Target and its customers have always kept their noses up when it comes to other discount retailers. The chain has never focused exclusively on value, although offering good prices has been a key part of its business model.
It is a very conscious decision by the chain. Target wants to be a place where everyone shops. That means maintaining a level of merchandise and in-store experience higher than rivals like Walmart and Dollar General.
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Doing that costs more. It means that the objective (TGT) It generally doesn't have the lowest prices among its direct competitors, but it strives to offer value and the best overall experience. That's why the chain has partnered with Starbucks, Walt Disney, Apple and Ulta Beauty, while also offering affordable versions of luxury brands like its Kendra Scott and Chip and Joanna Gaines product lines.
CEO Brian Cornell has taken great care to cultivate the “Tar-Jay” feeling that makes the brand a destination. People shop at Walmart and Dollar General because they are convenient and cheap. Customers visit Target because it's the new mall, a store full of interesting products, experiences and decent prices.
However, the retail chain has also kept its costs down by filling its stores with high-quality private labels. That's an area where the company has been expanding rapidly, and its latest move into the O&O space will pit it directly against Dollar General, Walmart, Dollar Tree and other stores built around low prices.
Image source: Joe Raedle/Getty
Target offers high-end, low-cost brands
Target has approached its O&O brands in a different way than Walmart or Costco. Instead of having a single brand, like Costco's Kirkland Signature or Walmart's Great Value, the chain has created dozens of brands that cover various parts of the store (Walmart has a few brands in areas outside of food and home goods, as well of great value.)
Instead of taking the traditional approach, Target has decided to create real brands that don't look generic. All In Motion, for example, offers women's sportswear, while Boots & Barkley has pet clothing and accessories.
The chain also offers Everspring, a broad line of household essentials, and Good & Gather, a food brand with more than 2,500 products. These brands don't feel like classic household brands, as they have logos, illustrations, and displays that make them feel like third-party brands.
Target has decided that its latest owned and operated brand, Dealworthy, will aim to offer an exclusive but very affordable line of products. The move came after a quarter in which the retailer reported a 4.6% drop in comparable sales.
Target adds $1 items
Most Target locations have an area at the front of the store that sells items for as little as $1. That area has often seemed to lack cohesion. You could have cheap school supplies next to discount candy and other containers filled with inexpensive Christmas tree decorations.
Target has never really had a brand that offers prices that match what Dollar General and other low-cost retailers sell. The network now has a much more striking response to this.
No one could plan what might be offered in this area, so it was more of a scavenger hunt as part of your visit to Target than something where you would find items on your shopping list. The new line will contain 400 items with prices starting below $1 and generally not exceeding $10.
“Dealworthy's assortment spans clothing and accessories, essentials and beauty items, electronics and home goods,” the company shared on its website.
This is Target analyzing its sales data and finding products where it can bring real value to its customers.
“In electronics, some items, such as phone cases, will be priced 50% lower than any other brand sold at Target,” the chain added.
The new merchandise will begin appearing in stores and online this month (February). Target will add to the line throughout 2024 and 2025. Target hasn't shared the full list of items, but did say it will include “power cords, underwear, socks, laundry detergent, dish soap and more.”
Images shared by the retailer also show paper towels, toothbrushes, paper plates and cotton balls.
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