• by Thom Forbes  @tforbes, January 13, 2012

Target announced a plan yesterday to open short-lived boutiques -- upscale shops selling unique merchandise -- within its stores that observers say is an attempt to regain some of the merchandizing magic that differentiated the retailer as “Tar-zhay,” particularly in the Early Aughts. It is also adding a baker’s-couple-dozen shops-within-the-shop for a decidedly non-boutique operation, Apple.

Rumors of the Apple deal surfaced last week when a source told Apple Insider’s Daniel Eran Dilger that the company plans to begin operating Apple-branded areas within 25 larger Target stores in locations that can't support a standalone Apple Store. Although both Apple and Target remained tight-lipped about the deal, it was confirmed yesterday.

The retailer was more verbose at a Manhattan press conference about "The Shops At Target," which features six retailers -- Polka Dog Bakery, Privet House, Cos Bar, The Webster and The Candy Store –- and will open on May 6 for six weeks. All six will be in all 1,767 Target stores, as well as online. A new rotation of shops is expected in the autumn, and the program will run through 2013, at least.

Flagging retail sales -- which rose less than expected in December -- are leading retailers to take risks that “may or may not work in the long run,” according to Reuters video reporter Bobbi Rebell.

What’s innovative about the program is that the merchandise will be “co-created,” says Brian Robinson, Target’s director of fashion and design partnerships. “It’s not product that is in the shop today that we’re bringing to Target, it is product that has not existed before.”

All told, the shops will peddle about 400 exclusive items with prices ranging from $1 to $159.99 for a pouf (a type of ottoman) from Privet House, Stephanie Clifford reports in the New York Times.

“Architect and designer Michael Graves' tea kettles and other home goods helped Target pioneer the concept of higher-end partnerships at mass chains back in 1999,” points out Reuters’ Jessica Wohl, but other chains have subsequently launched more exclusive goods. Wohl cites Kohl's line of Vera Wang apparel and shoes and stores within stores such as JC Penney’s partnership with Sephora for cosmetics boutiques as examples.

"We've gone through a cycle where everybody looked like everybody else and had the same product mixes and now the way to really differentiate this is to do your own concept shops," says Roseanne Morrison, fashion director at retail consulting firm The Doneger Group.

Kurt Salmon Associates strategist John Long tells Rebell: “The challenge is, as companies try to reach outside of their core businesses, what they often find is boomeranger customers –- customers who will try them once and then go back to their shopping pattern.”

Some experts say that Target has diluted its brand by trying to be a “one-stop-shop where customers can buy everything, including bananas and ibuprofen” on the one hand, writes Barney Jopson in Financial Times, while also attempting “to be a beacon of style not available anywhere else” on the other.

“They’ve been a leading innovator for so long. But the general feeling in the marketing world is they’re going through an identity crisis, really trying to figure out who they want to be,” retail marketing specialist Ed Little, who has worked at Nordstrom, Macy’s and J Crew, tells Jopson. “All the emphasis they put now into food is a diversion from the hip, trendy, design-focused brand personality that they worked so hard to develop.”

But Target’s Robinson claims the new program puts it “at the frontier of what's next in retail. "With [these shops], we're building on that sense of discovery by offering our guests a chance to experience one-of-kind specialty stores and boutiques through collections that have been specifically tailored to their wants and needs."

Ad Age, which broke the story a week ago that the retailer was ending its long-term relationship with Wieden & Kennedy in the wake of CMO Michael Francis’ departure to JC Penney in October, reveals today that the agency’s “swan song” will be a creative campaign to support the new initiative.

It will be the retailer's main marketing push for the spring selling season, Target's vp-communications Dustee Jenkins tells Natalie Zmuda. "This is one of the things we're incredibly proud of as part of our partnership," Jenkins says of Wieden's work on the program.

The television campaign will tell consumers how Target discovered the boutique shops, as well as what they can expect, while online advertising will be more product focused, Zmuda reports.

"It's an utter celebration of these shops," according to Robinson.

Target also says it will begin a new $5 billion stock buyback plan upon completion of its current $10 billion buyback plan.