Kmart is preparing a new kind of store built entirely around furniture and homewares, and the discount giant says as many as 50 of them could end up across Australia and New Zealand if the idea works. The format, called K Home, opened its first door in Melbourne this month, and retail analysts say it could become a serious local rival to IKEA when it eventually crosses the Tasman.
The first K Home store sits in eastern Melbourne and covers about 3,800 square metres. It carries none of the clothing and accessories that fill a normal Kmart. Instead the floor is given over to furniture and home living products that until now Kmart could only sell online, laid out in room-style displays meant to help shoppers picture how pieces fit together at home.
That online-only limitation is the whole reason the format exists. Wesfarmers chief executive Rob Scott, whose company owns Kmart, told media the retailer had been building its furniture range for years but had been stuck selling it through a screen. “We’ve been developing the furniture category for a number of years now, but we’ve only been selling it online because there are limitations for us to effectively display the furniture within a Kmart shop,” Scott said.
Kmart Group chief commercial officer Callum Smith said the new store had been built to feel different from the usual Kmart aisles. “The space has been designed differently from a traditional Kmart store, with a more immersive home environment, curated displays and room-based inspiration to help customers explore the range in a more intuitive way,” he said.
Kmart’s managing director has told reporters there is room for up to 50 K Home stores across Australia and New Zealand if the Australian trial goes well. For now there is no confirmed New Zealand store, but the company is understood to be weighing up a furniture-only shop on this side of the Tasman, and that is where the IKEA comparison starts to matter.
IKEA only arrived in New Zealand late last year, opening a single store in Auckland, and the early numbers have been striking. The store drew more than 1.7 million visitors in its first six months, its website and app pulled in 9.54 million visits, and furniture and homewares spending across the country rose 4.3 percent in the first quarter of 2026 compared with the same quarter a year earlier.
Sam Brough, head of brand at consumer research firm Tracksuit, said the speed of the shift had surprised even people who expected IKEA to do well. “While everyone expected IKEA’s launch late last year to make waves, watching the shopping habits of Aucklanders shift over the first half of 2026 has been incredible,” Brough told RNZ. “It’s clear from the massive traffic they saw at their Auckland store, welcoming over 1.7 million visitors in their first six months alone, that they’ve captured a huge slice of consumer attention right out of the gate.”
That attention is starting to show up in the way people shop. Brough said around 90 percent of New Zealand consumers were now aware of the brand, and that IKEA was climbing on the measures that matter most. “We’re seeing that play out now in our data. IKEA is steadily climbing when it comes to people actively researching and buying from them, with both their investigation and usage metrics jumping by five percentage points over a few short months,” he said.
Kmart has felt the pinch. Brough said the share of consumers who said they preferred shopping at Kmart had recently slipped four percentage points to 19 percent, which he described as “a bit of a temporary chill”. Even so, he argued Kmart was one of the few retailers with the brand strength to push into a new category and make it stick. “They know they can’t just sit back on their laurels and they do have the brand credentials to pull off a new category play in a way that most retailers can’t,” he said.
Chris Wilkinson of First Retail Group said the format could suit the way New Zealanders are increasingly living. He pointed to the growing number of people in apartments and inner-city flats who do not own a car and rely on public transport, a group that does not fit the classic out-of-town warehouse model. “We’re getting a lot more people living around our city centres and in some urban environments where they’re not necessarily driving to places anymore, they’re much more reliant on public transport,” he said. The thing that would decide the winner, he said, was “design-led affordability”.
That phrase neatly captures the contest. IKEA built its global business on flat-pack furniture that looks good and costs little, and Kmart has spent years doing something similar through its Anko house brand. A standalone K Home store would put the two head to head on exactly the same ground, cheap furniture that photographs well and ships flat.
For New Zealand’s existing homewares retailers, the six months since IKEA opened have been a warning shot. If Wesfarmers proves the K Home format works in Australia, the question is no longer whether it comes here but whether local chains have used the time to sharpen their margins, lock in loyal customers and stand for something IKEA and Kmart do not. The good news for shoppers is simple. Two of the biggest names in cheap furniture are about to start fighting hard for the same dollar, and price-conscious buyers usually do well out of a fight like that.
What would tempt you into a furniture-only Kmart, and has IKEA changed how you shop for your home? Let us know in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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