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Target Puts Toys, Tech, and Price Front and Center for the Holidays
Target is enhancing its annual Bullseye’s Top Toys list with the introduction of a 360° shoppable experience on Target.com that will let shoppers explore a virtual room full of items from brands like Barbie and Play-Doh. The retailer is also emphasizing its low prices and exclusive partnerships, including a multiyear FAO Schwarz collaboration that will continue into 2023, which together could help the company maintain a competitive edge in what might be a downbeat holiday season.
The experience aims to “make toy discovery easier and more joyful,” according to Target. Brands and franchises on the overall list include Pokémon, PAW Patrol, Marvel, and LEGO, which will add to Target’s Disney and FAO Schwarz partnerships to deliver a wide selection of popular choices.
Target will also put an emphasis on affordability, such as by noting that its selection of the season’s hottest toys starts at $7.99 and that most of the items from the FAO Schwarz collaboration and the Disney100 Retro Reimagined collection — which celebrates Disney’s centennial anniversary — carry price tags under $25.
“We know affordability is top of mind for many of our guests as we head into the holiday season, and we’re committed to delivering exceptional value as they make plans to celebrate with friends and family,” said Jill Sando, EVP and chief merchandising officer at Target, in a press release.
Target’s emphasis on holiday savings makes sense, given that shoppers are still cautious following the recent year of high inflation. While price growth tapered off during the summer, retailers still need to contend with the resumption of student loans, which some experts believe could weigh on overall holiday results due to the 40 million affected consumers seeing an average of $300 added to their monthly expenses.
Target has its work cut out for it if the company wants to catch up to rival Walmart, which firmly outperformed Target in Q2 2023 when Walmart saw a sales growth of 6.4% compared to Target’s 5.4% decline. If the 2023 holiday season ends up as gloomy as some think it may become, combining toys from popular franchises with prices that catch parents’ attention could prove to be a winning move.
Discussion Questions
Can the digital experience and emphasis on price help Target stand out as a toy destination for holiday 2023? How can Target outmaneuver Walmart to become the stronger company in Q4 2023?
Poll
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Mark Ryski
Founder, CEO & Author, HeadCount Corporation
James Tenser
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Target is planning to play offense this holiday season, and the digital experience and especially the low price emphasis on toys is a good place to start. The partnerships that Target has cultivated with significant toy brands will serve them well and the new online experience should help convert more online visitors to buyers. A key strength of Target has been leveraging their stores as distribution facilities for their online sales and I expect to see them continue to use this to their advantage this holiday season.
I have my doubts for this as a strategy. Kids know what they want for toys from TV commercials and other sources. I can’t see a 360 digital web site experience being all that useful. They’d be better off making TikTok cartoons of the toys.
If Target can execute this strategy effectively, they will definitely not be caught flat footed. Walmart outperformed and outmaneuvered them last year because Target did what they had always done.
I’m impressed with Target’s collaborative partnerships across the toy category, their range of assortment, their 360° approach, and their anticipated price points. This should bode well in a year where budgets are tight and holiday time seems more rushed than usual.
Target’s focus on excellent store operations, supply chain execution, fulfillment, digital commerce, loyalty, and value-centric product offerings are key to their success and a foundation they could build on as we enter the holiday season. The company already has store traffic, a solid digital commerce experience, customer loyalty, and critical partnerships with Pokémon, PAW Patrol, Marvel, and LEGO.
The company is already a destination for consumers’ household needs and has become a nationwide force to be reckoned with in the toy industry. What will be a crucial differentiator for Target is to come up with some authentic TikTok social commerce strategies. Whether it’s partnering with top influencers or well-established brands, over 80% of content consumed online is video, and this is where the core customers are, who directly influence their parent’s shopping decisions.
I actually think a virtual room could work well given how crowded stores get and how much consumers dislike that. Competing on price against Walmart will always be tough for Target, as it’s perpetually positioned as more expensive. So, that focus is an important one but definitely an uphill battle.
I like that Target is putting an emphasis on affordable toys, but that’s easy to do with stuffed animals and makeup kits. The retailer does a good job on its website offering toys by age and for under $25. This will be harder to do with the technology older kids want.
I am not so sure about the 360 degree shoppable experience. When it comes to toys, kids aren’t so different than any other generation. My grandkids poured over the Amazon toy catalog last year for hours. That thing was dogs eared and worn out in places. Circling the toys you dream about is more fun on a printed page you can carry everywhere.
Exclusive and affordable offerings and digital excitement will distinguish Target’s toy assortment, and delight parents and kids.
Strategic partnerships, private labels and retail media growth will improve Target’s competitive position. Premium shop-in-shop quality and cheerful associates set Target apart all year round.
When it comes to Target’s virtual toy experience, it’s worth remembering who buys most of those holiday toys? I’d submit that grandparents’ spending will equal or exceed that of parents. Grandparents don’t do much of their gift buying on Tik Tok (at least not yet).
Target’s “3-D” toy pages are not exactly the metaverse either. Web-literate boomers and elders will have no trouble using the low-barrier interface to indulge the kids in their lives.
In-app shopping may work better for young parents, so it behooves Target to use a variety of channels to capture holiday toy sales. Yes, that includes Tik Tok.
Yes! Target can outperform Walmart by flexing its’ superior merchandising muscle, and putting their pricing front and center (while making it competitive), as well as enhancing their selection, and continuing to raise their customer service. All of this should focus on creating a superior customer experience while eliminating Out Of Stocks (Walmart’s biggest weakness)
Low prices are a great start for moving parents through the purchase funnel in a time when inflation is high. However, the list originates with the kids, who are generally on TikTok and YouTube checking out the hot toys of the season, vs going on target.com. As a demand generator, I don’t know how productive it will be. It seems like the bigger role will be in demonstrating to the parents how the toy works and if it is age appropriate for the child on their gift list.
Target is pulling out all the right stops for holiday: connecting digital and physical experience, leveraging exclusive partnerships and keeping prices in check. These are are solid moves for a successful holiday season and Target is leaning in well prepared.
Still, it’s hard to ignore Target’s 5.4% Q2 revenue decline vs Walmart +6.4% Q2 revenue growth. The question then becomes, what is driving Walmart foot traffic and baskets where Target may not be competing so strongly. In this economy, Grocery and Walmart super centers may be driving one-stop shops for families. While Target may do a good job on toys and tech for holiday, they still lag overall in Grocery which may be contributing to
overall revenue gaps.
Target’s approach for the holidays this year is a good example of leveraging technology to address current customer shopping habits. The emphasis on creating an immersive eCommerce experience highlights the importance of meeting consumers where they want to shop, especially during the upcoming holiday rush. Parents can help their children build Christmas wish lists in a fun, hands-on way without ever stepping into a store and when it comes time to shop, it will make Target an easier place to one-stop-shop for all their Christmas purchases.
The attention to affordability also underlines their understanding of the current consumer mindset. With inflation remaining high headed into the holiday season, consumers are ever mindful of their gift-giving budgets and are looking for ways to stretch them as far as possible. By making it easier for shoppers to find affordable gift options for everyone on their list, Target is once again encouraging seamless, one-stop-shopping to accommodate customers where they’re at.
Focusing on digital experience can definitely help Target differentiate itself from competitors. Consumers, especially the younger generation, are increasingly looking for seamless and interactive shopping experiences. To compete with Walmart in Q4 2023, Target has to prioritize an enhanced customer experience as a way to capture more market share this holiday season since historically Walmart has been more competitive on pricing.