Latest intros in home goods further boost differentiation

DSN Retailing Today, April 11, 2005 by Mike Duff

New home brands are cascading into Target, and if the overflow carries away a few existing brands, these new initiatives will certainly create enough excitement to interest consumers.

Of course, Target has dropped home brands before, including, most recently, one of the two Martex proprietary labels it carried. But Target has ambitious plans for its home furnishings department that will make it a crowded camp without some rationalization. With a Target in northeastern Illinois recently offering six brands of window panels alone--Shabby Chic, Fieldcrest Luxury, Fieldcrest Classic, Woolrich, Waverly and Bella--at prices ranging from $12.99 for a pair in Waverly to $49.99 for a single in Fieldcrest Luxury, Target seems to be covering more ground and providing more brands than are conducive to self-serve, mass-market merchandising.

Recently, Gregg Steinhafel, Target Stores president, pointed out to investors that 2004 had been a year of introductions in home furnishings with Shabby Chic and Dorm Room among the new names in home goods. Clearly, Target had its eyes on younger consumers with its efforts. Earlier, the retailer had developed a Todd Oldham label with the same consumer segment in mind, but phased it out when it didn't perform to expectations.

The Target home initiative that has made the biggest splash within the retailing industry was the January introduction of Global Bazaar. The line emphasizing international styles caused concern among analysts who cover retailers such as Pier 1 and Cost Plus World Market.

Joan Storms, a Wedbush Morgan analyst, stated in a research note that Target had informed her "the company does not intend to maintain the Global Bazaar department in the stores on a permanent basis."

Analysts have acknowledged that Global Bazaar hurt mid-market import specialists short-term, at least among investors, but long-term, Target's effort might be viewed as a positive. Target has carried import goods, including wicker and bamboo goods, for some time in a more limited assortment. Ultimately, Target may promote the category's popularity and the position of the specialists within it.

Target validates the fine imports category and the price points that come with it at the mass market. "Cost Plus and Pier 1 have the advantage when it comes to dominant assortment, superior in-store merchandising and better customer service. ... Overlap [is] not as big as you would think," said Storms

That Target would go after what had been a specialty store business is hardly surprising considering that it has ardently pursued department store brands to bring additional purchases and new customers into the stores. Department stores are squarely in Target's sights in 2005, particularly with the launch of the licensed Fieldcrest brand and Issac Mizrahi home.

Those introductions, said Steinhafel, are part and parcel of "our continuous emphasis on internal design, development and sourcing to deliver trend-right, quality merchandise in all our fashion categories and our consistent introduction of new brands and products that distinguish Target from our competitors."

Specialists aren't altogether off the hook, as Target plans to develop a storage solutions operation with California Closet. Target is also working on a new line of apparel and room accessories aimed at girls ages 6 and 12.