Wesfarmers has announced it will shut down the Catch online retail platform, ceasing operations as a standalone business by the end of March 2025. This decision, part of a strategic restructuring, involves transferring Catch's e-commerce fulfilment operations to Kmart Group. Select digital capabilities developed under Catch will also be absorbed by Wesfarmers' various retail divisions, including the well-known Bunnings and Officeworks.
Managing Director Rob Scott stated, "While Catch’s financial performance has been challenging, we have gained valuable insights and capabilities..." This decision is aimed at streamlining Wesfarmers' operations, cutting continuing losses from Catch, and enhancing the digital capabilities of its retail portfolio.
Wesfarmers acquired Catch for $230 million back in 2019 with high hopes of boosting its digital presence. Initially, it was viewed as a pivotal move to strengthen e-commerce capabilities. To date, the integration has led to over $3 billion in e-commerce sales and 220 million digital interactions per month, reported during the 2024 financial year. Nonetheless, the competitive pressures within the Australian e-commerce sector, alongside Catch's slower-than-expected growth, necessitated a reconsideration of its viability as an independent entity.
Scott pointedly noted, "The recent increase in competitive intensity... has affected Catch’s financial performance and growth prospects." The shift focuses not only on the failing marketplace but also leverages the strengths of Wesfarmers' existing retail frameworks. He added, "The Group’s retail and health businesses, with their leading omnichannel offerings and trusted brands, are positioned to respond as the market and customer expectations evolve."
The transition plan will integrate Catch’s fulfilment centres located at Moorebank, New South Wales, and Truganina, Victoria, expected to take shape by the fourth quarter of the 2025 financial year. Kmart Group managing director Ian Bailey expressed optimism, stating, "The transition will result in faster deliveries to customers at lower unit costs, relieving pressure on our busy stores." This integration is projected to boost the efficiency of Kmart’s online fulfilment processes.
Despite expectations for long-term benefits, the short-term outlook remains modest. Wesfarmers anticipates incurring one-off costs between $50 million to $60 million linked to Catch's shutdown, alongside reported operating losses for Catch estimated at $38 million to $40 million for the half-year ending December 31, 2024. These financial strains hint at the challenges Westfarmers has faced since acquiring Catch.
Reflecting on the troubled path, Scott acknowledged the insights gained from the venture, stating, "Since the acquisition, [Wesfarmers’] retail divisions have significantly enhanced their data and digital operations." Clearly, this venture served as both challenge and teacher for the conglomerate, providing much-needed lessons about the realities of operating within the intensely competitive online market.
Other industry players have weighed in on this significant market shift. Ruslan Kogan, founder and CEO of Kogan.com, remarked, "It’s bittersweet to hear..." he appreciates the legacy of Catch, noting it was once his closest competitor, and lamenting the eventual closure of what had been such a formidable force since its inception. Kogan stated he had reached out multiple times to acquire and possibly rescue the business.
The dynamics of the Australian e-commerce sector continue to shift, with established players adapting to pressures from rivals like Amazon, and newcomers gaining traction. Kogan underscored this reality, hinting at the broader challenges traditional businesses face as they try to navigate the tech-driven marketplace.
Catch was initially founded by Gabby and Hezi Leibovich as Catch of the Day, paving the way for the e-commerce scene in Australia back when online shopping was still blooming. This shut down caps off years of suffering significant losses, reported as high as $163 million for the 2023 financial year. Wesfarmers initially saw acquisition as growth opportunity, yet just five years later it resembles more of cautionary tale of strategic miscalculation.
While Bunnings continues to thrive as Wesfarmers' golden goose, the saga of Catch is marked by notable highs and lows. It's viewed as both case study and lesson, underscoring the necessity of agile adaptation to remain competitive. This transition, though challenging, may enable Wesfarmers to concentrate on its core retail strengths without the burden of Catch's past operations.
Wesfarmers is expected to provide updates on the wind-down and transition at its Strategy Briefing Day scheduled for May 2025. The future holds the question of whether the lessons learned will propel Wesfarmers advantageously within the fast-evolving e-commerce arena.