Their products are sometimes better in quality and usually closer aligned to current fashion trends. It depends on the product, but there are definitely some things that I think are worth paying more for at Target compared to Kmart.

The article does mention that.

Perhaps people that buy lots of chocolate and confectionery? That's the biggest theoretical demographic I can think of (my only other thought are people that buy new clothes and underwear rather than using a washing machine, but I don't think that would be many).

Yes. I don't personally, but know Kmart at least is cheap for clothing basics, especially for kids. It also has cheap homeware and small appliances. Not everyone can afford to buy expensive brands.

Edit: should also point out, they pretty much have clearance stuff on sale weekly, so people probably go to see what they can get for cheap.

There are many who live in shopping deserts (? I think I got that name wrong) where Target or Kmart may be their only choice for groceries.

KMart Australia has no relation to KMart USA anymore, it's completely separate.
Target is worse, it was never affiliated at all.