Target plans fewer promotions it hopes will pack bigger holiday punch

NEW YORK – After a disappointing season last year, Target is changing up its holiday playbook.

It is streamlining its number of promotions, sprinkling hundreds of new giftable items throughout stores and expanding its marketing efforts to go beyond its focus on families.

Target's bevy of promotions and up-and-down prices confused shoppers last year, Mark Tritton, Target's chief merchandising officer said at a media briefing. So this year, it is simplifying the approach to have fewer sales that it hopes will have a bigger impact.

At the same time, Target has rolled back prices on thousands of items in a move toward a more everyday low pricing approach similar to Walmart — a strategy that Tritton said has been paying off so far and will continue through the holidays.

"We will have meaningful promotions," especially during Black Friday and Cyber Monday, he said. "But priced right daily will be our regular drumbeat."

Analysts note that Target needs to tread carefully to ensure it is seen as offering plenty of enticing deals because promotions often drive people to the stores during the holidays.

"The risk around the holiday season is that employing this strategy too stridently leaves some folks to feel there's not as much excitement there," said Leon Nicholas with Kantar Retail.

As part of its renewed focus on value, Target also won't shift all of its marketing focus this year to holiday as it usually does in November and December. Instead, it will continue its Target Run and Done campaign centered on driving trips for household essentials, such as laundry detergent and toilet paper, during those months.

Last year, Target's comparable sales during the holidays slid 1.3 percent, punctuating a decline in sales that dogged it most of that year. It was a sobering moment for Target, pushing executives to move aggressively to repair the core business.

"I think part of what happened last year is they underestimated how strong a player Amazon would be around the holiday," Nicholas said.

As company executives dissected what went wrong last year during the holidays, they identified several areas for improvement. One key area where they saw competitors outperform them was in offering easy, affordable gifts that customers can grab for a teacher or for a stocking stuffer for a teenager.

"We had some room to play here but we weren't stepping up our game," Tritton said.

So this year, Target's merchandising teams have assembled about 1,700 products, most of them designed or curated in-house, that will be displayed on about 10 stand-alone kiosks throughout stores. The items, most of them under $15, range from holiday-themed socks to beauty sets to tech accessories. Gifting ideas will also be a big focus on Target.com and in its marketing.

Executives also saw room for improvement with its marketing. While its holiday campaign last year was successful in many ways, especially in reaching its target audience of families and Latinos, they realized it didn't do much to inspire young adults without children or empty nesters, said Rick Gomez, Target's marketing chief. That will change this year.

"It's pretty obvious that we have a lot more people shopping at Target than just families," he said. "We felt we left a lot of sales on the table last year by not overtly marketing to these groups."

Target plans to keep a bigger focus on Spanish-language ads, with half of its TV spots this year running in Spanish. Overall, the retailer will increase its holiday media spending in the high single digits, Gomez added.

Target also decided to get rid of its 10 days of deals promotion it held the last two years around the week of Black Friday. Instead, Target will have weekend deals throughout the season starting Nov. 11 in the hopes of motivating customers to go to the stores on days they're more likely to shop. Executives also said they heard from customers they don't like it when Christmas messaging overpowers Thanksgiving so they plan to wait until early December to turn up the volume on its Christmas advertising.

Toward that end, a big focus in Target stores next month will be the Nov. 5 launch of Hearth & Hand with Magnolia, its highly anticipated exclusive home decor line with HGTV stars Chip and Joanna Gaines. Target is building out dedicated in-store displays under the outline of a house to draw more attention to the collection in about 550 stores, with smaller versions coming to the rest of stores.

Target will also highlight the eight new private-label brands it has launched this year. The new lines include JoyLab, an athleisure brand for young women, Goodfellow & Co., a new men's apparel brand, and Project 62, a modern home line. Many of these new brands have been outpacing expectations and showing double-digit growth, Tritton said.

In November, Target will also add a mobile wallet into its app, initially just for Redcard holders, so customers can redeem their Cartwheel offers, get their 5 percent Redcard discount, and pay for their items in stores with one scan of their phone. Mike McNamara, Target's chief digital officer, said the retailer hopes to expand the capability to non-Redcard holders later this year.

As it has the last few years, Target will once again offer free shipping on any size order during the holidays, starting Nov. 1 and going through Christmas.

And to better compete with Amazon, Target is also boosting its ship-from-store program to 300 more stores this holiday season, an initiative which helps it get online orders to customers faster. About 1,400 of Target's 1,800 stores will ship online orders this year, and more than half of those orders arrive within two days. By comparison, Amazon Prime members already receive free two-day shipping on many orders and in some cases can receive same-day delivery through its Prime Now service.

This year, Target will also offer a twist on a gift card where a customer can click a GiftNow button when buying an item on Target.com. The recipient receives it as a digital gift box and can accept it, change the color or size or pick out something else altogether without having to go through the hassle of going to the store to make a return.

"This is a perfect solution for that fussy relative that we all have, and it's also great for last-minute gifts so you don't have to worry about whether the product is going to get there in time for Christmas," McNamara said.

An added benefit for Target is it could help reduce returns, a financial headache for retailers.

Kavita Kumar • 612-673-4113