Jordan Valinsky writes for CNN Business about the new brand created by Target in the context of the market of products that are the opposite of luxury goods.
Look, our income has ALSO dropped
Target’s new target audience is budget-conscious people. The Dealworthy brand was created for them, offering products priced below $10. The decision to create it results from the fact that the company’s sales value has dropped significantly in recent quarters. Target inevitably had to come up with a way to stop the disturbing trend. He focused on those who found themselves in a similar situation.
What will Americans find under the Dealworthy brand? A total of 400 products, of various types – phone chargers, disposable plates, underwear. That is, goods scattered on the shelves from stores operating in the business model that appeared in Poland in the first decade of the 21st century, generating a multitude of stores “Everything for PLN 4”, “Everything for less than PLN 5”, etc. By the way, a faithful copy of American dollar stores.
Coming out of the shadow of Walmart
Dealworthy-branded products are the cheapest items you can find in Target stores and the only ones that can be priced under $1. The company believes this will attract new customers who will assume that Target guarantees the quality of the Dealworthy brand and will thus be lured away from competitors offering a similar range.
Speaking of competition – by establishing Dealworthy, Target can gain a stronger presence in a market that has so far been dominated by Walmart and the aforementioned dollar stores. He also didn’t have much choice – according to GlobalDataRetail retail analyst Neil Saunders, price has recently become much more important to Target customers than it used to be.
Dealworthy on a white horse
Target is not a complete newcomer when it comes to the low-cost segment. So far, his portfolio includes two completely non-luxury brands – Smartly and Up&Up. The former, which covers products such as soap and garbage bags, will now be phased out. Besides, as Saunders claims, there was no idea for it and it never made it. So Dealworthy will absorb it. The latter will be slightly redesigned and will include slightly more expensive products.
In total, Target has 45 private label brands, generating revenue of $30 billion. The company has a strong position, but in recent years customers have limited the purchase of products such as furniture and electronic equipment, which are an important part of its portfolio. For the first time in six years, Target’s quarterly sales dropped, also due to negative reactions from right-wing circles to the Target Pride Month line. We will find out whether Dealworthy will save its results during the next quarterly summary in March.
