Target, locked
The year 2023 was a rough one for Target. The retailer’s stock price took a hit amid pride controversy in early summer, and because it’s known as the “upscale discounter,” its sales have been affected by a slowing economy. As former Target vice chairman Gerald Storch told Fox News in June 2023, “it’s not good to be the upscale discounter at a time when the consumer
doesn’t have a lot of money to spend.”
Still, among a certain consumer, Target is still the cool kid on the block. Target’s health and beauty care departments are in a constant state of evolution, but they continue to serve as a platform for emerging, high-concept and trend-setting brands to reach mass consumer audiences.
The company has become adept at taking direct-to-consumer brands and transitioning them to a brick-and-mortar environment. It has continued to focus on expanding its beauty and wellness product assortments to be more inclusive and reach a broader consumer base.
Perhaps the most significant evolution of Target’s approach to beauty care recently has been its response to a broadening definition of what beauty care means to consumers, particularly in the wake of the pandemic, said Sarah Broyd, a partner at Clarkston Consulting.
“Consumers have become a lot more focused on health and wellness, and self-care, rather than just makeup,” she said. “A few years ago, Target seemed like it was going down a path in which it was trying to be more like the Sephoras of the world, but they have since tailored that to focus more on what consumers are looking for. They are focused on a more well-rounded approach to health and wellness, and on having a broad diversity of products.”
In February of 2023, Target unveiled plans to add thousands of new self-care products, including more products from Black-owned and inclusive brands, and more products that meet
its Target Clean standards that prohibit certain ingredients.
“Self-care is one of the areas where we are seeing the fastest growth,” said Cassandra Jones, senior vice president of merchandising, essentials and beauty, at Target, in a blog post at the time. “The idea of beauty products is expanding to include self-care, self-expression and health—and they all go hand in hand. So many ‘health’ items also relate to beauty, and vice versa.”
Jones also has been overseeing Target’s partnership with beauty care products retailer Ulta Beauty, through which Target is rolling out Ulta Beauty “store within a store” departments in its own stores. This has allowed Target to bring in more premium and prestige brands while focusing its own traditional beauty care sets on mass brands with broad consumer appeal and more affordably priced niche brands.
“Ulta doesn’t dilute from the mass product that Target sells, and it doesn’t dilute from the Ulta brand name that does sell more premium products,” said Broyd. “It’s the best of both worlds. Ulta is able to reach consumers who might be near a Target, so they don’t have to drive to an Ulta, and Target is ultimately getting more sales of these higher-end products.”
[Read more: Inside Beauty: Hum Nutrition splashes onto Target shelves]
At the same time, Target is also concentrating on bringing in more diverse-owned brands, supporting its efforts to reach a wider base of shoppers. In beauty care, these brands might carry more products that offer a broader range of skin tones, for example.
Meeting Demands for Sustainability
Target has been especially adept at meeting consumer demands around sustainability with its beauty care assortments, said Dana Kreutzer, project lead, beauty and wellbeing, at market
research and consulting firm Kline & Co.
“Target continues to trailblaze in the beauty space, but also does an excellent job helping consumers understand how certain products and brands align with the retailer’s innovative programs, like Target Forward, Target Zero and Target Clean,” she said, citing the retailer’s environmental and sustainability initiatives.
This is especially true on the company’s ecommerce site, where consumers can easily filter products according to sustainability claims, inclusivity, and more, and understand the product’s benefits, Kreutzer said. In addition, Target has made progress in its efforts in how it educates consumers on beauty regimens and product use through its Beauty Edit program, she said. Beauty Edit allows consumers to build a skincare routine with dermatologist-recommended brands such as CeraVe, or learn makeup application, for example.
“Target is continually expanding its beauty assortment and making efforts to evolve with trends and shifting consumer behavior,” said Kreutzer. “Target started stocking natural and clean beauty products, which are still very relevant today, 10-plus years ago. Now, the retailer is home to 300-plus clean beauty brands and has made inroads in male grooming, indie beauty, prestige beauty through its Ulta partnership, and even the wellness space by adding brands like Love Wellness to the mix.”
These efforts can also dovetail with Target’s goal to offer its customers “affordable joy,” said Broyd. “They are priding themselves on having more affordable beauty care products, and that includes more wellness and self-care, including more private label,” she said. “Their goal is to have a price point of under $10 on most of their self-care products.”
Tiffany Hogan, director of retail insights at consulting firm Kantar, agreed that the blending of beauty care with health and wellness, combined with the expansion of the Ulta Beauty premium and prestige beauty product sets, have bolstered Target’s efforts to deliver consumers the on-trend products they are looking for at a range of price points.
“I think Target’s doing really interesting things,” she said. “They haven’t lost any ground as far as being a destination for those direct-to-consumer brands that are looking to expand.” While Sephora and Ulta may be at the “bleeding edge” of beauty-brand discovery, Hogan said, “Target is right behind them.”
Bringing Ulta into its stores, she said, gives Target more leeway to expand its mass offerings with adjacent and overlapping categories including new and innovative products in the personal care and health and wellness categories.“It connects those up-and-coming brands to its broader beauty care offerings,” said Hogan.
Hogan described Target’s blending of beauty care and health and wellness products as a “lifestyle” approach to merchandising, in which the retailer is adapting to consumers’ more holistic approach to health, beauty and wellness.
“Target is really approaching it from a lifestyle perspective, rather than just a category perspective,” she said, citing as an example the merchandising of some vitamins alongside private label activewear.
“Cross-category merchandising is something that they’ve always done well, and I think it’s really coming to light in health and wellness in particular,” said Hogan.
Boyd of Clarkston Consulting likewise noted that Target has also merchandised certain trendy vitamin and supplement brands within its beauty care departments, in addition to the more traditional vitamin and supplement assortments in the section dedicated to those items.
[Read more: Target supports wellness journeys with broadened offerings]
“We’re definitely seeing a lot of crossover from what we would call a normal category position to more of an end-use or a solution,” said Hogan.
She agreed that Target’s partnership with Ulta has enhanced Target’s beauty care positioning, because its shoppers now have access to even more premium and prestige brands than they ever had before. The combination could provide added convenience for customers who had been shopping at both retailers for their beauty routines, she said.
“It’s both a convenience play and a premium play for Target,” Hogan said. She noted that the Ulta assortment in Target is largely focused on the higher-end products, which leaves it less in direct competition with the mass offering that comprises Target’s main beauty sets.
“A lot of brands like La Roche-Posay are still in Target on the ‘Target shelf,’ and we see those getting a little bit of elevated merchandising, as that’s the high end of Target’s offering now, even though they also have Ulta,” Hogan said. “It kind of elevates the whole department a little bit, from an experience perspective.”
She noted that while Target has had some strong private label brands in personal care, such as its Up & Up product line, it hasn’t had as much penetration in private label beauty care.
“They don’t really have a mid-tier [private label] at this point, and that’s a place I’ve been watching for them to potentially evolve,” said Hogan. The partnership with Ulta could eventually allow Target to free up some space on its shelves for new private label brands in the category, she said, citing comments from the retailer about its desire to create more new private label brands in the future.
Managing Shelf Space
As Target continues to bring in new brands to its main beauty sets, it has reduced the number of SKUs for some products in order to make room, as part of an overall effort to revamp the departments, said Sarah Broyd, a partner at Clarkston Consulting.
Target has committed to adding 40 new products this year alone in the health and beauty space, she noted. “That’s a lot, when you think about shelf space,” she said. “When you go into Target stores now, there is a smaller amount of shelf space dedicated to each brand, because there is a higher diversity of brands.
“They have retooled their shelves to be able to hold more products, and make it more walkable, but the amount of SKUs they have is significantly higher than what it was in the past.”
In addition, Target is adept at rotating products out of its assortment if they don’t generate the desired results in order to make room for not new items, said Tiffany Hogan, director of retail insights at consulting firm Kantar.
“They’re more interested in newness and bringing shoppers in with those products than they are with necessarily keeping all of the [underperforming products], Hogan said. “That’s something they’ve done well. They take a merchandise planning approach—that seasonal approach that they’re very good within other categories, and apply that to beauty as well.”
A retail platform for digitally native brands
Candace Corlett, president of WSL Strategic Retail, a consulting firm specializing in shopper research and retail strategies, agreed that Target continues to be a leading platform for emerging brands. This is especially evident in some health and wellness brands that had historically been sold direct-to-consumer.
While the Ulta partnership has given Target a greater assortment of prestige brands, she said that Target remains on the cutting edge of consumer trends.
“I think Ulta brings brands to Target that Target could never get, like MAC Lipstick, but I don’t think they have lost their trendsetter reputation,” said Corlett. “I think they have been exceptionally good at translating brands from social media and direct-to-consumer to the store.”
She cited brands such as hims & hers in particular, and also noted the success Target has had with the Olly vitamin brand and with Harry’s, the men’s grooming franchise. “They are still trying niche brands,” said Corlett. “They were the ones who first brought us Olly, and they did a terrific job transitioning Harry’s. I am particularly fond of the men’s grooming set that they have created—it’s almost like a private room for men.”
The fact that consumers can find brands that they recognize from social media on Target’s store shelves gives the retailer “a lot of cachet” with shoppers seeking out trendy and emerging brands, she said.
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And for the brands, Target provides a platform to reach more consumers and gain widespread bricks-and-mortar distribution. “They made that Olly brand of vitamins,” said Corlett. “Without Target, I don’t think Olly would have been there. Target gives these brands the store distribution they need to get to that next level, and Target shoppers love the discovery.”
Among some of the recent direct-to-consumer beauty/self-care brands that have transitioned to exclusive retail partnerships with Target is Futurewise, a skin care products company that had launched online just a few months before onboarding with Target. Others include Function of Beauty, a hair care brand that launched a line of hairstyling products exclusively for Target.
“In the last several years, Target has become an incubator of sorts for direct-to-consumer brands,” said Broyd. “I think if anything, they have doubled down on bringing traditionally native digital brands to their stores.” The Function of Beauty partnership is especially noteworthy, she said, because they specialize in offering customized hair care products from their website.
“The fact that Target brought them onto their shelves is an interesting innovation in the
space,” said Broyd. “Function of Beauty can try to get consumers to buy the more expensive version of the product from them directly.”
