Photo: iStock | Canva
Can Target’s New Deal With Kendra Scott Boost Its Holiday Season?
Last week, Target struck a long-term strategic deal with Kendra Scott to carry an exclusive jewelry collection of earrings, necklaces, and more. Plans include debuting this jewelry online and at approximately 150 stores as the 2023 holidays approach, according to CNBC.
This comes as a surprise for many reasons and begs the question, will this help or harm Target?
Kendra Scott and her brand have been the center of numerous controversies over the last several years, and “the cheap chic retailer has struggled with slower sales and public backlash in recent months.”
According to Texas Monthly, Scott is “a recurring investor on Shark Tank, the reality TV show for entrepreneurs, and is the founder of the Kendra Scott Women’s Entrepreneurial Leadership Institute at UT Austin.” Last year, she also created the “Direct Retail by Kendra Scott” program, a direct-sales platform that came under fire from consumers who accused it of being a multilevel marketing scheme.
When Texas Monthly reached out for an interview, a company representative stated, “At Direct Retail by Kendra Scott, we are not an MLM. Family, Fashion, and Philanthropy are at the heart of what we do and the reason why we created this program: to empower female entrepreneurs.”
Kendra Scott’s new partnership may stem from how “Target shoppers have pulled back on buying clothing, home decor and other discretionary items while they spend more on experiences and pay higher grocery bills because of inflation.”
Additionally, Target alerted investors of an imminent dip in profits as they tackled excess inventory through markdowns and order cancellations. This action has further impacted the company’s already faltering stock, which closed at $155.98 at the time of the announcement, down 2.31%.
In late August, the stock reached a 52-week low. CEO Brian Cornell acknowledged the inventory challenges and the public backlash over their recent Pride merchandise in a CNBC interview. Additionally, organized retail theft has been a persistent drain on profits. Following these challenges, Target adjusted its annual forecast, now expecting a decrease in comparable sales and earnings per share of $7 to $8.
The Collector reported that Target has been utilizing designer brand collaborations since the early 2000s. The 2002 fashion collaboration with Isaac Mizrahi was able “to bridge that gap of making clothing with the appearance and style of high-end clothing but at a price that most people could still afford.”
Target encapsulated the notion that shoppers could expect affordable high-end fashion, and “ever since, there have been collaborations between Target and other designers including Lilly Pulitzer, Jason Wu, Zac Posen, Altuzarra, and Phillip Lim.”
As noted by Jewelry Shopping Guide, Kendra Scott’s brand is “synonymous with affordable and stylish jewelry. The jewelry collections are crafted with natural materials like gemstones, pearls and shells, as well as glass stones and lab-grown pieces, making luxury pieces affordable.”
Discussion Questions
Will Kendra Scott’s jewelry help boost Target’s sales? What does this deal mean for Target’s business overall?
Poll
Loading …BrainTrust
Allison McCabe
Director Retail Technology, enVista
Verlin Youd
SVP Americas, Ariadne
Quite honestly, on its own this will not significantly boost Target’s holiday sales. It is too small of an initiative to do that. However, it will certainly generate some incremental revenue, especially as it expands the jewelry category where Target doesn’t really play all that heavily. Jewelry remains a popular holiday gifting category and also sees an uptick in self-purchases around the festive season, so this is the right time to execute a partnership. More broadly, I see these kind of partnerships as one of the new ways forward for Target. Having improved its general offer, Target now needs to focus on deepening its expertise and offer in selective areas as a way of bolstering revenue.
Neil, it’s things like this that will actually get me into Target for holiday shopping. Once there, I’m sure I’ll find a few other “needs” to purchase. Just a sample of one, but it will result in increased share of my wallet.
Costume jewelry is not a destination business, but recognizable designers add credence to any offering. If this is a step towards more regular use of known designers throughout Target’s offering, it may bring in additional traffic. Unlike the limited quantity partnerships of the past, this will not create the sense of urgency, but will provide some exclusivity. Beginning to remind me of the department store days where strong brands drove business…
No one initiative will boost long-term profitability. I applaud Target for continuing to introduce new merchandise,brands and programs as long as they filter their choices and selections through the lens of their customers. Maintaining an affordable assortment in fashion/accessories is a key piece to a retailer’s assortment and is worth expanding.
Kendra Scott will not be a game changer for Target. Target didn’t need a game changer. KS is another incremental move that shows how Target keeps raising the bar for the content they carry and the customer they are trying to attract. When Target makes this kind of announcement, there is a very high probability that they will execute well. When other department stores make this kind of announcement, execution is a coin toss. What sounds good initially ends up with a very uneven execution. Target has a great track record for execution following this kind of announcement.
This is another high value partnership in the strong ecosystem has built to serve their customers. Offering shoppers access to coveted brands like Apple, Magnolia Ulta and more is an important part of Target’s avid and loyal customer base and a big differentiator from Walmart and Amazon. This may not boost holiday sales — there are larger external factors in play hampering that— but longer term this partnership only serves to further strengthen Target’s value to consumers.
Target keeps finding ways to keep customers interested, and the Kendra Scott collaboration is a good example. Sales may not be blockbuster, but the collaboration will draw shoppers in.
Kendra Scott enjoys tremendous loyalty and transfers well to Target’s brand ethos. The outreach from the Kendra Scott Foundation will add a nice touch. Of course, Kendra Scott benefits from the instant distribution expansion. Jewelry is often a buzz kill in the big box environment, no matter how upgraded apparel, home, and other discretionary categories are. The Kendra Scott partnership will help remedy the situation for Target. Even so, jewelry is also a high-crime scene and Target has clearly quantified the impact crime is already having on its business. It will be interesting to see which safeguards will be put into place and if/how popular KS concepts like its color bar will be executed. A word of caution: the brand awareness boost that Target brings could backfire if Kendra Scott creates a noticeably lower-quality secondary line specifically for Target.
In a word “No” Kendra Scott’s jewelry won’t boost Target’s sales. Now, if the allegations against Ms. Scott prove accurate – and Target publicizes the relationship loudly enough – its overall business might have a slight hit. Lesson Number One: You ought to be very careful whom you partner with.
Didn’t we just have a whole discussion about how out of touch people sometimes are ?? I’ve no trouble admitting: Kendra who ?? But of course I’m not in the target group.
If Target found another torch bearer for the ‘cheap chic’ strategy, it will work; if they haven’t, it won’t. But don’t ask me to give odds.
It is an addition, I don’t see the brand being a destination draw like their fashion collaboration Isaac Mizrahi , however every bit helps with the bottom line. Target just have to keep doing incremental improvements and experiments to see what works for their bottom line with consumers.
Smart move, and seems like a great potential for win-win, so long as Kendra Scott protects their brand with quality and pricing. Kendra Scott has built great brand value and customer loyalty that can now be leveraged with broader distribution that does not require them to continue to invest in their own stores. I’ll be checking out the collection this holiday season!
Maybe not on it’s own, but Target has a strong track record on collbs tht have opened new categories for them and that helped then to evolve into TARJayyy. KS is a strong brand and I can see this working well for both.