Artisanal Target? Retailer Recasts Lines TARGET -- WSJ

By Elizabeth Holmes Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 5, 2017).

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To understand what today's clothing shoppers want, take a look at the beer aisle.

Niche craft brands are stealing share from traditional beverage behemoths, as customers hunt for something that feels special. The same is true in beauty and grooming, where startups are getting all the buzz.

Target Corp. is taking note and cleaning house, shedding some of its stalwart brands and launching more than a dozen new ones over the next 18 months in apparel and home furnishings. To make room, the men's and women's Merona line and men's Mossimo offering will be phased out, having grown too big and homogenized to garner shoppers' affection, executives say.

Faced with slumping sales and stiff competition from rivals, including Amazon, Target hopes the new launches will give shoppers a reason to come into its stores.

Each new brand has a defined personality and purpose, Target says, and isn't a nondescript label. "People are looking for something that is more curated and meaningful to their specific lifestyle," says Mark Tritton, Target's chief merchandising officer. The goal is for A New Day, a more fashionable line of women's classics, and Goodfellow & Co, a modern menswear collection, to make an emotional connection with shoppers -- something Merona never was able to do.

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The new names, which will begin to appear this fall, are meant to complement the remaining brands, allowing each to have a clearer point of view, Target says. The athleisure-inspired JoyLab, for shoppers going from "crunches to brunches," will be marketed as a fashion brand, while the existing C9 Champion line is positioned to emphasize performance. Project 62, a home brand with a modern aesthetic in the works, will be displayed alongside the more traditional Threshold brand.

In addition to the launches, Target is making changes that it says reflect how customers want to shop today. Rampant discounts and promotions, which Target says have diminished customers' trust in retailers, will be kept to a minimum with the new brands. Thanks to better lighting and more mannequins, displays will resemble a boutique in a mall more than a big-box chain. New racks and shelves will allow for cross-merchandising, like displaying shoes alongside dresses.

Total Target sales fell 5.8% last year, to $69.5 billion. Sales at Target stores open at least a year fell 1.3% in the first quarter. The chain reported a "small decline" in apparel same-store sales in the first quarter.

The Minneapolis retailer is investing heavily in its new brand strategy, hoping to boost profits with fresh interest in these high-margin categories.

Half its apparel and accessories will be overhauled in the next two years, and more than a third of its home offerings. "Brands become a great differentiator," says CEO Brian Cornell. Target wants to draw customers from struggling rivals, including department stores and specialty chains that are closing locations.

The brands coming this fall will take a page from the playbook of Cat & Jack, a collection of children's apparel and accessories that Target introduced last summer to replace the clothing lines of Cherokee and Circo. The older labels were seeing same-store sales gains in the single digits, according to Mr. Tritton. "They weren't underperforming, we just felt they had overstayed their welcome," he says. Shoppers wanted clothes that were more stylish and durable.

Cat & Jack sales have surpassed Cherokee and Circo apparel sales combined, with same-store sales rising double digits and total sales set to top $1 billion in the first year. Even as it swells in size, Cat & Jack's style focus remains the same, Target says, with bright colors, whimsical graphics and clever slogans. When customers wanted edgier, more fashion-forward styles for slightly older children, Target launched a brand called Art Class. It, too, is selling well, offering "validation of why we need multiple brands with unique aesthetics," says Michelle Wlazlo, senior vice president of apparel and accessories.

With many customers browsing online before coming into the store, Target has done more with its in-store displays to help shoppers make the connection. Both Cat & Jack and Art Class have their own landing pages on Target's website, with graphics and color schemes specific to the brands replicated in store displays. For Cat & Jack, a three-dimensional hot-air balloon calls shoppers' attention to the store shelves.

To create niche adult brands for an audience as large as Target's -- 30 million people walk through its doors every week -- the company relied on insights consumers gave its market-research and design teams.

Real shoppers will appear in some of the new brands' marketing materials alongside models. "Consumers are looking for brands they can relate to," says Rick Gomez, Target's chief marketing officer, and "seeing people like themselves" helps draw that connection.

Write to Elizabeth Holmes at elizabeth.holmes@wsj.com

(END) Dow Jones Newswires

July 05, 2017 02:47 ET (06:47 GMT)