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.
Discussion Questions:
- What are the advantages and disadvantages of Target collaborations?
Jessica Wohl, “Target Hopes Exclusive Designer Deals Boost Sales,” Reuters, August 2, 2011.
Grewal Levy Marketing News 
The main advantage is to provide customers with a product made by a designer at an affordable price. The disadvantages are that they produce it at a very low quality, therefore they are creating a line of “cheap”, “low quality” clothes, which can hurt the brand’s reputation. Similarly, now people can buy Versace (etc…) dresses for 200 dollars. Even though this is more expensive than the rest, people will not see why they should spend 1,000 or 3,000 on a dress when they can get one of the same brand for ten times less.
I believe this new strategy for Target is excellent. It is an innovative way for these big discount stores to differentiate themselves from other stores. Where Walmart might be consolidating their grocery department, Target is taking a leading initiative and strong marketing campaign towards selling fashionable clothes. Though it is nice for customers to have access to designer clothes, do these regular and repeating consumers at Target have any sort of fashion sense? And are the endorsement deals with these celebrities good? Because most celebrities I believe have ulterior motives to self-improve their image, and a deal to sell cheap clothes is a perfect way to gain the recession-hit consumer base.
This is great for Target and for Target customers. As Jeremy said, Target is differentiated from other large discount stores, and they also get higher qualitiy lines of clothing. Targets brand is not hurt because these clothing lines are actually higher quality than they would typically have. The only reputations that could potentially be hurt are the designers. These clothing lines are not that low quality and they are fairly fashionable, but it is not to the designers typical standards. This may hurt their brands, but overall the demand for these products is incredible. Overall, I believe that these new lines of clothes at Target are great for Target, but it also enables designers to reach new market segments.
As this article suggests, the strategy of having limited time relationships with top designers is working for Target, as seen in their sales numbers. My question is in regards to competitors offering these same types of designer items at discount prices. Kohl’s for instance, has recently purchased the exclusive rights to many designer brands such as Liz Claiborne and Rock & Republic. Is it better for a retailer to have a limited time agreement with a designer or is it better for a big box retailer, such as Kohl’s, to buy out a designer brand and exclusively sell the products themselves?
Target’s marketing strategy has definitely benefited their sales, in comparison to their competitors. They have a variety of designer clothes, jewelry, and accessories at a more affordable price. Target’s works with the designers to create a line geared towards their customers. Though many may wonder why high fashion designers have dipped into the middle-lower class department stores, they are still designing for the upper class. They are hitting all markets and when the market begins to bounce back, these brands will have become well known and dependable. Therefore customers will be willing to spend a little more of their paycheck to buy the higher end staple pieces.
I would say the advantages are many. The consumer saves money, has a high self image and is also satisfied by the thought that they somehow got a bargain, and saved money but still got a high end product. In essence it is what TJ Maxx does, except paired with designers, not brands. This gives the “good feeling” to consumers of exclusivity, trendiness and thriftyness.
In terms of disadvantages, I don’t really see any in the case of Target. They create a fun and interesting rotation of trendy and thrifty clothing that keeps customers coming back on a semi-normal basis. In additon, from a business stand point, this can attract cusomters to other products as well. For example a customer might as well purchase their grocereies as long as they are shopping for clothing at Target.
I think that this is a great strategy for Target to boost sales and gain customers that may not come in to Target otherwise. For example, this fall Target joined with Missoni- a very well known and very expensive brand that is famous for its signature zig-zag pattern. Target created a huge advertising campaign that launched months prior to the actual release in stores, advertising at New York’s fashion week and in high end magazines like Vogue in order to target people who were familiar with Missoni, as opposed to people who regularly shopped at Target. Target sold clothes, home and bath accessories and bedding with this famous pattern printed on them, and as far as I know they did extremely well. The morning that they released Missoni for Target online, their website crashed due to an excessively high volume of hits. Every store completely sold out of the merchandise. Partnering with high end, designer lines is a great way for Target to expand their current product lines, branch out and potentially reach new customers.
I believe target has had a strong clothing strategy thus far. The market for stylish but affordable clothing is very large, but it will be interesting to see what happens to targets clothing sales in the future. If the economy really picks up, then there is a chance that consumers will start to buy more expensive program because they perceive it as having higher value. Consumers may also just want to stick with Target’s clothing because it gets the job done. Having designer clothing at Target is good because it will draw in more customers, who will then browse and purchase some of the other various products that are available at target. However, if there is a reduction in designer clothing, that can mean a loss in future sales.
I do not believe that Target is using the most effective strategy by advertising name brands as “exclusive” to Target. By doing this, it gives the product the image of being of lesser quality and different than an item found at the designer store. If it is “exclusive” to Target, some people may view the product at the same value level as any other Target brand. Stores like TJX and Macys bring in designer brands but do not advertise them as “exclusive”. Therefore, there is more of a thrill when a designer item is found because the consumer knows that the same item was sold at the high-end store at a much higher price. Some may wonder if there is a defect in the article of clothing. This question is similar to wondering if the article of clothing was last-season. In the end, it matters more that the article of clothing was once on the designer racks. Therefore, I believe advertising clothing as “exclusive” to Target is not the best strategy.
I recently visited a Target store for the first time in awhile and I was pleased by what the store had to offer, fashion wise. Their new strategy of moving toward designer products at discounted prices is perfect, especially within the economy nowadays. People want to be able to feel good in their clothes, but might not be able to afford the highest quality wardrobe; that is where Target falls into place. Having celebrities be introduced within stores including Target and Khols is a perfect way for the store to increase their annual sales because many people look towards celebrities for fashion advice.
I think the main advantages and disadvantages are pretty clear when it comes to designer collaborations like the ones at Target. Target is reaping the benefits of having a celebrity or designer name attached to its products. The people who normally shop at Target will find satisfaction in purchasing a product that is connected with a designer brand name. This may also bring in consumers who would typically not shop at Target, but may not have the indispensible income to shop at top-designer level. The disadvantages of this collaboration could highly effect the reputation of the participating designer. Although they may be increasing sales within a new target market (Target), they could be ruining their high-quality, high-class personality within their current market. A person who would purchase Vera Bradley on a normal basis may think less of the brand if is connected to a lower priced, lower quality segment.
I think one clear advantage that Target has here is that it’s product offerings vary. The competitors listed in the article (JCPenny and Kohls) both offer only clothing and accessory items. Target, on the other hand, also sells food, electronics and other home goods. For some shoppers who only want a one-stop shop for their shopping needs, Target might become a more appealing option because of its trendy clothing items. Therefore, Target might be a better option to shop at if customers are looking to save time but not sacrifice style. While this is an advantage for some, it may be a disadvantage as well. This is because some people only want to shop for food at one time or clothing at one time and they will not mix the two. Therefore, it may become unprofitable for Target to keep having these connections with name brands (especially with increasing costs) if customers ignore the clothing options and instead go to Kohls or JCPenny where there may be more options and styles because it specializes in clothes and accessories.