 days in core volume lines and that represents a quarter of our annual sales. This model is also helping drive deeper relationships and visibility with our supply partners, further helping their efficiencies.
“We have also developed a more holistic approach to sourcing fabrics across the business. This has helped us more than halve the number of fabric options in our library, resulting in cost savings through consolidated volume and improved consistency and quality of fabrics.
“Overall, we expect this suite of initiatives to drive higher sales through better availability and better products, and higher gross margin through lower markdowns and reduced cost of goods.”