Target Gets Cooking(.com)
Target agreed to buy Chefs Catalog and Cooking.com, two leading e-commerce businesses focused on cooking and kitchenware, in two separate transactions.
The businesses will be combined into a new, wholly owned subsidiary of Target, and both brands will continue to operate under their current names. Terms were not disclosed.
Founded in in 1998 and based in Marina Del Rey, CA, Cooking.com offers more than 30,000 products for the kitchen as well as recipes, cookbooks, and a library of member-submitted cooking content. It also operates websites for Food Network Store, Calphalon Store, Rachael Ray Store, and Epicurious Shop.
Founded in 1979 and based in Colorado Springs, CO, Chefs Catalog is an online retailer of kitchen products. Brands sold include All-Clad, Cuisinart, KitchenAid, Le Creuset, Scanpan and Wusthof.
According to Internet Retailer’s most-recent Top 500 Guide, Cooking.com had sales of about $100 million in 2011, and Chefs Catalog, $38.2 million. In Internet Retailer’s Top 500 rankings for 2011, Cookings.com ranked 169 and Chefs Catalog, 311.
Chefs CEO Tim Littleton will become president of the new subsidiary while Cooking.com’s CEO Tracy Randall will become a consultant to Target.
"We know consumers are increasingly looking online for cooking solutions to make their lives easier — from utensils and cookware, to recipes," said Casey Carl, president, multichannel and senior vice president, enterprise strategy at Target, in a statement. "These strategic transactions provide us a great way to address this growing opportunity and will offer expanded online options for our guests."
Some analysts speculated that Target’s investment is part of an effort to balance out its emphasis on kitchen merchandise with that of apparel, which has seen some notable exclusive launches lately. The move also builds on Target’s recent online investments, including the January hiring of an executive from Gilt Groupe to oversee Target.com and mobile. Target also recently launched six web-only apparel and home furnishings brands.
Citigroup analyst Deborah Weinswig said in a note, according to CBS Marketwatch, that the purchases "should give Target a significantly expanded presence in the cookware and kitchenware businesses, as well as access to valuable Web content. While small relative to overall sales, we believe this is an attractive strategic investment for Target, with the potential for increased synergies over time, such as enhanced gift registries and improved Web content."
"If you think about it, the most logical place to look for a new recipe is to go online," Paula Rosenblum, an analyst at RSR Research LLC. told Internet Retailer. "So recipe hunts beget ‘stickiness,’ which begets the potential of buying the cookware used to cook the stuff and, probably, the food used to make it."
Discussion Questions
What do you think of the potential benefits and synergies from Target’s acquisitions of Chefs Catalog and Cooking.com? How important is the web content to the acquisition?
The home store used to be (but is no longer) a core strength of Target. In cookware especially, Target has seen share migrate to competitors like Kohl’s (with its Food Network products) and Bed Bath & Beyond. The impact on Target’s e-commerce business will be relatively small for the short term, but the opportunity to build new content and strategies for bricks-and-mortar should be significant.
With the introduction of Michael Graves’s collection, Target established itself as having stylish and functional kitchen tools. These acquisitions can help establish Target as the place to go for an inclusive and stylish collection of all things related to the kitchen.
I have read articles stating that since the economic downturn in 2008 more consumers have been preparing food at home. Having tools that can provide recipes is really smart. Consumers can look for recipes and have access to kitchen tools that will make their task easier, more efficient, or stylish.
If this is part of a strategy of moving Target to a leadership position in e-commerce, then it is an excellent move. If the strategy is merely to bulk up the offering at Target stores, then it a step backwards.
Once upon a time this company was called the Dayton-Hudson Corporation. Target evolved out of traditional department stores. I doubt that there is anyone today that would suggest that the development of Target and the relinquishment of traditional department stores was a good move.
Similarly, if this acquisition strategy is part of the next face of development for Target (10 years from now), bravo for Target. Any retailer that does not see e-commerce as their primary touch point with consumers will be left becoming the Woolworths of the future.
So … let’s see. Target wants to take on Amazon and the Food Network. Good plan and good luck!
The absolute last thing the world needs is another online recipe/cooking instruction/culinary supply source unless Target can find some way of creating proprietary advantage in an already crowded field.
This strikes me as an idea that makes abstract sense, but unless perfectly executed, will have real difficulty gaining traction.
Target’s product is aspirational style, not creamed corn recipes.
This is a very overcrowded category, but if Target can tie into its focus on fresh foods and execute with style at the forefront of its plan, I believe shoppers will respond. The days of just counting on a Food Network personality are over.
Consumers are looking for authentic help to make better-for-you meals in their kitchens.
Target has long focused on the aspirational customer, and it’s smart for them to align themselves with these popular sites. As the store becomes more interactive, they’ll have the opportunity to stream content into their housewares departments, and create custom content featuring their products. Smart.
This is a great move for Target as it increases its presence in the e-space for their retailing growth in a more diverse direction. It grows Target in the kitchen areas, as well as establishing a greater .com presence. It is clearly a win/win for all parties. Good move Target!
Target, along with their mega-sized brethren are seeking logical platforms for becoming legitamate players in the digital space. They must—since Amazon and others have quickly established sizable ownership of the space.
Will this work for any of the original bricks & mortar players? Time will tell. But Target must be applauded for having a strategy and moving on it. These are two high-value brands in the kitchenware/cooking space and should prove accretive to organizational learning and customer experience.
This is about securing your prime customer. A brilliant move that we’ll also see executed by other large retailers.
Customers are looking for solutions and online is a great place to offer the solutions in a very flexible way without going through the physical process of setting it up and changing the solution components in-store.
Target’s acquisition is a great way to engage customers in that category, provide solutions and increase sales. Target has a lot of catching up to do on the online side, and this is probably a good way to create differentiator in that category.