Catch Closure Highlights Risks in Wesfarmers’ E-commerce Strategy

Strategic Shift in Wesfarmers’ E-commerce Approach

Wesfarmers has revealed a significant strategic pivot with the decision to wind down Catch as a standalone e-commerce business by the fourth quarter of the 2025 financial year. This move comes after years of challenging financial performance for Catch, which has struggled to keep pace amid intensifying competition in the Australian online retail sector.

Rather than continuing to operate Catch independently, Wesfarmers will transfer Catch’s fulfilment centres in Moorebank, NSW, and Truganina, Victoria, to the Kmart Group. This consolidation aims to improve operational efficiency and customer delivery times by leveraging underutilised fulfilment capacity within Kmart’s existing infrastructure.

Financial Implications and Operational Integration

The wind down is expected to incur one-off costs between $50 million and $60 million in the second half of FY2025, including $25-30 million in non-cash expenses. Catch itself is forecast to report an operating loss before tax of $38-40 million for the half-year ended December 2024, excluding these transition costs.

Despite these near-term financial headwinds, Wesfarmers is positioning the move as a way to eliminate ongoing losses associated with Catch as a standalone entity and to better leverage the digital capabilities and assets developed within the business. Select digital personnel and supplier relationships from Catch will be integrated into Wesfarmers’ broader retail divisions, enhancing their omnichannel offerings.

Enhancing Omnichannel Strength Through OneDigital and OnePass

Wesfarmers’ Managing Director Rob Scott highlighted that the experience gained from Catch has accelerated the Group’s digital transformation, particularly through the OnePass membership program and the OneDigital initiative. The Group’s retail divisions recorded over $3 billion in e-commerce sales and 220 million monthly digital interactions in FY2024, underscoring their dominant position in Australia’s non-food omnichannel retail market.

OneDigital will now focus on developing a Group retail media network, investing in shared systems and data capabilities to commercialise retail media across retail and health divisions. This strategic emphasis on data-driven customer engagement and personalised experiences is expected to underpin future growth.

Kmart Group’s Role and Future Outlook

Kmart Group Managing Director Ian Bailey noted that the transfer of Catch’s fulfilment centres will allow Kmart to better utilise these assets, which are currently operating at less than 50% capacity. The integration is anticipated to deliver faster deliveries at lower unit costs, easing pressure on Kmart’s stores and enhancing the overall customer experience.

While the immediate financial impact on Kmart Group earnings is expected to be positive but not material in FY2026, benefits are projected to grow as online sales expand. Wesfarmers plans to provide further updates on the wind down and transition at its Strategy Briefing Day in May 2025.

Overall, this restructuring reflects Wesfarmers’ pragmatic response to the evolving e-commerce landscape, focusing on scalable, integrated omnichannel capabilities rather than maintaining a standalone online retailer in a highly competitive market.