Brand new ideas for selling Target - Special Supplement: Apparel Merchandising

Discount Store News, April 1, 1996 by James Mammarella

Every retailer uses private labels-target just seems to get them right more often than most retailers. Indeed, the 688-store upscale discounter is so sure of its ability to grow its already potent house brands that many national brands of the mass market change their tactics when selling to Target.

Jim Phillips, vice president, sales and distribution for Brittania, says, "Brands have to find the niche around Target's private label programs. It's a different kind of selling, normally the private label revolves around some of the brands, especially in denim-but not at Target."

If a manufacturer commands a well-established consumer franchise-like Wrangler, Hanes or Fruit of the Loom, for instance-its brands will be maximized at Target. Vendors of less pervasive labels, however, find they may have to ship under Target's house brands-and must meet very high standards, at that.

Louis Padilla, senior vice president, general merchandise manager for soft lines at Target, notes that even on opening-price goods in core house brand programs, the chain's goal is to meet the competition on price, but exceed them on value. Even as Target steadily extends its ability to capture more business from customers who usually buy casual sports-wear and activewear in department stores and specialty stores, it refuses to walk away from the lower-priced business. Instead, Padilla says, Target intends to deliver more make and on-trend colors and styles at competitive pricing-a goal suppliers must heed.

By the same token, vendors negotiating with Target know they are dealing with a very astute, always in-focus buying team.

"Target wants to have impact in every category," says Abe Chehebar, president of Accessory Network, " and they have a very clear definition of what their brands stand for. When we show them a particular design, their buyer, fashion planner, merchandise manager and gmm will all agree on which brand it belongs under."

The current list of Target house brands, which store merchants call "owned brands," includes core classic labels Honors and Merona, the outdoorsy Greatland, Pro Spirit for knit programs, Sostanza for contemporary, Xhilaration for juniors, Surrey for men's furnishings, and the recent additions of Lullaby Club for layette and infants and Utility for young men's.

Together, these labels compose well over half of Target's apparel volume, according to estimates by several market sources, who peg the proportion of proprietary label business at competitors Wal-Mart and Kmart at less than 20 percent.

This high proportion of house brands, which is likely to grow, limits the opportunities for national brands at Target. Still, many vendors that lack the strength of major branded players have found ways to place their goods at the store.

"We seek to be in partnership with the retailer," says Walter Ginsberg, president of knitwear manufacturer TLC for Girls. While some of his company's trade with Target, mostly in the form of knit sets, is under the TLC label, he says an increasing share is being made under the retailer's house brands.

Even national brands that have earned the space for their main line products are unlikely to leverage that into extra room for their line extensions. For example, while Target takes a strong position in Wrangler jeans, the store will not make a major statement in Wrangler's denim@friendly Timber Creek tops when it is ready and able to deploy mass quantities of Greatland knits and wovens.

Similarly, purveyors of men's under-wear like Fruit of the Loom can gain ready rack space in basics, but any move to sell fashion boxers in Target is likely to run into a selling floor loaded with the discounter, s own Surrey and Honors goods.

Phillips says the Brittania selection of fashion watches, which is performing very well at Target, is an exception to the rule. "It is much more difficult to sell line extensions" to Target, he confirms, adding, "As they've moved forward, they've had less open-to-buy or interest in testing brand line extensions."

Target merchants are reserving more floor space for internal brands. Utility, for example, has been staked to a powerful corner presentation as its new young men's street active line. Padilla says Utility, which first tested eight months ago and rolled out chainwide for spring '96, "is performing way beyond expectations."

As with any Target house brand, the Utility image is clearly identified for consumers, with consistent presentation in circulars, fixture topper signs and ceiling-hung lifestyle posters that show how to wear related items. Karen Gershman, vice president of point-of-sale for Target, says the chain places a premium on projecting its own level of lifestyle tone throughout all departments. We generally don't use vendor point-of-sale," she notes.

The result is that Target makes it easier for consumers to maintain a consistent comfort level about Target styles. Expectations levels for quality, price and fashion are reasonably well defined by the house brands, and are reinforced with signage and crisp presentation and these expectations are usually met because of the chain's relatively high level of execution.