Commentary

Target Zeros In On Budget-Conscious Millennials With Smartly

With its latest in-store brand, Smartly, Target is targeting the budget-conscious consumer who’d like to spend a just buck or two on everyday toiletries and doesn’t want a package of a dozen or so cluttering up the bathroom closet.

“Think dish soap, body lotion, paper towels, and, yes, toilet paper. Smartly products will go on sale in Target stores and online in mid-October,” reports Alison Griswold for Quartz.

“Target said Smartly is priced, on average, about 70% less than traditional brands, such as Procter & Gamble Co. labels like Tide, Gillette and Charmin. The new line will be Target’s second generic brand for toiletries, undercutting prices on its Up & Up brand by about 50%," writes Khadeeja Safdar for the Wall Street Journal.

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“Am I saying we’re looking to replace a key brand like Tide with Smartly? Absolutely not,” Mark Tritton, Target’s chief merchandising officer, tells Safdar.

“Smartly products are sold in small quantities, such as a single roll of paper towels, to capture Gen-Z and millennial shoppers, including college students or 20-somethings who are starting their first jobs. Target’s market research has shown these shoppers aren’t as loyal to well-known brands,” Safdar continues. “'Most millennials are cost-conscious and more likely to try new products, but they are also looking for items that are pitched as healthy and good for the environment,' said David Garfield, head of the consumer products practice at consulting firm AlixPartners.”

They have a shelfful of options to choose from, of course.

“The discount market is crowded -- increasingly so since the arrival in the U.S. of German chain Aldi, which is blanketing the country with no-frills stores and quickly becoming popular among Americans. The competition for Target is getting fiercer online, too. Walmart Inc. has been boosting investments in e-commerce to catch up with Amazon.com Inc., an ever-present threat that keeps expanding its offerings,” writes Shelly Hagan for Bloomberg

“Smartly … will also go after customers of value products from stores like Dollar General Corp. and Dollar Tree Inc. Prices for Smartly products, which include body lotions, razor blades and all-purpose cleaners, range from 59 cents to $11.99. But most items less than $2, Target said.”

CNBC’s Lauren Thomas has an in-depth look at Target’s -- excuse me, “Tar-Jay’s” -- comeback as an affordable trendsetter since former Pepsi executive Brian Cornell took over in 2014. She starts with a stroll though the creative hub of the company’s roughly 40 private labels brands -- replete with bedrooms, living rooms, kitchens and meeting rooms for the likes of kid influencers -- inside its Minneapolis headquarters.

“Retail analysts agree Target's in-house brands for everything from iPhone accessories and bedroom curtains to sneakers are giving the company an identity again -- a way to stand out from Amazon, Walmart, Kroger and others,” Thomas writes.

“The company has rolled out 17 of its own brands, including A New Day for women's clothing, Heyday for electronics accessories, and Opalhouse for whimsical home decor, since the start of 2017 and is on track to add eight more by the end of 2019. Cat & Jack, arguably one of the retailer's most well-known brands today, reached $2 billion in sales just one year after its launch in 2016, selling trendy clothing for kids,” Thomas continues.

“Now we're back to Tar-Jay,” Moody's analyst Charlie O'Shea told CNBC, Thomas adds. “As a retailer today, you have to give the consumer a reason to come into your store or click on a website, and exclusive brands are No. 1 in that process. I would guess that Target’s brands so far are doing better than the company thought they would.”

“We differentiate Target by developing and curating new, innovative products and exciting new owned brands, which deliver an unbeatable combination of quality and price,” chief merchandising officer Tritton said in May, Quartz’ Griswold reports. “More recently, Tritton said that ‘standout’ growth in Target’s home goods category was benefitting from the company’s newest private-label brands.”

That includes Hearth & Hand with Magnolia, “a home decor line by television personalities Chip and Joanna Gaines,” as Abha Bhattarai wrote  for the Washington Post when Target reported sales growth was at 13-year high in August thanks to the demand for toys and sales good. “It is also remodeling hundreds of stores and so far this year has opened a dozen smaller-format locations near college campuses to appeal to cash-strapped students,” Bhattarai continued.

Who can once again afford to buy toilet paper.

1 comment about "Target Zeros In On Budget-Conscious Millennials With Smartly".
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  1. Ron Kurtz from American Affluence Research Center, October 8, 2018 at 11:08 a.m.

    Private braands with controlled distribution and pricing is the obvious response to Amazon and other forms of retail competition. A retailer would be smart in some instances to allow its private brand to have controlled distribution in other retailers in order to promote awareness and cache. 

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