The report comes after Wesfarmers sent out an announcement to staff earlier in the day.
Following the merger, Target and Kmart stores will retain their names and remain separate.
No changes will be made to the brand’s propositions, with Target offering affordable clothing and soft home furnishings and Kmart continuing to push price-driven products.
Citing the company, News.com.au reported that the merger would result in a “handful of redundancies,” mostly in technology and merchandise.
The two brands operate 452 stores, including 324 Kmart and 128 Target stores across Australia and New Zealand, as per information on Wesfarmers’ website.
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Kmart Group managing director Ian Bailey said: “The announcements today are an internal reorganisation of our support offices and there are no impacts to the Kmart or Target stores.
“With customers now demanding value more than ever, this new operating model will unlock a new level of scale and productivity across both brands, so we can deliver even greater value to our customers in the future.
“For store networks and 50,000 store team members – it’s business as usual – as we continue to focus on providing the best value products to the thousands of customers in Australia and New Zealand who choose to shop at Kmart or Target every day.”
Kmart chief executive John Gualtieri will oversee the stores’ day-to-day operations. Meanwhile, Target managing director Richard Pearson has been appointed as retail director of Wesfarmers’ health unit.
Sky News also reported that the two brands will convert to a single IT system in a bid to improve returns.
Ian Bailey added: “Kmart and Target are both strong businesses. I don’t see us doing this from a position of weakness. It’s quite the opposite. I’d say we’re strong, but I think there’s an opportunity to really capitalise on this time and find ways to continue to deliver better value for customers.”