"If you only put hearts and flow­ers in an as­sort­ment for girls and it sells, you think that's all they want"

the fu­ture of TAR­GET is in the hands of Chil­dren

Bloomberg Businessweek (Asia) - - CONTENTS - By Susan Ber­field Pho­to­graphs By Ackerman and Gru­ber

Mar­quan Harper ar­rived at the Min­neapo­lis head of­fice of Tar­get dressed as if he were com­ing to work. The St. Paul 10-year-old had ap­prox­i­mated the store uni­form—a red shirt and khaki pants—and per­suaded his mom to do the same. He checked in at re­cep­tion, put on his lan­yard, and joined 16 other kids to weigh in on a new line of chil­dren’s and ba­bies’ clothes called Cat & Jack.

The group, de­mo­graph­i­cally cor­rect and tem­per­a­men­tally di­verse, piled into Room 445, trans­formed for the day into a gi­ant walk-in closet the kids could ran­sack. They styled one head­less, child-size man­nequin in a striped neon dress and brown suede boots and another in blue leg­gings, blue suede boots, and a gray T-shirt that read “In­ven­tor.” With its play­ful lay­ers, boho-chic cuts, and muted shades jux­ta­posed with hits of neon, Cat & Jack looks a lot like Crew­cuts, J.Crew’s ad­ven­tur­ous line for young fash­ion plates (or their as­pi­ra­tional par­ents). New for Tar­get is a fo­cus on graphic T-shirts with feel-good con­tem­po­rary slo­gans such as “Change the World by Be­ing You.”

Mar­quan says he’s mostly out­grown graphic tees, though he might wear one when he records gam­ing videos for his YouTube chan­nel, as long as the shirt doesn’t seem braggy. Fin­negan Wam­bay, also 10 and from Chicago, is more re­cep­tive: “My fa­vorite T-shirt here is ‘Pe­ri­od­i­cally Genius, But Al­ways Cool,’” he says. “I would wear that ev­ery day.”

Any­body who’s been around young fam­i­lies knows that par­ents so­licit their kids’ opin­ions about all kinds of on­cead­ult de­ci­sions: where to go for din­ner, what kind of car to buy, even what to wear. In keep­ing with the times, Tar­get’s de­sign­ers have been lis­ten­ing to kids, too, about 1,000 of them from the ages of 4 to 12—in their homes, on­line, at day­long fairs, and in fo­cus groups—to cre­ate what could be­come one of the com­pany’s big­gest brands and maybe one of the coun­try’s big­gest kids’ brands.

For two decades, Tar­get’s two main­stay kids’ la­bels were Chero­kee and Circo. Th­ese togs were noteworthy for their or­di­nar­i­ness, as easy to throw in the shop­ping cart as gra­nola bars or juice boxes, and for how con­sis­tently they sold, ac­count­ing for roughly a bil­lion dol­lars a year in sales. Now, Tar­get is tak­ing what amounts to a great leap of faith for a lum­ber­ing, 1,800-store re­tailer: throw­ing out what’s worked and open­ing its sales to the winds of trends and the whims of chil­dren.

Cat & Jack is a cru­cial step in a long-term plan to re­vi­tal­ize Tar­get, the sec­ond-largest dis­count re­tailer in the U.S. Ex­ec­u­tives are fun­nel­ing their at­ten­tion and re­sources into four broad ar­eas—ba­bies, kids, style, and well­ness. Th­ese sig­na­ture cat­e­gories, as they call them, ac­count for $25 bil­lion in an­nual sales, one-third of the com­pany to­tal, and have higher mar­gins than es­sen­tials such as gro­ceries and ap­pli­ances. Once reimag­ined, th­ese ar­eas are ex­pected to gen­er­ate sales that will grow two to three times faster than the store’s other sta­ples.

When Cat & Jack re­places Circo and Chero­kee in mid-July, Tar­get ex­ec­u­tives will need th­ese (some­what) groovier cuts and colors to con­tinue to ap­peal to al­ready sat­is­fied cus­tomers. They’re also bet­ting that sales will in­crease at twice the rate of chil­dren’s lines at such com­peti­tors as Walmart Stores, Kohl’s, the Chil­dren’s Place, and Old Navy. But en­thu­si­asm for Cat & Jack goes deeper than the bot­tom line. Tar­get has thrown money, time, and reams of re­search into tutu dresses and danc­ing robot shirts be­cause the com­pany’s fu­ture is sup­posed to look the way Cat & Jack is sup­posed to look: op­ti­mistic, mod­ern, whole­some, in­clu­sive, fun. That’s a lot like what peo­ple thought of Tar­get be­fore it lost its cool.

For years, Tar­get had pulled off a feat that made it the envy of re­tail­ers and “Tar-zhay” to its cus­tomers. It sold high de­sign at low prices and gave big-box shop­ping some lus­ter. Re­mem­ber? In 1999 the ar­chi­tect Michael Graves in­tro­duced his witty post­mod­ernism to the masses there. His stain­less-steel teapots capped with a whistling bird for Alessi usu­ally sold for $100; Tar­get’s ver­sion, with an ac­tual whis­tle in lieu of a bird, went for $39.99. Isaac Mizrahi de­signed clothes not only for Bergdorf Good­man, but also for Tar­get. Long be­fore H&M, Tar­get gal­va­nized the de­signer col­lab­o­ra­tion craze, sell­ing lim­ited-edi­tion col­lec­tions from Ja­son Wu, Ro­darte, Proenza Schouler, and Mis­soni. To draw in high-minded and deeper-pock­eted shop­pers, it bought up all the ads in an is­sue of the New Yorker. In 2005 it staged a fash­ion show in New York where gym­nasts rap­pelled down the face of 30 Rock­e­feller Cen­ter. The chain’s mas­cot, Bulls­eye, an English bull ter­rier, is in Madame Tus­sauds wax mu­seum.

Tar­get came into be­ing in 1962, the same year as Walmart and Kmart. Walmart claimed global dom­i­na­tion, Kmart put­tered along, and Tar­get be­came the stan­dard-bearer for cheap chic. Its clever mar­ket­ing cam­paigns—“Hello Good Buy,” a Bea­tles song re­make, is one of the most mem­o­rable—made peo­ple feel bet­ter about shop­ping there in­stead of Walmart for es­sen­tials, even if the prod­ucts some­times cost more. Ne­ces­si­ties, such as Method, the min­i­mal­ist house­clean­ing prod­ucts that dis­tin­guish Tar­get’s flu­o­res­cent-lit shelves from its com­peti­tors’, ac­count for al­most half of its rev­enue. “Tar­get was the world’s best-mer­chan­dised dis­count store,” says Howard Davi­d­owitz, who runs a re­tail con­sult­ing firm in New York.

As con­sumers traded down

dur­ing the re­ces­sion, Tar­get did too. It fo­cused on low­er­priced, lower-qual­ity goods rather than the high-con­cept clothes, teapots, and gar­lic presses it was known for. That de­ci­sion brought it more di­rectly in com­pe­ti­tion with Walmart, dol­lar stores, and Ama­zon.com. Try­ing to out-cheap them in a low-mar­gin busi­ness proved a los­ing propo­si­tion.

In 2008 sales at ex­ist­ing stores fell 2.9 per­cent for the year, the first de­cline in at least three decades. Af­ter another bad year, sales slowly im­proved un­til De­cem­ber 2013, when news sur­faced that hack­ers had stolen the credit card or per­sonal in­for­ma­tion of some 70 mil­lion cus­tomers. Hol­i­day profit was al­most halved, and the breach even­tu­ally cost the re­tailer $200 mil­lion and singed its fal­ter­ing rep­u­ta­tion. That same year the com­pany ven­tured out­side the U.S. for the first time, open­ing stores in Canada at sec­ond-rate lo­ca­tions va­cated by a failed dis­counter and stock­ing them with mer­chan­dise priced higher than in its U.S. stores. Huff­in­g­ton Post Canada re­ported to re­sent­ful lo­cals that, for ex­am­ple, a set of two Riedel Vi­vant Pinot Noir Tum­blers sold for C$24.99 (about $24 in 2013) but were listed at $19.99 on Tar­get’s U.S. web­site. Then, a new dis­tri­bu­tion sys­tem in­tro­duced there broke down, leav­ing ware­houses full and shelves empty.

The sit­u­a­tion had be­come des­per­ate enough that the board of di­rec­tors hired the first out­sider to run Tar­get in its 52-year his­tory. When Brian Cor­nell, for­merly a se­nior ex­ec­u­tive at Pep­siCo and head of Sam’s Club, be­came chief ex­ec­u­tive of­fi­cer in Au­gust 2014, his first ma­jor de­ci­sion was to shut down the Cana­dian oper­a­tion; the com­pany took a $5.4 bil­lion write­down. (Former CEO Gregg Stein­hafel had told Women’s Wear Daily in June 2012 that he ex­pected “Tar­get Canada to de­liver $6 bil­lion or more in sales and 80¢ or more in earn­ings per share by 2017.”)

Per­haps the big­gest is­sue was that un­der Stein­hafel, the once ground­break­ing re­tailer had be­come bu­reau­cratic and in­su­lar while the in­dus­try had be­come hy­per­com­pet­i­tive. Tar­get didn’t take on­line shop­ping se­ri­ously, miss­ing out on the emer­gence of the mil­len­nial shop­per and the mighty swing to e-com­merce. Amy Koo, an an­a­lyst at Kan­tar Re­tail, says the per­cent­age of U.S. fam­i­lies at the end of 2007 who had shopped at a Tar­get within the past month was 53.2 per­cent, vs. 31 per­cent in May.

Ex­ec­u­tives say they’re through the worst and agree on how to talk about the dark years. They start with their slo­gan “Ex­pect More. Pay Less.” “We pulled back on the ‘ex­pect more’ and fo­cused on the ‘pay less,’” Cor­nell says. “As soon as we un­cou­ple that idea, we’re no longer Tar­get,” says Jeff Jones, the chief mar­ket­ing of­fi­cer. “There are lots of places where you can pay less and lots where you can ex­pect more.” Tar­get had be­come nei­ther.

“We had lost some of our edge,” Cor­nell says. “We had to mod­ern­ize.” Tar­get also had to down­size: It’s let go 2,600 peo­ple and elim­i­nated an ad­di­tional 1,400 open po­si­tions, re­duc­ing its staff at head­quar­ters by 30 per­cent. Of Cor­nell’s 12 se­nior ex­ec­u­tives, nine are new to the com­pany or to their job.

Cor­nell is trim and com­pact, holds an iPad on his lap, and wears a crisp, blue-checked shirt and blue suit pants, an out­fit that would’ve vi­o­lated the pre­vi­ous coat-and-tie ex­ec­u­tive dress code. Tar­get was al­ways a more con­ven­tional com­pany than its savvy de­sign and ad cam­paigns sug­gested. Th­ese days, ev­ery­one at the of­fice can wear jeans and T-shirts.

Cor­nell likes to give in­ter­views on the 26th floor, a bright, airy space where the de­sign team dis­plays its fa­vorite prod­ucts, such as a mar­ble tea-can­dle holder and a bed­sheet with a pocket for a mo­bile phone. He roams around, eats at the com­pany cafe, and some­times con­ducts im­promptu in-store fo­cus groups. He reg­u­larly in­vites ex­ec­u­tives from mod­ish tech com­pa­nies such as Pin­ter­est and Snapchat to give talks.

In meet­ings early on, Cor­nell says, he had to en­cour­age “more con­ver­sa­tion, fewer slides.” He asked staff to call out prob­lems in ar­eas other than their own. “It is some­times un­com­fort­able. We’re a Mid­west­ern com­pany. We didn’t say the hard things be­fore,” says Joshua Thomas, a spokesman.

Con­sider that un­til two years ago Tar­get didn’t use man­nequins or that un­til this year it didn’t have vis­ual mer­chan­dis­ers, the group of cre­atives devoted to store dis­plays. Ex­ec­u­tives didn’t think they needed ei­ther. Even when they were at their best, Tar­get’s stores never quite lived up to the ex­pec­ta­tions of those com­ing for the de­signer “col­labo” prod­ucts which were often sit­ting for­lornly be­tween plas­tic tum­blers and jumbo pret­zel bags. The thrifty ap­proach served to keep bud­get-minded cus­tomers from feel­ing alien­ated, but now that Whole Foods Mar­ket makes even let­tuce look lush and H&M has in­tro­duced the velvet rope to dis­coun­ters, Tar­get has to step up.

Ex­ec­u­tives are pleased to re­port that clothes dis­played on man­nequins sell 30 per­cent more than when they’re on racks or shelves. Even in down­town Brook­lyn at Tar­get’s busiest, and often messi­est, store, the man­nequins are dressed neatly in red, white, and blue be­fore the July 4 hol­i­day. One is wear­ing a Chero­kee red tulle miniskirt, a navy vest with ice pops, and a navy T-shirt. Another has stars-and-stripes leg­gings and a blue T-shirt em­bla­zoned with a map of Amer­ica. Al­though the rest of the girls’ depart­ment is sub­jected to flu­o­res­cent light­ing, there’s track light­ing above the man­nequins. It helps.

Tar­get is also redesign­ing the front area of its stores, aka the Bulls­eye Play­ground. Be­fore, shelves there looked like bar­gain bins—with three-ring binders, socks, math flash cards, jute twine, and marsh­mal­low skew­ers jum­bled to­gether—al­though bar­gain bins that brought in more than half a bil­lion dol­lars a year. Most items are still less than $7, but the shelves are stream­lined and cheerier. In one Min­neapo­lis store in late May, LED string lights, can­dles, Amer­i­can flags, pa­per lanterns, tote bags, and seed kits are lined up in their proper spots, their prices easy to see. Sales have in­creased 30 per­cent.

Tar­get’s typ­i­cal cus­tomer is chang­ing, too. Ex­ec­u­tives used to de­scribe her (al­ways her) as a boomer mom who drives a mini­van and lives in the sub­urbs. Now, Tar­get says it has more His­panic, mil­len­nial, and ur­ban shop­pers. Which is why it ran ads fea­tur­ing His­panic celebri­ties dur­ing the Bill­board Latin Mu­sic Awards, cre­ated its Cartwheel app to of­fer spe­cial deals, and plans to open two stores in New York City this year.

All fam­i­lies shop for kids’ clothes, though, mak­ing it one of the most re­li­able cat­e­gories for re­tail­ers. It’s a $30 bil­lion mar­ket in the U.S. that grew 1.8 per­cent last year, split among such com­pa­nies as Chil­dren’s Place, Gap, Gym­boree, H&M, Kohl’s, Walmart, Zara, and many small bou­tiques, some on­line only, ac­cord­ing to Euromon­i­tor In­ter­na­tional. “The good thing about the kids’ busi­ness is that it is a lit­tle more sta­ble” than women’s and menswear, says Susan An­der­son, an an­a­lyst at FBR Cap­i­tal Mar­kets. Be­cause growth in the kids’ cloth­ing busi­ness is mod­est, “it’s re­ally just a bat­tle for mar­ket share,” she says. Tar­get is sec­ond to Walmart among the mass mer­chants, which to­gether ac­count for about 40 per­cent of chil­dren’s ap­parel sales, ac­cord­ing to mar­ket re­searcher NPD Group.

Amanda Nusz is Tar­get’s head mer­chant for kids’ clothes and Nadine Stek­len­ski is head de­signer. They’ve worked to­gether for al­most 10 years and re­ally do fin­ish each

other’s sen­tences. What­ever ten­sion ex­ists be­tween them as they bal­ance tak­ing risks and mak­ing the num­bers, they’re equally adept at hid­ing it. They’re both en­er­getic, though Stek­len­ski, in a tight black dress with a faux-leop­ard coat and a big, turquoise neck­lace, is the more bois­ter­ous. Nusz wears a white lacy shirt from Adam Lippes for Tar­get and pants from Tar­get’s Merona brand. While ev­ery­one else labors in typ­i­cal cu­bi­cal farms, the 270 de­sign­ers work in an open space with art stu­dios, glass-walled show­rooms, lots of nat­u­ral light, and even two bal­conies where they can en­joy the brief Min­neapo­lis sum­mer.

Nusz and Stek­len­ski say they’d been eager to try some­thing dif­fer­ent for kids but could never per­suade Stein­hafel to back them. Early on, Cor­nell said he wanted Tar­get to be “fa­mous for kids.” Nusz and Stek­len­ski ar­gued for scrap­ping Circo, the in-house kids’ brand; end­ing the li­cens­ing agree­ment with Chero­kee, which Tar­get de­signs; and cre­at­ing a line for new­borns to pre­teens. “That was a big de­ci­sion, be­cause Circo and Chero­kee were suc­cess­ful,” says Julie Gugge­mos, head of prod­uct de­sign and de­vel­op­ment, who’s been at Tar­get for al­most 26 years. “The kids’ busi­ness wasn’t bro­ken. It was strong.” It was sort of in­vis­i­ble, though, and hadn’t evolved much from the look of the Olsen twins on Full House. “If you only put hearts and flow­ers in an as­sort­ment for girls and it sells, you think that’s all they want,” Gugge­mos says. “Girls love sci­ence. Peo­ple know that, but that un­for­tu­nately wasn’t the take we had.”

Last year, Tar­get stopped separat­ing toys into boys’ and girls’ aisles. This year it an­nounced that trans­gen­der cus­tomers could use the bath­room of their choice. Cat & Jack isn’t gen­der-neu­tral, but there will be an on­line-only col­lec­tion of shirts un­der the name, Tees for All, with words like “Ath­lete” or “Smart & Strong” avail­able for boys and girls in a uni­sex fit. Clothes in the stores will re­main sep­a­rated by gen­der. Cat & Jack will still of­fer sparkles and glit­ter, pink and purple, frills and ruf­fles, and, at least at some point, kid-size but­ter­fly wings and a long tulle skirt with glow-in-the-dark stars. The prints on Cat & Jack dresses won’t be wildly dif­fer­ent from what’s been in stores, but they’ll be more so­phis­ti­cated, the color com­bi­na­tions less typ­i­cal. The polka dots will be big­ger, the stripes neon. There will be a short-sleeve dress with boldly drawn flow­ers and leaves on a black back­ground; another dress will have a pale pink sweat­shirt on top and an or­ange tulle skirt. Boys will still get di­nosaurs and as­tro­nauts on their T-shirts and slouchy pants with draw­string waists.

Cat & Jack is geared for a gen­er­a­tion of kids that’s more col­lab­o­ra­tive than com­pet­i­tive. “They’re not about pos­i­tiv­ity that makes them­selves feel good but some­one else feel bad,” says Mandy Dane­man, who con­ducts re­search for Tar­get. She and her team in­ter­viewed hun­dreds of kids, dug into aca­demic stud­ies, and talked with com­pa­nies such as Walt Dis­ney and Nick­elodeon. “The kids told us: I don’t want shirts that say, ‘I Win, You Lose.’ I want shirts that say, ‘We Got This,’ or, ‘Game On.’” The team changed a shirt from “Play to Win” to “Play for Fun.”

Nusz and Stek­len­ski no­ticed that kids have a finely de­vel­oped and widely shared sense of hu­mor. “Now it’s cool to be the funny one,” Nusz says. Es­pe­cially for boys, says Stek­len­ski. “I see boys walk around with uni­corns on their shirts—if there are but­ter­flies com­ing out of the butt.”

“We’re not in the self-es­teem busi­ness, but we are in the self-ex­pres­sion busi­ness,” Nusz says. Adds Dane­man: “The kids are say­ing, ‘I want to stand out in my pack.’ Think about it. That means ‘I want to be unique but not unique enough that I don’t have a place.’”

Tar­get lis­tens, to a point. Kids change their minds, and par­ents ul­ti­mately pay. That’s why al­though 10-year-old Fin­negan loved the “Pe­ri­od­i­cally Genius, But Al­ways Cool” graphic, the de­sign­ers changed it, be­cause they mostly heard that kids care more about be­ing smart than cool. Now it’s sim­ply “Genius” writ­ten with el­e­ments from the pe­ri­odic ta­ble.

When one group of par­ents and kids saw a boys’ T-shirt with the say­ing, “Lost in Space—No Wifi Out Here,” the adults thought it was funny and the kids thought that seemed like a very scary place. Nusz de­cided to keep the shirt in the col­lec­tion. Then there was the tee with cam­ou­flage made of kale. It was a fa­vorite of the de­sign­ers, but no one else cared for it. The most po­lar­iz­ing shirt said sim­ply, “OMG.” The kids loved it, but “par­ents don’t re­ally want sass on the T-shirt when they are al­ready deal­ing with it at home,” Nusz says. They cut it. “If it was go­ing to be our No. 1 seller, we’d have to think about it.”

Tar­get’s de­sign staff used to browse com­peti­tors for in­spi­ra­tion. Now, Stek­len­ski says, “I don’t want a de­riv­a­tive of a de­riv­a­tive. Don’t go to Top­shop, go to Morocco,” the coun­try that’s the source of the djellaba chic swirling through the pages of Vogue. They went. They drew pictures of the mo­saic tiles to cre­ate pat­terns for some of the dresses. They also trav­eled to Bali to visit the Green School, which says it’s the world’s only com­pletely sus­tain­able school. When talk­ing to the kids about so­cial is­sues, Tar­get’s mer­chants and de­sign­ers thought hunger or home­less­ness among chil­dren would come up. In­stead, the kids talked about sav­ing an­i­mals. After­ward, the de­sign­ers went to an aquar­ium and a zoo; im­ages such as a hu­man with a lion’s head now pop up on the clothes.

Cat & Jack will be more up-to-the-minute than the Circo and Chero­kee la­bels, but the clothes have to cost the same, from $4.50 to $39.99. Ex­ec­u­tives also want to high­light Tar­get’s oneyear guar­an­tee on its own brands of clothes; no sur­prise that the prom­ise tested well with ev­ery­one, es­pe­cially, they say, His­panic cus­tomers.

To make the math work, Tar­get is sign­ing longer-term con­tracts with its ap­parel sup­pli­ers, which are con­cen­trated in Bangladesh, Cam­bo­dia, China, and In­done­sia. Nusz and Stek­len­ski in­tro­duced sup­pli­ers to Cat & Jack early in the de­sign process and so­licited ideas for ma­te­ri­als, such as one they’re call­ing Tough Cot­ton, a cot­ton-and-span­dex blend

soft­ened by a chem­i­cal that Stek­len­ski claims is safe enough to drink and makes the cot­ton fibers stronger with ev­ery wash. “And we have tough ne­go­ti­a­tion tac­tics,” Gugge­mos says. Tar­get, like other price-con­scious re­tail­ers, re­quires its sup­pli­ers to jus­tify ev­ery cost for ev­ery item each year, rather than start with the bud­get from the prior year. The new ex­ec­u­tive in charge of the sup­ply chain is Arthur Valdez, who used to work at Ama­zon.

“Tar­get is op­er­at­ing at the low end of the mar­ket, and they put pres­sure on the con­tract man­u­fac­tur­ers to re­duce cost by any avail­able means,” says Scott Nova, ex­ec­u­tive di­rec­tor of the Work­ers Rights Con­sor­tium. “Tar­get is typ­i­cal of a mass-mar­ket re­tailer, but that’s not good.” Thomas, the com­pany’s spokesman, says: “Tar­get is com­mit­ted to re­spon­si­ble busi­ness con­duct and this in­cludes re­spect for work­ers’ rights.” The re­tailer pub­lishes a list of the fac­to­ries it uses for its brands and pledges not to work with ven­dors who hire child la­bor or re­quire more than a 60-hour work­week. It says it reg­u­larly au­dits sup­pli­ers to make sure they’re com­ply­ing with the com­pany’s so­cial re­spon­si­bil­ity re­quire­ments.

Cat & Jack wasn’t the fa­vorite when the mar­ket­ing team tested three names for the line last sum­mer. Another name—which ex­ec­u­tives don’t want to share in case they find a use for it later—was the most pop­u­lar, but that was be­cause the group thought it sounded like “a ba­sic brand with re­ally great value,” says Michelle Me­sen­burg, vice pres­i­dent for style mar­ket­ing. In other words, like the Tar­get that Tar­get doesn’t want to be. So they went with Cat & Jack, which sounds up­scale, maybe a lit­tle vin­tage, while still, they hope, leav­ing a lot to the imag­i­na­tion. It may also sound a lit­tle fa­mil­iar: There’s al­ready a Janie and Jack brand, a Jack & Jill, and a Jack & Lily.

Like con­tem­po­rary par­ents who give chil­dren so much de­ci­sion-mak­ing power, Tar­get is also learn­ing about the in­sti­tu­tional con­fu­sion that comes when chil­dren are re­ally seen and heard. Kids will be in­volved in the Cat & Jack mar­ket­ing cam­paign. Their pho­tos will be in ads and in stores and when Tar­get’s back-to-school pro­mo­tion be­gins in late July. Some of those ads and so­cial me­dia spots will be writ­ten and di­rected by kids, too. The pro­fes­sion­als are fig­ur­ing out when and how much to be in­volved. At first, “we didn’t want it to be ‘made by kids,’ with us giv­ing them all kinds of di­rec­tion,” Jones, the chief mar­ket­ing of­fi­cer, says. Now he says he’s wor­ried that “if th­ese kids are re­ally good, will it look like it’s made by kids?”— in other words, Cat & Jack can’t look too grown-up. A few weeks af­ter that con­ver­sa­tion, Tar­get de­cided to also make its own, adult-di­rected Cat & Jack TV com­mer­cial to air in July.

Cat & Jack will be the sec­ond brand Gugge­mos and her team will have in­tro­duced this year. The first, Pil­low­fort, is for kids’ bed­rooms and in­cludes bunk beds, desks, sheets, and ac­ces­sories. Tar­get sold all those items be­fore, but didn’t put a lot of de­sign ef­fort into them. Now there are lots of prints and pat­terns to be mixed and matched for boys and girls. Pil­low­fort is sell­ing 15 per­cent bet­ter than the old stuff was, and Cor­nell says it could dou­ble the kids’ home busi­ness line over the next three years.

The at­ten­tion, in­vest­ment, and pres­sure on new brands such as Pil­low­fort, part of Cor­nell’s sig­na­ture cat­e­gories, are so far pay­ing off. Sales for the brands and cat­e­gories rose more than three times as fast as the com­pany av­er­age in the first quar­ter of 2016. But over­all, it was an un­der­whelm­ing start to the year. Tar­get’s same-store sales rose 1.2 per­cent for the pe­riod, less than ex­pected. Cor­nell, like ex­ec­u­tives at many other re­tail­ers, blamed “an in­creas­ingly volatile con­sumer en­vi­ron­ment” and bad weather in the North­east. He says that fig­ure could be flat or down as much as 2 per­cent in the sec­ond quar­ter. It would be the first time sales have de­clined since he took over. Still, Cor­nell says, “the el­e­vated fo­cus we’ve ap­plied to our sig­na­ture cat­e­gories is prov­ing out, but we’re just at the be­gin­ning of the jour­ney.”

Cus­tomers and the econ­omy will de­cide whether Tar­get bought the plane tick­ets to the most prof­itable fi­nal des­ti­na­tion. “Those sig­na­ture cat­e­gories have been grow­ing quickly,” says Kan­tar Re­tail’s Koo, “but there’s only so much of that stuff you can get peo­ple to buy. They still have to get the ba­sics, like gro­ceries, right.” Those are what bring peo­ple into the stores reg­u­larly. Cor­nell knows that fam­i­lies don’t need new clothes as often as they need food, but they need new clothes more fre­quently than in­dus­trial-chic fil­a­ment-bulb string lights and stuffed gi­raffe heads for a child’s bed­room wall. Cat & Jack, then, is sup­posed to ex­ist some­where be­tween the gra­nola and the gi­raffe.

Back at Tar­get head­quar­ters in May, Stek­len­ski says she’s started work­ing on a “truly fash­ion aes­thetic” line for kids that will ar­rive in stores in 2017. Ev­ery­one likes to feel they can con­trol their des­tiny. Cat & Jack won’t be all that de­ter­mines Tar­get’s fu­ture, but the brand might help it, as the T-shirts say, “Dream Like a Uni­corn.” Or at least “Run Hard,” and maybe “Win Big.” <BW>

With Shan­non Pet­ty­p­iece

“They could add more fash­ion, more dresses.” ——Hailey Bau­man, 7

Mini taste ar­biters se­lect fa­vorites at Tar­get’s head of­fice

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