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Target’s Partnership with Magnolia Is a Strategic Fit

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Target’s Partnership with Magnolia Is a Strategic Fit PART 1 OF 2

Target’s Partnership with Magnolia Is a Strategic Fit

Target’s new home and lifestyle brand

Target (TGT) announced that it has entered into an exclusive partnership deal with Magnolia. Founded by Chip and Joanna Gaines, Magnolia is a home and lifestyle brand. Target stated that it would launch a new home and style brand, Hearth & Hand, in collaboration with Magnolia. The brand will be available at Target stores and Target.com starting on November 5, 2017.

The partnership is a strategic fit for Target. Its efforts to speed up the rollout of new and exclusive brands have been successful in the past. The partnership with Magnolia will help the company generate incremental growth by offering differentiated assortments at value pricing. The Hearth & Hand products will be in the price range of $0.99–$129.99. Most of the items will be under $29.99.

Target’s Partnership with Magnolia Is a Strategic Fit

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Target’s merchandise initiatives

Target’s focus on differentiation through new and exclusive brands, amid stiff competition from Walmart (WMT) and Amazon (AMZN), has been one of the primary reasons behind the company’s rebound in sales. The above graph shows that Target’s comps were positive during the last reported quarter due to its differentiated value offerings. Notably, all of the company’s exclusive brands launched earlier are witnessing healthy demand and generating stellar growth.

Last year, the company launched the Pillowfort and Cat & Jack brands in the kid’s segment, which became an instant success. Both of the brands had double-digit comps growth. In fact, the Cat & Jack brand performed better than management’s expectation. The brand exceeded more than $2 billion in sales in little more than a year.

Target launched Cloud Island, a new infant brand, in May 2017. The brand is generating double-digit comps growth. Target’s new maternity brand, Isabel, launched in July 2017—it’s gaining traction. Based on the success of these exclusive brands, Target plans to launch four new brands across the men and women’s apparel and home category during 3Q17.

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