Wesfarmers has bought the online retailer Catch Group for $230 million, and hopes to use the pioneering Australian company's e-commerce prowess to help guide its department stores Kmart and Target into the digital age.
The conglomerate, which also owns Bunnings, Officeworks and until recently Coles, said on Wednesday that Catch Group would continue to operate as an independent business under the oversight of Kmart Group boss Ian Bailey.
The acquisition would "accelerate Wesfarmers and Kmart Groups digital and e-commerce capabilities whilst continuing to invest in the unique customer and supplier proposition", Wesfarmers managing director Rob Scott said in a statement.
Catch Group started life in 2006 as Catch of the Day which put one discount product on offer daily but now stocks tens of thousands of products. It has a team of buyers who scour the world for distressed, out-of-season or unsold products from leading brands that Catch then sells at below-market prices.
Catch, which has said it expects to ship about 3 million items this year, had been vying for an ASX-listing towards the end of 2018.
The company is about 90 per cent owned by its co-founders, the brothers Hezi and Gabby Leibovich, who in the past two years had bought out other investors, which included James Packer and Seek co-founder Andrew Bassat.
Catch dispatches orders from a highly automated warehouse in Melbourne's west, which it says gives it a cost advantage over competitors.
Mr Bailey said the Kmart Group and Wesfarmers were attracted to Catch's leading technology platform and data capabilities, which would help drive the digital initiatives already under way at Kmart and Target.
Kmart been a standout performer for Wesfarmers, but its trading deteriorated in the last half of last year, while Target has struggled to make a profit.
This will further drive best practice in supply chain, fulfilment and online execution across our brands, including opportunities for Target to secure online fulfilment capacity and productivity benefits," Mr Bailey said.
Catch Group managing director Nati Harpaz said joining the Wesfarmers stable would benefit Catch's business partners and customers.
"Catch will continue to deliver innovation in the online market in Australia, with the focus of delivering great value and savings to our customers," he said.
Reporter for The Age