Since 1999, long before collaborations were the norm, Target has released capsule lines with the likes of Proenza Schouler and Victoria Beckham. It also relied largely on its own brands, including Mossimo and Merona, to fill the apparel sections of its stores — a concept online juggernaut Amazon has only recently tackled.
To compare, Target’s apparel makes up 19 percent of its sales, versus 16 percent for Amazon and 9 percent for Walmart. But the latter two companies are gunning for more relevance in the space: Amazon has launched a number of private labels, including work-ready brand Lark & Ro, and Walmart has acquired multiple apparel companies, including Bonobos and Modcloth.
“Developing private labels represents a way for these retailers to have something that the others can’t replicate. It also makes direct price competition more difficult, and offers them a way to create more loyal shoppers,” said Tom Gehani, the director of client strategy and research for big box and department stores at L2.
To keep up with the mounting competition, Target announced plans yesterday to launch four new brands across its apparel, accessories and home decor categories. The news is part of the company’s larger announcement in March that it would be investing over $2 billion this year to reverse its recent sales declines and accelerate growth.
Pieces from Target’s A New Day line
“Target has a long history of leveraging their perceived ‘design’ aesthetic via private label or exclusive brands, and this shows they are willing to refresh those brands once consumers are no longer responding,” said Gehani, noting that 30 percent of Target’s sales currently come from its private label brands. Target’s exclusive C9 by Champion and Cat & Jack lines are two of its top growth drivers, he said — unlike Amazon, where best-selling brands do not include any of its own.
“[Target] has a lot of experience — more than its two main competitors,” he said.
The new apparel brands include A New Day, a contemporary women’s brand that seems to take notes from the retailer’s Who What Wear line, mixing classic and trendy pieces; Goodfellow & Co., a menswear brand focused on quality and fit that aims to attract style-savvy guys; and Joy Lab, a women’s activewear line with a more fashionable, Outdoor Voices-esque approach than the retailer’s previous collections.
The lines will debut in stores across the country and online in early September, and are the first of more than 12 new brand launches the company has planned over the next two years. The company’s longtime basics brands, Merona and Mossimo, will be axed to make room for these new labels, which offer a more distinct point of view.
“As we’ve been creating these new brands, we’re thinking about the values we want to stand for five, 10, 15 years down the line — so they’ll have real meaning and depth as we evolve,” said the company’s executive vice president, Mark Tritton, in a recent blog post. “Everything we do is based not only on our guests’ needs today, but also where we see our brands forging a space tomorrow.”
As such, the new brands have been designed using the same extensive research approach taken by Target when it introduced its new children’s line, Cat & Jack, last year. At the time, Bloomberg reported that the retailer had solicited the sartorial opinions of over 1,000 kids — ages 4 to 12 — in focus groups, online and at day-long fairs.
Bloomberg also drew similarities between Cat & Jack styles and those found in J.Crew’s kids’ line, Crewcuts, hinting at a private label copycat model that other big-box brands like Amazon have been called out for. Target’s styles, of course, had a price advantage over the many look-alike styles that seemed to serve as inspiration.
Pieces from Target’s Goodfellow & Co. line
At the end of the day, developing private labels is simply a smarter way to satisfy today’s customers than relying on outside brands, argued Hélène Heath, a senior editor at the visual intelligence platform Dash Hudson.
“Sure, Amazon and Walmart currently seem entangled in a big box merchant battle, but this move by Target appears to be an effort to [reassert] its stripes as the clear style leader of the category,” said Heath. “Walmart and Amazon haven’t made the same impact that Target has managed to make in that sector throughout the years.”