A.R.S.E. Alert! Confirmed! Retail Emperor has no Groovy Clothes!

Always Right, Sometimes Early! Well, it appears that I’m no longer a lone voice in the “What’s so hip about Target?” wilderness.

Joining me is the venerable Deborah Weinswig; influential analyst at Citigroup Global Markets, who recently downgraded Target with a “Sell” rating . . . then went on to pour a bit of acid in the wound by giving snaps to Wal-Mart for, (are you sitting down?) It’s APPAREL strategy.

How long have we railed at the retail injustice?

Cautioned against sipping Target’s “cheap chic” Kool Aid?

Pondered the sea of sameness that is the 90% of apparel space just beyond Target’s latest Go International collection?

So, while everyone else busied themselves with more anti-Wal-Mart speculation (does Wal-Mart deserve to have a design presence in NEW YORK CITY?), or attempted to breathe new life into old Wal-Mart apparel “news” (Business Week’s recent go-neg article which included Wal-Mart’s ill-fated apparel strategy of two years ago . . . must be a slow retail news month!), Citigroup took off the rose-colored glasses and jumped in our corner by noting, among other things, that Wal-Mart’s use of third parties for apparel sourcing makes sense (Target’s “We can do it all” strategy is looking positively retro against Wal-Mart’s and Kohl’s more nimble “don’t try this at home” models . . . see previous blog post).   

One man’s trash is another’s . . .

Target’s retail media darling status has been further boosted by the oft-cited statistic that 22% of their total sales comes from high-margin apparel (vs. 10% for Wal-Mart) . . . uh, but what if 20% of that 22% looks really boring and (using my whisper voice here) . . . kinda cheap?  Am I the only one who can’t tell the difference between Mossimo, Merona or Cherokee?  Do you too look at the deeply-wrinkled wovens and wonder where the store’s steamer is stashed?  

Isaac Mizrahi was the only “M” brand at Target that really had a distinct look; however, his recent sprint to Liz Claiborne will challenge Target to replace an estimated $300 to $500 million in revenue; that’s a big gap for private label to fill.  In the meantime, Wal-Mart has gotten all . . . well . . . TARGET on us by snagging deals with Op, l.e.i., and Norma Kamali.  Three brand deals within one year at Wal-Mart?  Well, that’s pretty darned speedy in the discount world. 

Sure, customers are putting more emphasis on price and will for the short to mid term . . . however, Wal-Mart has earned its advantage on more than just dollars and ninety four cent endings.  You gotta hand it to Target’s marketing team . . . perfectly-articulated store-as-brand promise, yet as the product continues to under-deliver on that promise, Target is poised for a backlash.  Wal-Mart is finally reaping rewards for keeping it real.


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