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Targeting Fast Fashion: Discounter to Showcase Global Designer Lines

Target is entering fast-fashion's heady realms, launching Go International, a program of limited-edition collections from international designers.

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BOSTON — Target is trying to polish its image in fast fashion’s heady realm, showcasing limited-edition collections from international designers.

The Minneapolis-based discount retailer is launching Go International, which will kick off in February with the young British designer Luella Bartley.

“Our greatest strength is our trend leadership and our ability to anticipate what our guests want next,” Target president Gregg Steinhafel said during a presentation to investment analysts in New York on Tuesday.

For holiday, Target will also have a 60-day run of merchandise from the oft-recycled Fiorucci label and a limited-edition gift assortment of luxury apparel. Among the items are a cashmere sweater beaded with Swarovski crystals and a silk scarf. For men, the assortment will include silver cufflinks, cashmere sweaters and $29 silk jacquard ties.

Target did not give details about other designers, or the Bartley, Fiorucci and holiday collections, and did not return calls seeking comment.

Steinhafel told analysts that the planned limited-edition collections would temporarily displace a small amount of Mossimo and private label Xhilaration apparel.

Target is well positioned to “participate in the affordable luxury space,” said Jeffrey Klinefelter, retail analyst with U.S. Bancorp Piper Jaffray. “With savvy marketing and design, they have created a halo for this brand that allows them to sell a $29 tie and have people perceive it as a great value. This would have been inconceivable 10 years ago, and it’s simply an unbelievable accomplishment for a discounter.”

The discounter keeps pushing the design envelope in its bid to stay ahead of rival Wal-Mart, which is on a campaign to update its fashion profile. The Bentonville, Ark.-based retailer this month launched Metro 7, a fashion line aimed at contemporary urban customers, and announced the signing of a celebrity spokesmodel, former Miss Universe Dayanara Torres.

Target’s move follows that of Swedish fast-fashion chain Hennes & Mauritz, which this year sold out a limited-edition collection by Karl Lagerfeld within hours. This summer, H&M partnered with Elio Fiorucci on a pool loungewear line. The store will have a Stella McCartney exclusive at holiday.

“We believe great design gives Target a sustainable competitive advantage,” Michael Francis, executive vice president of marketing and a creative force behind the bull’s-eye brand, told the analysts. “Design for all is our declaration of independence.”

The Italian fashion house Fiorucci is known for its Technicolor sensibility, denim, and use of materials such as gold lamé and plastic. Bartley, a fashion journalist-turned-designer, showed a spring runway full of punked-up preppy ensembles and cheeky nautical looks, such as red-and-white striped shirts and eyelet minidresses laced with rope.

Given that Go International will focus on limited-edition collections, the program seems to be as much about generating excitement as about driving sales. Target derives most of its apparel sales from design partnerships with Mossimo, Isaac Mizrahi, Cherokee and Liz Lange in addition to private label brands Xhilaration and Merona. Cynthia Rowley and Ilene Rosenzweig design a line of home decor and loungewear.

“We use public relations buzz to amplify our message” and “level the playing field with competitors who outspend us,” said Francis.

Klinefelter said Go International “probably won’t generate billions in revenue, but the idea is really to put a focus on the apparel offerings in their stores…It creates the momentum to talk about apparel and for the customer to visit frequently for higher-margin goods.”

Events like its vertical fashion show, which featured acrobats wearing Target fashions at New York’s Rockefeller Center this summer, and its virtual trunk show presenting Mizrahi’s fall collection online “create thousands of media impressions,” capture the public’s imagination and vastly outstrip the value of advertising dollars, Francis said.

Target, which has been flirting with Manhattan shoppers for years with floating barge stores and other sensational promotions, said it would build a three-level store near Brooklyn College. Chairman and chief executive officer Bob Ulrich described the location as a triangular property near Long Island Rail Road tracks. The store will have a street-level lobby and small, local retailers on the first floor. Target will occupy the second and third floors.

Ulrich said the chain had not yet found an economically feasible Manhattan location, though Target believes there is significant unmet demand in urban areas.

“We have one store in San Francisco, and we could have 10,” Ulrich said. “We have two stores in Chicago now; we could have 20. If there is second-tier department store fallout, there could be major opportunities” to buy up the real estate.

The company plans to open 110 stores in 2006. Most of the growth will be in California and New England, in metro areas.

Ulrich said the company would pick up some locations from the May-Federated merger, but does not expect the purchases to move the company ahead of its planned 8 to 10 percent annual square footage growth.

Executives also discussed store service initiatives. They have launched Channel Red, an in-store television network that will give information about product launches and new releases in the entertainment department. They are boosting space devoted to video games, one of the store’s most productive areas, by 50 percent, Steinhafel said.

Target has launched a gourmet line of chocolates, called Choxie, and executives are pushing to expand private label gourmet foods, premium meats and locally grown produce since improved food sales correlate to increased visits and larger average transactions. Shopper visits are running 3 percent ahead of last year’s, according to Target chief financial officer Doug Scovanner.

Analyst Klinefelter said the rise in traffic was evidence that “Target is taking a disproportionate share of traffic out there. And not just share from Wal-Mart. They absorbing share in apparel, and home and electronics.”

Target executives said they were not concerned about fuel prices dampening the desire for luxury, and showed rare levity when analysts kidded them about rival Wal-Mart’s apparent attempts to out-upscale Target.

“What about [Wal-Mart ceo] Lee Scott’s 250-count sheets?” quipped one analyst.

“I believe [Target Stores president] Gregg [Steinhafel] is probing up with 600 thread-count,” Ulrich replied.

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