Analysts say Big W and Target can only survive one.
Australia`s 80 billion-dollar clothing and household goods market is at a crossroads that could make at least one of Australia`s three discount department store chains unsustainable.
The industry, which faces a backlog of international clothing giants, has been under constant siege by famous brands such as Ham M and Uniqlo, which use their international size, design power and supply chain to steal sales.
After last quarter`s discount department store sales fell to their lowest level in eight years, the only unanswered question is who will survive, Woolworths`s Big W or Wesfarmers`s Target?
Even Wesfarmers`s star Kmart slowed last quarter, with sales growth dropping to 8.2 percent from 8.6 percent last year.
Compared to Target and Big W, the situation is worse.
Target`s equivalent store sales plummeted 22 percent last quarter, while Big W fell 5.7 percent, beating market expectations.
The importance of these sales data is that Kmart has not benefited from the losses of Target and Big W, so where are these sales going?
Some blame it on cold, wet spring, and weak consumer confidence.
But the continued rise of H\ x {5ee5} m is also a reason for weak sales.
"I think consumers may not be willing to spend money, but some of them must have gone to Ham," said one analyst.
"International brands are winners of market share, especially Ham M, because they are cheap, and I think it makes it difficult for Target and Big W to turn things around."
"what is disappointing and unacceptable to me is very weak clothing sales," said Big W boss Sally Macdonald.
"I think it is widespread throughout the market, mainly affected by the weather, but there are other factors."
According to Macquarie Wealth Management, the uncomfortable conclusion for Big W and Target is that the industry may only accommodate Kmart and one of them.
This is not the entry of any new international brands, including Amazon, which is rumored to start business next year.
JP Morgan`s Shaun Cousins says the challenge for Target is that Kmart, also owned by Wesfarmers, has taken a low-price position.
He says Target`s transformation depends more on products, which increases price, fashion and seasonal risks.
"despite my negative view of Target, considering that Kmart and Target are not doing well at the same time, this is a good thing for Kmart and neutral for Wesfarmers Group`s discount department store," he said.
Retail consultant Steve Kulmar says it`s difficult for both discount stores to survive, let alone three.
"I think Target is the most dangerous, but Big W is no better," he said.
"there is a lot of pressure on the whole industry, so in a few years I think there will be a strong brand in the market, maybe a second, as well as online and international brands."
