Target is in the middle of a major store overhaul. Over the past two years it has remodeled 400 of its fleet of nearly 1,850 stores. This year and next it will pick up the pace to complete another 600 stores by year end 2020. The new stores are being outfitted with technology enhancements, new fixtures and a more open look and feel.
CEO Brian Cornell said the remodel efforts are “totally transforming how they [the stores] look, feel, and function.” The remodeled stores translate into a 2% to 4% lift in comparable store sales, reported Cathy Smith, CFO, in the company’s fourth quarter earnings call. Once Target completes its goal of remodeling ~1,000 store, the resulting lift across the chain will be massive, if it can keep those levels up.
One department getting an extra dose of spit and polish in the remodel is beauty. It, combined with household essentials, brings in more money than any other reporting category— 24% of revenues in 2018 and 29% in first quarter 2019.
That’s not surprising since beauty and household essentials are by nature a necessity-driven, replenishment business. But with the new design of the beauty department, the company wants to change that to make the beauty department a place for discovery as well. In other words, Target wants to give discovery-centric Ulta and Sephora a run for their money.
Speaking to the Business of Fashion, Christina Hennington, vice president and general merchandise manager of essentials and beauty, explained the shift. Target beauty is moving “from a very heavy replenishment-based business [with] a very functional layout to one that we’ve worked to balance between discovery and inspiration.”
New open design
Target guests will experience a differentiated look and feel when shopping in the newly designed beauty department, as compared with the more practical essentials section.
The shelves are lower, giving broader sight lines. New accent lighting will enhance the experience of trying on and testing cosmetics.
And the beauty aisles are wider to avoid the unnerving “butt brush,” which Paco Underhill’s Envirosell research found results in lower sales because shoppers being touch from behind invariably move away from displays where it occurs.
New dedicated staff
Into this newly enhanced physical space, guests will be welcomed by staffers dedicated to serving the beauty customers. Described as “category experts” by John Mulligan, COO, in the most recent earnings call, the staffers will be chosen for their passion for beauty in order to share their passion with Target guests.
The beauty category experts will be encouraged to “move beyond task and share their expertise with guests, providing advice and perspective to help them find the best products to meet their needs,” Mulligan said. “This new model allows them to focus on their passion rather than serving as a general athlete across multiple categories.”
Maybe the Target category experts won’t match the level of personalized service at Ulta or Sephora, but having boots on the ground dedicated to beauty will be a big step ahead of the old self-service model common in mass merchandisers.
And new products will continue to be added to the current range of over 1,000 beauty brands carried. These new lines, the company hopes, will continue to attract new curiosity-driven guests to the store, as well as get those shopping for other items to stop and browse the expanded beauty range.
That includes a greatly enhance selection of natural beauty brands, including Red Earth, Yuni, Tenoverten, Cocokind, Grace + Tonic, Native and Hello.
Guests will be guided to these natural offerings with a new Clean logo in the stores and online that signifies products formulated without product-specific chemicals. This aligns with the company’s stated goal to eliminate certain chemicals from all its beauty products by 2020.
Indie brands also figure prominently in the company’s beauty makeover. Beauty influencer Kristin Ess introduced an exclusive haircare line with Target in 2017, which is reported by BoF to be expected to reach $100 million in sales this year.
Target is also bringing in more indie brands to meet the special needs of its guests, including women of color, like Everyhue, Haleys, Hue Noir and Reina Rebelde. “We know our guests have a wide range of beauty needs and preferences, and we want to make sure Target has the best assortment for all hair types or skin tones,” Hennington said.
And Target continues to elevate its private label beauty offerings, like the new Versed skincare line, Smartly with low-cost personal care basics and the new men’s Goodfellow & Co offering.
Goodfellow & Co started as a men’s fashion line in 2017, which caught on quickly and gave the company confidence to expand into men’s grooming.
Men have already shown they are comfortable shopping Target’s beauty department for more specialty shaving supplies like Harry’s. Now the company hopes men will step it up further with Goodfellow & Co’s expanded range of more than 30 products. Mexican actor Erick Elías was just brought on to represent the Goodfellow & Co brand.
Target sticks to its knitting
In Target’s fresh face of beauty, it continues to build on its core high/low business model. While none of its new beauty brands reach the stratospheric heights of brands at Sephora, its new natural and indie brands have a luxe-for-less allure.
And its exclusive private label brands shore up the lower-end with appealing offerings at prices most everyone can afford. For example, Goodfellow & Co’s range is priced from $3.99 to $16.99 and described by CMO Mark Tritton as “about 20% lower than comparable men’s premium brands.”
In its new beauty department Target is sticking to the magic formula that made it great in the first place. It is clearly differentiating itself from Walmart as a more elevated, more experiential place to shop for beauty.
And while it isn’t reaching the levels of Ulta or Sephora in terms of brands or services, it still generated some $18 billion in its beauty and essentials department in 2018, well over what Ulta and Sephora are estimated to have produced last year.
Date: June 20, 2019