Apparel and accessories accounted for 20 percent of Target’s annual sales last year. Unlike many other big box and discount retailers, Target offers designer products at lower price points. Thus the retailer has created a niche for itself by partnering with big design names, such as Michael Graves and Isaac Mizrahi, to develop fashion-forward home wares and apparel.
Although Target may be the best practitioner of this strategy, other retailers similarly have developed relationships with designers to create exclusive brands. Kohl’s launched the Simply Vera line with Vera Wang that ultimately accounted for 50 percent of its apparel sales in 2010. JCPenney enjoys an exclusive line by Cindy Crawford. Yet these retailers struggle to maintain lower prices, especially as prices of raw materials increase.
As Target prepares for the 2011 holiday season, it is developing more exclusive relationships with designers to lure shoppers into stores. The limited-time partnerships should help create a sense of exclusivity and urgency. For example, Target will work with Gwen Stefani to roll out Harajuku Mini kids’ clothing during the holiday season and leave the items available into stores only for a year. A line of hats will bear the name Albertus Swanepoel; a jewelry line features designs by Dana Kellin.
Retailers develop designer lines to offer customers merchandise that they might not typically be able to afford. In addition, when done correctly—with items remaining consistently moderately priced—designer partnerships can help retailers boost their bottom line.
- What are the advantages and disadvantages of Target collaborations?
Jessica Wohl, “Target Hopes Exclusive Designer Deals Boost Sales,” Reuters, August 2, 2011.