Target goes green with new private label Everspring
Target (TGT -5.79% ) wants to own more of the brands that populate its shelves. And even in this era of expanding e-commerce, in fact have shelves is a real advantage for the trader from this point of view.
The discount retailer has long partnered with some fairly well-known names to draw attention to its private labels and exclusive lines, including Chip and Joana Gaines, Chrissy Teigen and Vineyard Vines. This time around, however, it’s a safe bet that buyers will take a flyer to a new line simply because of the values it represents.
What does Target do?
The retail chain’s latest house brand is Everspring, a line of 70 household essentials like laundry detergent, paper towels, hand and face wipes and cleansers.
Target describes Everspring as “a down-to-earth solution to Earth standards.” The products in the range are made with plant-based or otherwise renewable materials, as well as post-consumer recycled paper.
“Customers can be sure they are buying essential products for their home that include the ingredients and components they want and have the efficacy they need to accomplish their daily routines,” said Christina Hennington, vice -Senior President of Target.
The line, which is already on sale in stores and on Target.com, also complies with Target Clean, the new product standard launched by the company in March. The Target Clean icon on a product means it has been “formulated without specific chemicals…such as phthalates, propyl-paraben, butyl-paraben, and sodium laureth sulfates.”
Private labels give Target more control over its supply chain and, by essentially removing the middleman, allow it to sell at lower prices if it chooses. In the case of Everspring, Hennington said items in the line sell for around 20% less than other comparable products.
More importantly, if consumers decide they like an Everspring offering, they can’t buy it anywhere else. This should prevent customers from devoting even more of their retail business to Amazon ( AMZN -5.32% )which has had less success with its own private labels.
It’s not like the e-commerce giant hasn’t tried: it’s created more than 400 private labels, but few have succeeded. In fact, a recent research report by Market pulse showed that Amazon gets 81% of its private label revenue from just 10 brands, and 57.8% of that comes from its AmazonBasics line, which looks more like an old-school private label than a store brand. Overall, Amazon’s exclusive private labels represent less than 1% of its total sales.
The difference may well be that it’s hard to draw attention to brands that consumers have never seen before without physical stores. People browsing Target’s racks and shelves not only see the new items, they can also handle them and, in a way, get a sense of their quality.
Amazon’s private label products may rank high in search results on the site, but shoppers’ inability to physically touch them before purchase appears to be seriously hampering their sales growth.
Target doesn’t have this particular weakness, so it should have a head start in persuading its shoppers to try Everspring.
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