“People think about Target as this big $100 billion company, almost 2,000 stores across the country,” said Brian Cornell, chair and chief executive officer, at the WWD Apparel and Retail CEO Summit. “But within that we have this unique $30 billion owned-brand portfolio. Some of those brands are on their way to be $3 billion and $4 billion brands.”
Customers can literally grow from one Target brand into the next, going from Cat and Jack as kids to Wild Fable in high school and then onward to A New Day.
“We’ve had this amazing history of being a company that designs great brands, our own brands, and manages those brands like you would a portfolio,” Cornell said. “To have a $30 billion portfolio that plays such an important role in the lives of so many consumers, it’s part of what makes our brand so unique and drives that unique relationship we have with so many guests across the country… It comes back to great design capabilities, a great sourcing capability. We manage them like big national brands.”
Lisa Lockwood, WWD’s news director, interviewed Cornell, who took the stage at the summit alongside Rick Gomez, Target’s executive vice president and chief commercial officer.
All together, 10 of the retailer’s 45 brands bring in more $1 billion in sales annually and Gomez said “that doesn’t happen by accident.”
“It’s been years of investment and capabilities around design and sourcing that have really become a competitive advantage for Target,” Gomez said. “It’s not private label as far as we’re concerned. These are brands. They’re built up on consumer insights. They have clear differentiated positioning in the marketplace. The team designs based on a muse and a consumer.
“We think about our own brands from a portfolio management perspective,” Gomez said.
While Target has evolved and changed over the years, the discount-fashion notion of “Tar-jay” is very much alive and well.
“’Tar-jay’ is a term that consumers gave us,” Gomez said. “We think about it as almost a commitment for us to deliver on a promise to deliver ‘Tar-jay.’ ‘Tar-jay’ is all about is offering on-trend, stylish, high quality product at an affordable, accessible price. When you walk into a Target or you’re browsing through the app, you’ll see examples of ‘Tar-jay’ all over the place.”
Perhaps the most prominent example of ‘Tar-jay’ is the company’s 25 years’ worth of collaborations with designers — which started Michael Graves and has included more than 175 different connections, including a line with Diane von Furstenberg last spring.
“The challenge is when you’ve been doing something for 25 years is keeping it fresh, keeping it new, and the team does a phenomenal job of that,” Gomez said.
Target has changed a lot over the last 25 years, but has been careful to stick close to its core even as it evolved.
The company bought last-mile delivery firm Shipt in 2017 and has — like almost every other retailer — been seeking to become more digitally savvy and connect with more shoppers via e-commerce.
At the same time, it has doubled down on its stores, which have seen continued investment.
Cornell said that’s the topic he’s been asked most during his decade as CEO.
Target is continuing to invest in its stores.
“We made a pretty bold decision back in 2017 when people were talking about physical retail starting to go away,” Cornell said. “As we talked to consumers, they were actually telling us they still enjoyed shopping in stores, but they had an expectation for a really unique shopping experience.
“So we continue to see stores play a really important role in retail,” he said. “Any given day, two thirds to 75 percent of all the retail dollars spent in America are spent in physical stores and we are going to build new stores.”
Over the next 10 years, Target plans to add more than 300 new stores while refurbishing its existing doors.
“But it’s not an ‘either/or’ for us,” Cornell said. “It’s an ‘and.’ We also have a very sizable digital business today, and it’s close to $20 billion today. And it’s rapidly growing. It’s a business that we know is going to be really important.
“We’ve had a unique model because our stores fulfill most of our digital orders, whether you’re ordering online and picking up in a store, using our drive-up service, having a personal shopper bring it right to your home or shipping from our stores.”
While big, Target has had to slug it out with other heavyweights in the market, like Walmart and Amazon, while also navigating a very tricky consumer environment where the whims of shoppers and new technologies can reset the scene quickly.
“Retail’s not for the faint of heart,” Cornell said, speaking in the run-up to the U.S. presidential election. “There’s so many challenges that we’re facing right now, whether it’s the election or it’s inflation or it’s competition.
“What I keep talking to the team about is given all the volatility, it’s about leaning into creativity,” he said. “It’s leaning into playing offense, being on your front foot. And to me that’s what resilience is: The creativity, despite all the volatility.”
That has shown through how Target has approached the beauty business, which Gomez said has “almost doubled since 2019.”
“Part of that is being able to deliver on that secret sauce that is Target, which is being able to identify products that are on trend, that are stylish, but are affordable,” Gomez said.
“Brick-and-mortar for us is about 80 percent of our beauty business, in about 800 of our almost 2,000 stores,” he said.
Blake Lively launched her hair care line Blake Brown with Target, pricing all of the products under $20. And Dwayne “The Rock” Johnson introduced his men’s skin care brand Papatui with Target, priced at under $10.
Through its Ulta Beauty at Target partnership, the retailer has launched some 70 new prestige brands.
“The name of the game in beauty is continuing to dream, bring a steady drumbeat of newness,” Gomez said. “And when you do it at an affordable, accessible price point, we see great success.”
