Target and its customers have always sort of held their noses up when it comes to other discount retailers. The chain has never been all about value even though offering good prices has been a key part of its business model.
It's a very conscious decision by the chain. Target wants to be a place where everyone shops. That means maintaining a level of merchandise and in-store experience that's superior to rivals like Walmart and Dollar General.
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Doing that costs more. It means that Target (TGT) generally does not have the lowest prices amongst its direct competitors, but it's striving to deliver value and the best overall experience. That's why the chain has partnered with Starbucks, Walt Disney, Apple, and Ulta Beauty while also hav affordable takes on luxury brands like its Kendra Scott and Chip and Joanna Gaines merchandise lines.
CEO Brian Cornell has been very careful about cultivating the "Tar-Jay" feeling which makes the brand a destination. People shop at Walmart and Dollar General because they're convenient and cheap. Customers visit Target because it's the new mall, a store packed with interesting merchandise, experiences, and decent pricing.
The retail chain, however, has also kept its costs down by filling its stores with high-quality house brands. That's an area where the company has been expanding quickly and its latest move in the O&O space will have it directly taking on Dollar General, Walmart, Dollar Tree, and other stores built around low price points.
Image source: Joe Raedle/Getty
Target offers high-end, low-cost brands
Target has approached its O&O brands in a different fashion than Walmart or Costco. Instead of having a single label, like Costco's Kirkland Signature or Walmart's Great Value, the chain has built out dozens of brands that cover various parts of the store (Walmart does have a few brand names in areas outside of food and home goods in addition to Great Value.)
Instead of taking the traditional approach, Target has decided to create real brands that don't feel like generics. All In Motion, for example, offers women's athletic wear while Boots & Barkley has pet accessories and apparel.
The chain also offers Everspring, a broad line of household essentials, and Good & Gather, a food brand with over 2,500 products. These brands don't feel like classic house brands as they have logos, artwork, and displays that make them feel like third-party brands.
Target has decided that its latest owned-and-operated brand, Dealworthy will be aimed at offering an upscale but very affordable product line. The move has been made after a quarter in which the retailer reported a 4.6% drop in same-store sales.
Target adds $1 items
Most Target locations have an area at the front of the store that sells items for as little as $1. That area has often seemed to lack cohesion. It might have cheap school supplies next to a discounted candy with other bins filled with low-cost Christmas tree ornaments.
Target has never really had a brand that offers pricing that matches what Dollar General and other low-cost retailers sell. The chain now has an answer for that with a lot more flare.
Nobody could plan what might be offered in this area, so it was more a treasure hunt part of your Target visit rather than something where you'd find items on your grocery list. The new line will contain 400 items with prices starting below $1 and generally not topping $10.
"The Dealworthy assortment spans apparel & accessories, essentials & beauty, electronics, and home items," the company shared on its website.
This is Target looking at its sales data and finding products where it can bring true value to its customers.
"In electronics, some items, like phone cases, will be priced 50% lower than any other brands sold at Target," the chain added.
The new merchandise will begin appearing in stores and online this month (February). Target will add to the line throughout 2024 and 2025. Target has not shared the full item list but did say that it will include "power cords, undergarments, socks, laundry detergent, dish soap, and more."
Images shared by the retailer also show paper towels, toothbrushes, paper plates, and cotton balls.
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