In August, Target announced a shift in its strategy regarding private label brands, which would result in delisting some of its existing brands to make room for new, more targeted brands. This week we saw the results of this strategy shift when Target launched several new private label brands including home décor brands Project 62 and Hearth & Hand.
The primary objective driving the strategy shift was a desire to better leverage private label brands to improve the relevance of the Target brand. With all the changes happening in the marketplace, including shifting behaviors, expectations and preferences among millennials, many retail brands are struggling to find a place in the consumer’s heart. Target’s new plan replaces the existing, broad reaching private label brands, with more highly targeted brands designed to appeal to very specific consumers in the hopes that relevance will follow.
There are several learnings that can be extrapolated from Target’s shift in strategy that retailers from all sectors should pay attention to.
Be Proactive, Take Advantage of the Opportunity
The changes happening in the marketplace today represent both challenges and opportunities for brands. Those that have chosen to address change as a challenge, reacting in the moment, seem to be struggling. Target has embraced the changes impacting them as an opportunity. Their shift in private label brand strategy is a proactive step forward in redefining the role of their private label brands.
The objective of any retailer is to get people through the door. Once they are in the store, sales will follow. Target sees its private label brands as an important tool in regaining relevance that will surely result in foot traffic through the door. They have prioritized the relevance of the Target brand, over reacting to change, to drive sales.
Retail brands should start by identifying the real challenge they are facing versus reacting to change. How can that challenge be reframed as an opportunity? What role can private label brands play to take advantage of that opportunity?
Be Consumer Centric
Central to the Target strategy is an approach to brands that is highly consumer centric. Target CMO Rick Gomez said, “We’re going to have a portfolio of brands that each stand for a specific point of view and aesthetic.” The expectation is that each of the private label brands will appeal to a very specific type of consumer, and that they are not going to be for everyone. This approach results in a highly-curated product line that is more customized to the consumer, versus being all things to everyone. Multiple private label brands allow Target to have something for everyone, while avoiding a one-size-fits-all approach. We have seen evidence that suggests consumers are overwhelmed by choice, and actually prefer fewer options that are more customized to their specific tastes.
Taking a consumer centric approach means that the brand acknowledges the importance of the consumer in their relationship. Retail brands should think about how private labels can work to put the consumer first. How can the private label be used to build stronger, more personalized relationships? Being consumer centric means knowing who your brand is and putting a firm stake in the ground on what it offers and stands for.
Remember, There Is More to The Consumer Experience Than Meets The Eye
Target has indicated that the new private label brand strategy is part of a bigger evolution that will also include store design and supply chain. Clearly the changes happening in retail are bigger than brands, and in this case Target is acknowledging that all aspects of the consumer experience need to evolve including brand, product and store experience. The siloed structure of many organizations prevents the kind of integration that will result in a true omni-channel experience, where all aspects of the consumers’ engagement with the retail brand are in sync. True success in the evolution of retail will require a visionary brand that breaks down the walls and aligns brand, product, and the omni-channel experience in one cohesive package.