Kmart Group is accelerating its apparel product development cycle through artificial intelligence, with managing director Aleksandra Spaseska flagging faster design-to-shelf lead times as a key driver of recent category growth.
Speaking at Wesfarmers' 2026 Strategy Briefing Day in Sydney today, Spaseska said digital tools and supply chain collaboration had enabled faster lead times, with youth apparel singled out as a standout performer representing an increasing proportion of both womenswear and menswear sales.
"We have continued to broaden and improve our ranges in areas where we see the strongest growth potential," Spaseska said. "Our youth apparel ranges continue to perform well, representing an increasing proportion of womenswear and menswear sales. This success has been underpinned by faster design to shelf lead times enabled by digital tools and supply collaboration."
AI is now being embedded across the product design and quality lifecycle, including trend analysis, insight generation, and supplier collaboration, with Spaseska flagging the business expects to move toward "even more agentic AI applications" over time.
Underpinning the product development push is a significant RFID rollout. Kmart has scaled RFID tagging at source to more than 60 per cent of purchase order volumes in apparel, which Spaseska said was improving item-level visibility, inventory accuracy and on-shelf availability.
The retailer completed its first RFID-enabled stocktake in apparel earlier this year, describing it as a faster and more accurate alternative to manual processes.
The RFID program is also being extended beyond apparel into additional categories, and into Target stores, with AI-enabled solutions being deployed in general merchandise in parallel while the broader rollout continues.
Spaseska framed the combined investment as building toward end-to-end supply chain visibility, with AI expected to play a growing role in forecasting, inventory positioning, and replenishment over time.
Kmart Group claims to hold approximately 8 per cent of Australia's apparel market, which Wesfarmers values at around $49 billion based on Euromonitor data to December 2025.
Alongside pushes in product and placement, Kmart has also been adding new capabilities to customer shopping journeys, including the rollout of virtual try-on experiences and "see it in my space" functionality, allowing customers to preview outfits on themselves and see home products via AI technology positioned in their own space before purchasing. This is being driven by Kmart's online shopping assistant called Joy.
The drives across apparel add to a broader rollout of digital capabilities across Kmart Group, which also includes the scaling of the Kmart marketplace. Spaseska said the marketplace launch is a clear strategy to help expand Kmart Group’s addressable market.
“The marketplace materially expands customer choice and makes it easier for customers to complete more of their shopping with us in the one place,” Spaseska said. “We now have more than 130,000 products available on the marketplace from 90 sellers, and the early trading results have been really encouraging since launch.”
Spaseska reported that 40 per cent of Kmart’s marketplace customers had not transacted with Kmart in the prior 12 months, which she said demonstrates the strong customer acquisition through this channel.
“We're also seeing larger baskets from marketplace customers, which indicates the positive halo effect into our own brand offer,” she added. “The launch of Target on Kmart has also been successful as a customer acquisition channel for Target.”
Kmart also has an app, which Spaseska said is fast becoming a primary gateway to Kmart’s digital ecosystem.
“Customers using the app are more engaged overall, and we see the app as the natural platform for discovery, loyalty and omni-channel shopping.”
Kmart’s online upgrades come as Kmart Group’s online sales – which include Target online and marketplace – made up 10.3 per cent of total sales in the first half of FY26. This equates to around $630 million out of $6.3 billion made in total in the six months to December 31, 2025.