It may not feel like it, but we're actually living in something of a golden age for the shopping and retail industry.
Never before has a customer had so much access to selection and price competition. And as stores continue to consolidate and compete, many are forced to get picky with what they carry, what they don't, and where exactly they're pinching our pockets.
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But with the most recent inflation data, it may not feel like we're living in the best time to be a shopper.
The January Consumer Price Index was reported on Thursday and the numbers weren't exactly enthralling. Prices rose more than expected at 3.1% overall on a 12 month basis, above the 2.9% most analysts were expecting.
Here's how several key consumer goods and services changed compared to the month prior:
- Food: increase 0.3%
- Energy: increase 0.5%
- New cars: stable at 0%
- Used vehicles: decrease 3.4%
- Apparel: decrease 0.7%
- Shelter: increase 0.6%
- Transportation: increase 1%
- Medical care services: increase 0.7%
With the seemingly routine price hikes that feel like anything but predictable, it's exceedingly important for retailers to maintain profitability without passing on too much cost to their shoppers. For some, this may mean store closures or consolidating shelf space. But for Target (TGT) , which is prized for its accessibility and value, it has been leaning in to one of the core foundations of its business.
Target leans into a successful model
Ask any Target shopper why he or she enjoys perusing the bright red and white aisles for hours and you might hear a common answer. It's in-house brands are not only affordable but they compete with many outside brands.
Target's internal brands are successful as they are plentiful. The retailer offers 50 in-house brands, which include lines for inside and outside home decor, personal car, cookware, formalwear, maternity wear, athletic apparel and swimwear, party supplies, and more. Often these labels are offered at lower prices than external brands, and Target shoppers tend to buy outsized amounts of them.
For example, All in Motion, Target's athletic and leisure brand, brought in $1 billion of revenue just one year after its launch. All together, Target's owned brands bring in $30 billion in annual sales, but it continues to grow.
In February, Target announced it would expand and refresh its popular in-house Up&Up brand, which offers household goods like baby and cleaning supplies. The rollout affects nearly 2,000 products and is expected to breathe new life into an already booming line; the Up&Up brand brings in approximately $3 billion in annual sales.
And on Thursday, Target announced it would add yet another new budget-friendly brand called Dealworthy. The line will include about 400 products for around the home, including:
- Clothing and apparel
- Fashion accessories
- Beauty and cosmetics
- Electronics
- Home and household items
Some of the teased products in Target's press release include things like paper plates, paper towels, body wash, shampoo, men's underwear, charging cables, cotton balls, and tech device charging cords. Most of the items are expected to range from between $1-$10. Items will begin hitting shelves in late winter 2024 and will continue to roll out through 2025.
Target added that its tech accessories will be especially affordable; phone cases, for example, may be up to 50% cheaper than any of the other brands currently sold at Target.
"With the introduction of our newest owned brand, Dealworthy, consumers can shop hundreds of everyday basics at incredibly low prices, without sacrificing quality for the price," said Rick Gomez, executive vice president and chief food, essentials and beauty officer, Target. "We know that value is top of mind for consumers, and Dealworthy, backed by our owned brand promise, will not only appeal to our current guests but position us to attract even more new shoppers to Target."
