Kmart to invest A$500m in Moorebank fulfilment centre to modernize Australian retail logistics

In a landmark move poised to redefine Australia’s retail logistics ecosystem, Kmart Group, a division of Wesfarmers Limited, has announced a transformative investment of A$500 million to develop a state-of-the-art Omnichannel Fulfilment Centre in Western Sydney. Located within the ESR-managed Moorebank Intermodal Precinct, the new 100,000-square-meter facility is scheduled for completion by late 2027 and is designed to serve the distribution and e-commerce needs of both Kmart Australia and Target Australia. The initiative is expected to significantly enhance operational efficiency, lower fulfilment costs, and support the group’s long-term growth trajectory.

Why Is Kmart Investing A$500 Million in Moorebank?

The investment comes at a time when Australian retailers are under increasing pressure to deliver faster, more reliable fulfilment experiences across physical and digital channels. Kmart’s commitment to Moorebank reflects a wider industry shift toward omnichannel agility, automation, and supply chain sustainability. According to John Gualtieri, Managing Director of Kmart and Target, the fulfilment centre will centralise critical backend functions, enabling faster restocking, quicker deliveries, and improved inventory accuracy. While not directly quoted, Gualtieri’s recent comments suggest this development is central to Kmart’s broader goal of simplifying store operations and future-proofing its logistics capabilities.

The A$500 million project is also aimed at enabling scalability. With online sales and footfall stabilising post-pandemic, the company sees the facility as an anchor point for integrating warehouse robotics, AI-powered planning, and dynamic route optimisation. This is particularly vital as the group eyes a medium-term revenue target of A$20 billion, building on the current momentum of its discount department store portfolio.

What Makes the Moorebank Intermodal Precinct Strategic?

The selection of Moorebank Intermodal Precinct as the project site is no coincidence. Operated by ESR Australia and backed by National Intermodal Corporation, the precinct is strategically located with direct rail connectivity to Port Botany and excellent road access to Australia’s eastern states. The site is widely considered the country’s most integrated logistics and freight infrastructure hub. Government modelling projects the precinct to generate A$11 billion in economic value over 30 years, with A$3.6 billion specifically benefiting the South West Sydney region. Kmart’s integration into this freight corridor will allow for intermodal efficiencies, including the transfer of container freight from rail to warehouse floors, significantly reducing long-haul trucking dependency.

From a sustainability standpoint, Moorebank offers a vital advantage. By prioritising rail freight over diesel-powered road transport, Kmart expects to cut emissions and reduce supply chain volatility, particularly amid fluctuating fuel costs and road congestion challenges. This aligns with wider efforts by Australian corporates to meet ESG reporting obligations and decarbonisation targets, especially in sectors with complex distribution footprints.

Job Creation, Economic Value, and Institutional Response

The project is set to bring direct economic benefits to Western Sydney and beyond. According to initial estimates released by the New South Wales government, the fulfilment centre will create more than 1,300 jobs during its construction and start-up phase. Upon reaching full capacity, the facility is expected to support around 6,800 direct and indirect jobs. These roles will span logistics management, automation systems operations, last-mile coordination, and data-driven supply chain planning. Deputy Premier and Minister for Western Sydney, Prue Car, described the investment as a generational opportunity to supercharge the region’s infrastructure employment base. Her office noted that the project will also support ongoing skills development initiatives tied to vocational education and training in logistics and transport.

Market reaction to the announcement has been cautiously optimistic. Analysts following Wesfarmers Limited have noted that while the project carries substantial capital expenditure, it is viewed as a margin-accretive investment over the medium to long term. By reducing per-unit fulfilment costs and compressing lead times, the centre is likely to deliver EBIT margin improvements for Kmart and Target, especially in a retail landscape where operational efficiency is becoming as important as product pricing.

A Sustainability-Built Fulfilment Centre

Sustainability is central to the facility’s blueprint. Designed to achieve a minimum 5 Star Green Star rating, the Moorebank site will incorporate a range of green building technologies. These include adaptive smart lighting systems that respond to natural daylight, passive thermal control features to reduce cooling and heating loads, and greywater recycling infrastructure to lower water usage. Rooftop solar readiness has also been confirmed, with potential for battery storage integration in future phases. From an emissions standpoint, the use of rail-based container transport significantly lowers scope 3 carbon emissions, which is becoming a key metric for ESG-conscious investors and procurement partners.

The project builds on a broader ESG narrative emerging across Australia’s retail and logistics sectors. Peer companies like Woolworths Group and Coles Group are also investing in low-carbon distribution centres, with some piloting electric vehicle (EV) delivery fleets and green hydrogen logistics trials. In this context, Kmart’s Moorebank facility sets a new standard for combining performance, scale, and sustainability in a single logistics asset.

How Will the Centre Support Kmart and Target’s Omnichannel Operations?

Once operational, the fulfilment centre will serve as the logistical core for Kmart and Target’s national networks, supporting both bricks-and-mortar store replenishment and direct-to-customer e-commerce fulfilment. The design will enable automated picking, robotic packaging, and intelligent inventory forecasting. With real-time data integration, the facility will allow for precise stock positioning and rapid response to customer demand changes. By consolidating online and offline fulfilment workflows into a single ecosystem, the Moorebank hub will help the brands reduce inventory redundancy and streamline returns processing. This consolidation is expected to directly improve customer satisfaction metrics, reduce lost sales due to stockouts, and increase inventory turnover ratios.

Notably, this level of integration mirrors trends observed globally. Retailers such as Amazon, Walmart, and Zara have already demonstrated the advantages of centralised, automated fulfilment systems in meeting omnichannel expectations. Kmart’s shift to this model indicates a strategic pivot away from fragmented logistics contracts and toward vertically integrated control over fulfilment quality and speed.

Kmart’s Broader Retail Performance and Supply Chain Strategy

In its most recent half-yearly earnings for the period ending December 2024, Wesfarmers reported total group revenue of A$22.1 billion. Kmart Group, which includes Kmart and Target, contributed A$5.8 billion, reflecting resilient growth despite subdued consumer spending in some discretionary categories. Analysts noted that Kmart’s ability to offer low-cost essential goods had helped it outperform in value-conscious segments, while Target’s narrowing focus on homeware and apparel was showing signs of brand stabilisation. Operational efficiency was a key highlight of the earnings call, with Kmart Group achieving improved gross margins due to better supplier negotiations and leaner inventory practices.

The Moorebank facility is expected to further these gains by cutting cost-to-serve ratios across multiple regions. It may also unlock future supply chain synergies for other Wesfarmers divisions, such as Officeworks and Catch Group, if shared infrastructure or systems integration becomes viable.

Future Outlook: What Comes Next?

Looking beyond Moorebank, analysts expect Kmart Group to explore additional regional fulfilment investments in Queensland and Victoria. There is also growing interest in how emerging technologies such as AI-based route optimisation, digital twins for warehouse modelling, and predictive analytics for stock forecasting will be integrated into the Moorebank hub. Industry watchers suggest that Kmart could be a candidate for early adoption of electric or hydrogen-powered delivery fleets, particularly if state-level green freight incentives are extended into 2026–27. From an institutional perspective, the successful execution of this logistics strategy may enhance Wesfarmers’ positioning as a defensive, ESG-aligned retail conglomerate, capable of scaling profitably even in low-growth environments.

Logistics as Retail’s Strategic Battleground

In an era where fulfilment delays can quickly erode customer loyalty, logistics has become a defining factor in retail competitiveness. Kmart’s A$500 million Moorebank Fulfilment Centre isn’t merely a warehouse—it’s a strategic infrastructure play that brings together automation, sustainability, and customer-centric agility. As more retailers migrate toward digitally connected, low-emission fulfilment networks, Moorebank may serve as a template for what the future of Australian retail logistics looks like.