! THIS IS AN ARCHIVED REPORT  Please click here to view the current report

Kmart

Kmart is one of Australia’s largest retailers, with a network of discount department stores offering customers a wide range of apparel and general merchandise products at low prices, every day.

Kmart sources its products through a diverse range of suppliers, including China, Bangladesh, India, Indonesia and Cambodia.  As at 30 June 2015 Kmart had 203 stores across Australia and New Zealand and Kmart Tyre and Auto Service had 246 centres across Australia. Kmart has 31,877 team members and revenue this year was $4.6 billion.

Material issues

Our business focuses on seven key areas to improve our sustainability:

  • Product safety
  • Ethical sourcing
  • Employee development
  • Employee safety
  • Community contribution
  • Energy efficiency
  • Reducing waste

Ensuring the quality and safety of our products

We work to continuously improve the quality and safety of our products.

This year there were 76 reported product-related injuries, compared to 85 last year. Typical injuries reported were lacerations, burns and allergic reactions. We investigated these products for potential improvement (unless the product had been discarded and could not be assessed in another way).

This year we had six voluntary product recalls for Kmart brand products compared to four last year. The six recalls related to mugs, a hammock, a lamp, car seat covers, power boards and an apple cutter. All recalls were undertaken as a precautionary measure, with no major product-related injuries reported, although minor injuries such as bruising, cuts and burns were reported in relation to the hammock, apple cutter and mugs.

 

As an example of our approach to product safety, this year we recalled a hammock on a metal stand. After receiving two customer complaints that the fabric component of the hammock had split, we withdrew the product from sale and immediately commenced an investigation. Though strength testing of the fabric was conducted prior to ranging, further testing was conducted to establish whether the strength was affected by exposure to sunlight. Upon confirming that light exposure could affect the durability of the hammock fabric, we decided to proceed to a voluntary recall.

We are working with laboratories to develop a test methodology that incorporates ageing for similar products in the future.

Sourcing our products ethically

In the past year, we focused on five key initiatives to enhance our ethical sourcing program.

  • Working with individual suppliers and factories and providing targeted training to improve the performance of factories where issues of concern have occurred. These issues include excessive working hours, consecutive working days, wage deficiencies, inconsistent records and health and safety issues.
  • Extending our commitment to transparency on factory locations, with the publication on our website of all apparel factories, all footwear factories, all non-China general merchandise factories, and the first tranche of general merchandise factories in China.
  • Commencing a review of Australian suppliers producing own-brand products for Kmart in high risk countries to ensure they are compliant with our ethical sourcing requirements.
  • Developing a five-year ethical sourcing strategy as part of Kmart’s 2020 Sustainability Strategy.
  • Undertaking research to better understand the challenges and opportunities associated with living wage.

926 factory audits

During the year, we conducted 926 ethical sourcing audits of our suppliers' factories. Although the majority of factories were approved or conditionally approved, our audit program and ongoing monitoring efforts identified 13 critical breaches of Kmart’s Code in the past year – the most common breach related to attempted bribery and unauthorised subcontracting. All these factories have now been deregistered, meaning no further orders can be placed.

 

 

Developing our team

This year we continued to embed our ‘unwritten ground rules’ (UGR) culture program with each business function exploring its unique UGRs and developing initiatives for improvement. We also launched a survey of all store and distribution centre team members to benchmark our performance and identify opportunities for improvement.

To further improve our gender balance, in the past year we established a working group for Women in Leadership (WiL). At the top of the agenda were improved flexible working arrangements for all team members. An executive steering committee has now been established to drive the broader diversity agenda, with five year targets and action plans currently being discussed for WiL and Indigenous employment.

 

Enhancing the health and safety of our team

We remain committed to the health and safety of all team members, contractors and customers.

Our total recordable injury frequency rate this year was 31.6, unchanged from the previous financial year. Our lost time injury frequency rate, however, increased from 6.9 last year to 7.0 this year (a 1.4 per cent increase). Although there was a reduction in ‘slips and trips’ on the selling floor, there was an increase in sprains and strains, and hand and finger injuries, relating to a new stockroom process. This process has subsequently been improved through additional supervision, training and rostering. Early injury intervention and the relatively minor nature of injuries assisted in an 11 per cent reduction in hours lost to injuries relating to new claims during the year.*

To support our safety goals, we launched a Safety Activity Book during the year. The Safety Activity Book lists all the safety related activities that must be completed for the month, including team talks, inspections, focus topics and training requirements to ensure the safety of all team members, customers and visitors.

We also launched a health and wellbeing strategy this year. Please click here for further details.

*The 2014 figure reported was 7.0 and this was adjusted due to the removal of two LTIs after the report was published.

 

Safety performance

31.6

total recordable injury frequency rate
2015   31.6
2014   31.6
2013   37.6
2012   37.1
2011   40.8

 

Contributing to the community

The Kmart Wishing Tree Appeal remains a Christmas tradition with 432,000 gifts collected across Australia and New Zealand and more than $300,000 donated to The Salvation Army in Australia and New Zealand through the appeal this year.

In early 2015, Kmart store teams each selected a local charity through the Spare Change Program for customer fundraising. This resulted in more than $106,000 being donated to 125 different groups, ranging from Meals on Wheels to the Country Fire Service Foundation.

In Shepparton, Victoria we continued to build on our relationships with the Indigenous community by donating customised IT equipment to students attending the Academy of Sport Health and Education. The donations allowed more students access to laptops to complete their studies through the Victorian Certificate of Applied Learning.

Click here to see an example of how our distribution centres contribute to the local community.

Community contributions

10.2

$m
Direct
2015   1.2
2014   0.9
2013   1.3
2012   1.2
2011   0.7
Indirect
2015   9.0
2014   10.7
2013   9.4
2012   10.4
2011   10.6

Maximising our energy efficiency

We recognise that LED lighting technology represents a significant environmental opportunity for our business. As a result we have conducted trials in various stores to investigate the viability of the technology. We are currently assessing the results of those trials to determine the best way to implement this technology across the business.

In the past year, we have also introduced monitoring and reporting to assist in improving energy efficiency in stores. These reports highlight stores that are not using energy efficiently, particularly outside of trading hours, with facilities management and store managers engaged to further investigate and rectify the problem.

Energy use

1.0

petajoules
2015   1.0
2014   1.0
2013   1.1
2012   1.1
2011   1.1

 

Minimising our waste

Throughout the year, we continued to divert the majority of all waste from landfill, achieving a diversion rate of over 80 per cent for the year.

In conjunction with other Wesfarmers businesses, we also investigated ways to reduce waste to landfill from the Mount Isa store in Queensland by transporting cardboard to Townsville for recycling. Given the remoteness of this store, recycling options have historically not been viable; however, by combining the recycling from a number of businesses this becomes more commercially viable. Kmart hopes to commence this project in the coming year.

The increase in waste disposed was largely driven by improved data calculation methodologies at Kmart Tyre and Auto Service allowing us greater visibility of waste to landfill.

Waste

55

tonnes '000
Disposed
2015   10
2014   9
2013   10
2012   11
2011   10
Recycled
2015   45
2014   38
2013   35
2012   34
2011   34

 

2015-16 priorities

The focus for Kmart in FY16 is the launch of our 2020 Sustainability Plan. The plan will include specific goals and actions in relation to all material issues and draws on 12 months of research and engagement with the business and our stakeholders. Key focus areas in the plan will include:

  • Product quality and safety (e.g. improved data and metrics; raw materials sourcing risk)
  • Ethical sourcing (e.g. review of emerging risks, factory capacity building)
  • Team development (e.g. culture, diversity and inclusion)
  • Team health and safety (e.g. moving safely, health and wellbeing)
  • Community (e.g. community engagement strategy)
  • Environment (e.g. energy/emissions, transport, waste).

GRI Reference: G4-DMA, G4-PR6, G4-12