The Imitation Game
Fast Company|September 2021
Retail has always thrived on Target, with its billion-dollar private trends—spotting them, copying them labels, has turned this and capitalizing on them approach into a winning strategy.
By Elizabeth Segran

WHEN AMERICANS WENT INTO LOCKDOWN LAST YEAR AND BEGAN SHEDDING THEIR TAILORED CLOTHES FOR SWEATPANTS AND LEGGINS, TARGET WAS READY.

In January 2020, it had debuted its newest in-house brand, an activewear label for women, men, and kids called All in Motion. The pieces, most affordably priced at under $30 an item, were on-trend and made from the latest technical fabrics. During the pandemic, sales of All in Motion exploded. The brand generated $1 billion in revenue for Target in its first year—an extraordinary achievement considering that high-profile activewear startups like Outdoor Voices and Tracksmith have yet to see a fraction of that success.

All in Motion’s aesthetic, however, wasn’t all that new. The product assortment and silhouettes were likely familiar to devoted Target shoppers, who may have purchased items from Champion’s C9 line, an affordably priced activewear brand that had been sold exclusively through Target for more than 15 years until it was dropped by the retailer at the end of 2019. Both lines offered a version of boys’ track pants, for example, with colorful panels along the seams; both offered girls’ leggings in bold graphic patterns. And their prices were nearly identical. (Target says that its designs for All in Motion are original, and that any similarities reflect basic market trends.)

Champion had designed and produced its C9 athletic wear for Target under a longstanding licensing deal that, in 2018, raked in $380 million for Champion’s parent company, Hanesbrands. When Hanesbrands announced, in August 2018, that Target wouldn’t be renewing its C9 contract when it expired at the end of 2019, analysts used the next earnings call to grill then CEO Gerald W. Evans Jr. about what the company would do now with C9, and how it could ensure a “competitive moat” around the brand should Target decide to create a similar line. Hanesbrands, which declined to comment for this story, had little leverage, and a lot at stake: In 2018, Target accounted for 11% of its $6.4 billion in sales across its many brands, which include Hanes, WonderBra, and Maidenform.

Target, for its part, seemed to see the C9 contract’s expiration as a chance to do what it increasingly does best: develop and launch a stylish brand internally—and keep all the revenue for itself. Since Target CEO Brian Cornell announced a plan to double down on the company’s portfolio of private-label brands, in 2017, the retailer has been recapturing the design halo that it developed back in the aughts through savvy collaborations with the likes of Michael Graves and Isaac Mizrahi. The in-house brand strategy, which has Target’s own designers incubating new product lines from the company’s design lab in its Minneapolis headquarters, has been an unmitigated success. Though the company declines to share how many people are on its design team, its facilities include a 3D lab for prototyping, a lab for chemists and materials scientists to test new products, a painting studio where prints and patterns are created, and a sensory testing facility to accommodate Target’s emphasis on inclusive design.

Target now has more than 45 owned labels across fashion, home, beauty, and more. Ten of them generate upwards of $1 billion annually, and four earn more than $2 billion, including kids’ label Cat & Jack and home-decor brand Threshold. “We have been building our design, sourcing, and brand management capability for years, and now I would describe it as industry-leading,” says Jill Sando, Target’s chief merchandising officer, who oversaw the launch of All in Motion. “It’s a critical piece of our strategy.”

Private labels aren’t the only factor driving Target’s sales, which have shot up by nearly 30% since 2017, reaching $94 billion last year. The retail giant also cultivates an atmosphere of discovery in its stores and online by showcasing up-and-coming brands, especially from direct-to-consumer startups. The retailer has become something of the go-to partner for online-only brands making their first foray into brick-and-mortar retail —from Casper mattresses to Quip toothbrushes. Since 2016, 22 direct-to-consumer brands have chosen Target as their launchpad. “It’s really about the mix,” Sando says, “creating something distinct, only available at Target, that delivers on our guests’ needs and wants.” This approach keeps customers coming back and leads to what’s known as the “Target Effect,” the phenomenon whereby you step into a Target store to pick up a few items but leave with an enormous haul of products you never knew you needed. Other mass retailers appeal to customers on price alone; Target pulls in shoppers who value good design.

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