Building a Better Bullseye
Early this year, Minneapolis-based Target conducted the Target Corporate Analyst Meeting. New CEO Brian Cornell expressed his vision for the future and began mapping out how Target would get there. He repeated the phrase, “Nothing is sacred. Everything is on the table,” throughout the meeting and invoked it to challenge his team to set a new course for the retailer. The phrase was used as a rallying cry to focus the retailer on becoming unique and differentiated, as well as focusing on the Target guest.
Since his hiring, Cornell has lived up to the “Nothing is sacred. Everything is on the table,” mantra by making big decisions, including pulling out of Canada and closing 80 stores, major layoffs at the corporate headquarters and significant executive level hiring. Not to mention a major highly successful collaboration with the iconic American designer brand Lily Pulitzer and selling the Target pharmacy business to CVS Health.
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This has the potential to not only dramatically change the Target private brand portfolio, but to also change the way American retailers approach private brand portfolio strategy.
Cornell went on to tell the analysts, “Going forward, we will be a brand that separates itself from others based on merchandising authority and experience, centered on ease and on inspiration. We’ll enable mobile to be the front door to all of Target. Importantly, we’ll reassert our cultural leadership to build unparalleled guest affinity. And we will be a more agile, a more efficient, and a more guest-focused headquarter team.”
Only time will tell, but the potential for the “Nothing is sacred. Everything is on the table,” mantra to dramatically impact private brand at Target and other retailers for years to come is significant. Since the early 2000s, American private brand has focused on building traditional tiered portfolios of labels and increasing quality. And now, in 2015, they have largely succeeded. Today, quality and 20 to 25% penetration have shifted from groundbreaking to table stakes, and differentiation is the rallying cry. That is the true essence of Cornell’s mantra. In order for Target to survive, and honestly, for all retailers to survive, the retail mentality must shift away from monotonous cookie cutter sameness to meaningful differentiation. They must give customers a reason to choose them versus the retailer across the street, or Amazon just a click away.
Today, retailers like Cornell are reassessing their private brand strategy and beginning to understand that traditional price-focused NBE private brand product is the foundation that a profitable and differentiated private brand portfolio requires. They are then building on that foundation with brands designed to have different business roles and unique customer targets. Ultimately they are Brands designed to WIN!