Target adopts international style

DSN Retailing Today, Feb 7, 2005 by Laura Heller

MINNEAPOLIS -- Target is testing the international waters, so to speak, with its newest merchandising initiative, Global Bazaar, an eclectic assortment of home decor items.

Featuring imported home goods, the department occupies space traditionally taken up with seasonal merchandise and runs for just six weeks through Feb. 19, between the winter holidays and the beginning of Easter, and the outdoor goods and spring planting season.

With aisles of product inspired by such locales as India, Asia and Latin America, the assortment extends Target's current Market Bazaar program to encompass a much wider range of housewares and accent pieces.

Beaded and mirrored pillows, mosaic vases and end tables and painted pottery hail from India. Smoky glass accent pieces, earthenware and wrought iron evoke Latin American decor. Japanese-style screens, teapots, dishware, silk orchids and candles sit across the aisle from blue and white ceramics and figurines from China. Endcaps from Mexico and Italy mix glassware with condiments such as salsa from Frontera Grill and imported extra virgin olive oil. Prices range up to $299 for the dining furniture and area rugs set in a canopied vignette in the center of the department.

Every item is sourced directly from the country of origin and marks yet another private label program for the retailer. In all, the department has more in common with a Cost Plus or Pier 1 than any other discount department store, something that has analysts musing as to the program's effect on these specialty retailers.

"The impressive offering could potentially take market share from both Cost Plus World Market and Pier 1, in our view," wrote JP Morgan analyst Charles Grom, in a research note, "given that 'eclectic' furniture pieces have historically been the bread and butter of both home furnishings retailers."

Given the program's timing of January and February, which is typically a lull between holiday assortments, Global Bazaar will likely contribute to stronger-than-usual monthly sales at Target stores, according to Bill Dreher, Deutsche Bank analyst. Furthermore, "Global Bazaar" has been a natural and successful expression of Target's value-added design strategy," he continued. "This initiative creates increased near-term competition in the home decor space." Target has been heavily advertising the initiative in circulars, in stores and on its Web site.

With such a short run, Global Bazaar is an ambitious program that makes good use of a seasonal department between seasons, and further enhances Target's position as a source for distinctive proprietary goods. Should the effort be successful, expect Target to bring it back for more than a single season.

"Target management could continue to roll out a new assortment of 'Global Bazaar' products in between other seasonal periods," said Dreher. "At the very least, we expect management will likely incorporate best-selling products into Target's current home furnishings department."