Target stays on the hipper side of soft lines: not content with leading the pac, Target refocuses on fashionable house brands - The Power Retailers: Target

Discount Store News, April 1, 1996 by James Mammarella

Target is easily the fashion value leader among mass merchandisers, with the best in-store presentations, the most pervasive and coordinated private label programs and the top reputation among consumers. Yet one of the chain's top merchants stands by this remark: We're not a destination for apparel."

This claim may sound disingenuous, but Target senior vp, gmm soft lines Louis Padilla told DSN in a recent interview that he has the research to back it up.

What the assertion really spells out is trouble for other mass merchandisers, because it means Target is not content with its reputation as the best upscale discounter. This chain will continue to be, as the saying goes, a moving target.

Target's view is that its customers shop department stores and specialty stores for most apparel purchases. We really have to get better,, said Padilla. "If we work harder at developing our own house brands, well make it a little hipper to pick up an item or two.,

He asserts that Target's guests,, who may make "a lifetime investment, in an apparel purchase at a department store, can use Target for an alternative type of purchase: fashionable merchandise that they don't plan to wear forever.

To determine what kinds of products to carry and what image to project, Target uses a product development team that has long been regarded by the industry as first rate and as one committed to changing to get even better. Padilla described how the methods of that team have changed over time: "We've shifted from trend-driven [product development] to the disciplines of brand management. Each brand has a guest position and profile, and a different product look."

Target applies these ideals to all brands, whether national or internal, but it applies an extra measure of care to its internal creations. Alone among discounters, Targets house brands compose well over 50% of its apparel and domestics mix, according to market analysts. Target can thus more readily offer unique fashions and exert greater control over pricing and the overall look of its stores.

The fact that some competitors, notably the upscaling regional chains like Venture and Bradlees, realize greater proportions of their total volume from apparel than does Target (where apparel generates about 38% of revenues), only means that Target has plenty of room to develop its soft lines strength.

By building out from customer demographics and fashion needs, Target focuses with intensity on segments of business; in turn, this can isolate opportunities with great certainty.

Current line introductions developed in this manner include Utility in young men's active apparel and Cherokee as an updated misses line. (For details, see "Brand New Ideas for Selling Target," p. A68.) Target designed everything internally for house brand Utility, and it maintains tight control in its exclusive direct license with Cherokee.

The rollout of the Lullaby Club house brand is another case in point; it was built on the assumption that Target customers would pay for better goods in infant and layette if they were packaged as gifts. "This is a marketing concept tied to the gift registry and to better goods," said Padilla.

Having successfully installed Club Wedd bridal registry kiosks at the front of its stores over the past three years, Target piggy-backed Lullaby Club onto the same computer system last year. And in the children's apparel department, it quickly added a fixture or two of Lullaby Club brand clothing sets, plush baby toys and various pre-packaged gift sets.

A similar discipline is exerted in domestics, where Target now carries a full gondola run of Garden Estates coordinated bedding in updated floral patterns. Keyed by a mini-bed vignette atop the endcap, this program appears to be a transformation of a house brand previously labeled Country Estates and then simply Estates. The line has always had a Martha Stewart flair, but the name has been tweaked as the execution of the look has evolved.

In any product area where the chain has a winning concept, it seems to have succeeded by building in quality and projecting a consistent image. Target's advertising and in-store presentation have continually driven home the message that the apparel and domestics assortments are clean, fresh and in style, but not likely to soon go out of style.

A further key message is that the goods are priced right-not just in dollars and cents, but in terms of convenience. By keeping these messages clear in circulars, broadcast ads, point-of-sale signage and merchandise displays, Target adds more value, because the time-pressed shopper spends less time sorting through clutter and can more easily make decisions, which in turn can lead to greater average purchases per visit.

While the chain is credited with achieving very good execution, it must combat the same challenges every chain faces. There are Target stores where merchandise appears indifferently coordinated and gaping holes span gondola displays. But in the culture overseen by chairman and ceo Robert Ulrich, where "team leaders", direct efforts toward serving "guests," such instances are the exception.