US retail giant Target is venturing beyond its physical stores, exploring a new revenue stream for its private-label products: wholesale partnerships, Bloomberg reported.
The company announced an expansion of its existing partnership with Canadian department store chain Hudson’s Bay (HBC).
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This expanded deal will see Target’s popular in-house children’s apparel brand, Cat & Jack, adding swimwear, outerwear, and footwear to its offerings at HBC stores and online platforms.
This move marks Target’s first foray into wholesale distribution.
The decision follows a positive customer response to the initial launch of Cat & Jack apparel at Hudson’s Bay in March 2024.
The new aforementioned product categories will be available at HBC starting in 2025.
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By GlobalDataTarget is also reportedly exploring broader wholesale opportunities.
According to Bloomberg, the company’s chief growth officer Christina Hennington said the business has received interest from other retailers around the world and is in the early stages of exploring opportunities to sell its products to these retailers in Europe and the Americas.
This strategic shift comes as Target navigates a challenging economic climate. Facing declining sales over the past three quarters due to inflation and interest rate hikes, the company is seeking new avenues for growth.
Target is reportedly optimistic about a rebound, with its executives expecting positive comparable sales figures in the second quarter of 2024.
Selling private-label brands to other retailers is a novel approach within the retail industry.
Private-label products typically offer higher profit margins and increased customer loyalty compared to national brands.
This trend has seen domestic retailers such as Walmart and Kroger significantly expand their private-label offerings in recent years.
Target boasts impressive figures for its Cat & Jack brand.
Customers purchase more than 300 million Cat & Jack items annually, generating roughly $3bn in sales.
All told, Bloomberg noted, Target’s in-house brands contribute nearly a third of the company’s total revenue, exceeding $30bn annually.
In the long term, Target aims to improve performance through a wider retail network and a revamped loyalty programme.
The company also plans to open more than 300 new stores and renovate most of its existing locations within the next decade.
Additionally, it launched a paid membership programme in April this year, Target Circle 360, to compete with similar offerings from Amazon and Walmart.
The Hudson’s Bay deal represents a return to Canada for Target, which exited the market after facing significant losses.
