NEW YORK — Target believes American consumers are feeling more upbeat — and is planning an aggressive push for the holidays to make sure they stay that way.
This story first appeared in the October 17, 2012 issue of WWD. Subscribe Today.
“If you look at consumer sentiment, it’s ticked up,” Gregg Steinhafel, Target Corp.’s chairman and chief executive officer, told WWD at its second annual Media Day here. “Postelection, there will be less uncertainty. We work on a bipartisan basis and hope a [fiscal] compromise will be reached.
“I don’t see the guest racing ahead,” he added, speaking of Target’s customers. “The guest gets value. Our apparel business has been very healthy all year. We’re seeing signs and glimmers of hope.”
Steinhafel said he is somewhat optimistic about the holiday season because Target has a string of incentives planned and distinctive merchandise — from a special holiday gift assortment of accessories, nail polish and clutches in distinctive colors and packaging to the Target and Neiman Marcus holiday collection, which was kept under wraps in the next room of the presentation space until it was time for the big reveal, when a curtain parted and the dramatically lit products could be seen surrounding a larger-than-life-size red gift box.
Prior to opening the curtain, Steinhafel and Karen Katz, president and ceo of the Neiman Marcus Group, shared the podium. “Strange bedfellows, huh?” Katz said under her breath. Then, she added, “Target is without peer in their ability to source and manufacture. This will resonate with those who shop at Target or Neiman Marcus or both. It’s the perfect match in every way.”
The groundbreaking partnership called for an unexpected advertising and marketing campaign, said Jeff Jones, executive vice president and chief marketing officer of Target, and Wanda Gierhart, senior vice president and chief marketing officer of NMG, offering a first look at the collection’s campaign shot by Craig McDean, with illustrations by Quentin Jones and featuring Karlie Kloss, who sits in an oversize metal outline of an ornament as if it were a swing.
The retailers, in “a TV first,” according to Jones, partnered with ABC to promote the new collection as the sole sponsor of the midseason finale of “Revenge” on Nov. 11. Target and Neiman’s are working with series creator Mike Kelley to produce a “‘Revenge’ episode inside a ‘Revenge’ episode.” It will feature all 50 products in the collection.
Asked whether shoppers will find the Target and Neiman Marcus holiday collection priced too high, Steinhafel said, “No. It goes from the very low range to signature items at higher prices. We learned from other designers what will sell. We will be delivering spectacular value on these products, the vast majority of which are under $60.”
The opening price point is $7.99 for wrapping paper by Rodarte, a stationery set by Carolina Herrera and a Tory Burch lunch box. Alice + Olivia’s colorful bicycle is the most expensive at $499. In between there’s Proenza Schouler’s sweatshirt, $29.99; Brian Atwood’s leather gloves, $49.99; Thom Browne’s blazer, $129.99, and Jason Wu’s pair of girl’s dresses, $59.99.
Target hopes to further spur holiday traffic with new rewards for holders of the retailer’s proprietary credit and debit card, the Red Card, who will qualify for free shipping and an extra 30 days to return purchases between Nov. 1 and Dec. 24. Target is also extending its price-match policy to its e-commerce site, and, for the first time, Target will enable consumers to compare prices with Wal-Mart on target.com.
Target is starting to promote for Black Friday early. The retailer last week launched a commercial themed “Big Dog.” The decision to send the message out early is “about launching our value proposition and we want to put that foundation into place,” Steinhafel said.
Beyond holiday, the nation’s second-largest discounter is plotting a string of initiatives, including:
• Target has spent $3 billion on store remodels and has completed three out of four stores in its fleet.
• The retailer is still focused on getting its shoppers to cross the aisle from food to discretionary categories. “We absolutely want to deepen our relationship with our guests. We want to make her trip more efficient, whether she’s shopping for food or apparel or home,” said Steinhafel. The investment in the fresh food business has made it the fastest-growing category across the assortment. “Today, we sell as much food as we do home goods and apparel,” said Kathee Tesija, executive vice president of merchandise and supply chain.
• While home had been slightly lagging behind apparel, Steinhafel said the launch of Threshold, formerly Target Home, should boost sales, an effect the retailer saw when it relaunched Up & Up private label consumables.
• Tesija said “health and beauty is where growth is particularly strong. Comp-store sales have grown 8 percent per year. In late summer, we started testing a beauty concierge in our Chicago stores. They dispense advice agnostic of brands, distribute samples and show guests product reviews.”
• Target wants to be the destination of “Hollywood blockbusters,” Tesija said, and it’s selling exclusive versions of films such as “The Hunger Games.” It’s doing the same with music, with Taylor Swift’s Target exclusive version of “Speak Now,” with six bonus tracks and 30 minutes of video content.
Asked how he feels about being a showroom, where consumers look at the product and then buy it online, Steinhafel said, “We love it when we get to book the sale.” He noted that Target is partnering with Apple and the retailer rolled out a pilot with Best Buy’s Geek Squad this month.
Other trials in the works, according to Casey Carl, president of multichannel and senior vice president of merchandising, include testing an in-store pick-up service where guests order online or via mobile device. The service, which sounds similar to a Wal-Mart delivery option, will launch in 2013 in Minnesota. Target is also piloting same-day delivery in partnership with eBay. Now in a trial that launched Oct. 10 in San Francisco, Target is also rolling out free Wi-Fi to all its stores and working with wayfinding technology to let consumers navigate stores and find precise locations for specific items.
Steinhafel said that Target will open its second City Target store in San Francisco. The small-format, urban retail model made its debut in that city this month, along with the first freestanding store for C-9 by Champion, one of Target’s owned brands. “We’ve gained valuable experience in modifying our format by opening stores in Los Angeles, Seattle and Chicago,” he said, adding that the retailer will unveil its first City Target unit in Portland, Ore., in July.
The launch in Canada, where Target will have 124 stores in place by the end of 2013, is going well. “There is some signature white space in Canada in home and apparel, they don’t have the same numbers of competitors as we do here,” Steinhafel said. “We have an opportunity to gain market share.” Wal-Mart has revealed a $750 million investment in Canada and Steinhafel said that entire market is in a state of change.