• by Sarah Mahoney  @mahoney_sarah, March 24, 2022

Target says it is expanding its relationship with Levi’s, in a move it says both highlights its success with national brands and underscores its private-label wins.

The announcement, hinted at in its recent earnings announcement, comes as the Minneapolis-based retailer continues to score impressive sales gains, including robust apparel sales.

Target has partnered with Levi’s for a decade, starting with the Denizen brand in 2011. In 2019, it debuted the Levi’s Red Tab label. And last year, it launched Levi’s for Target, a 100-item collection of home and pet items featuring Levi’s denim, with a focus on sustainability.

The new initiative is rolling Levi’s brand out to an additional 300 stores, bringing the total to 800. In addition to denim, it also includes more than 60 tops and dresses for women, and fleece, tees and trucker jackets for men.

The push comes as Target intensifies partnerships with other national brands, including shop-within-a-shop deals with Ulta, Apple and Disney. It also caps a more ferocious push into Target's own brands. Of those 45, several of the apparel brands -- including Cat & Jack, its kids line, and All in Motion activewear -- already top $1 billion in sales.

Some, including Universal Thread and Goodfellow, also sell plenty of denim. Target says those products have done quite well, prompting it to look for more ways to sell blue jeans.

“All told, the interplay between our owned and national brands has reinvigorated this category,” says Christina Hennington, Target’s executive vice president and chief growth officer. In the chain’s recent earnings conference call for investors, Hennington said those moves have transformed the company “from a retailer that sold denim to a denim destination, having grown sales in this category by more than $150 million since 2019.”

The competition has been taking notes. Macy’s made a splash last week by hiring Target talent, naming Emily Erusha-Hilleque as senior vice president of private brands. She recently headed up design for Target’s Wild Fable line, aimed at Gen Z. She also worked on many of Target’s designer collaborations, including those with Levi’s and LEGO.

While Wall Street observers continue to be impressed with Target’s substantial sales numbers, not everyone agrees that the private-label approach is a smart bet.

Zain Akbari, an analyst who follows the company for Morningstar, says Target is especially vulnerable these days, since digital shopping makes switching retail brands practically effortless. He expects that without the scale of Walmart and Amazon,"Target will be vulnerable to the competitive onslaught.”

And while Akbari favorably views Target's efforts, launched back in 2017, to turn stores into omnichannel fulfillment centers, “Walmart and Amazon define the space, driving prices down as they deploy unparalleled scale in ways we believe Target cannot match.”

Akbari notes that the retailer's private-label and exclusive offerings help drive traffic and account for a third of the chain’s sales. But they also require “considerable investment in innovation and marketing.” And while he applauds its efforts to improve private-label offers, “the efforts will take time to bear fruit and come as larger or more focused competitors invest heavily in their own portfolios.”