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Target (NYSE: TGT ) is getting a merchandise facelift just in time for the all-important holiday shopping season. On Tuesday, the discount retailer pulled back the curtain on its collaboration with luxury chain Neiman Marcus. The limited-edition holiday collection is an event that Target investors have been looking forward to since news broke of the unlikely partnership back in July. If the past is any indication, this should be an epic event for Target.
Right on Target
The mass-market retailer has made a name for itself by blurring the lines between high fashion and discount apparel. Target kicked off the year in true trendsetter style with a special collection by famous designer Jason Wu. Of course, Wu wasn't the first world-renowned designer to team-up with Target. In 2011, Target made headlines for its massive turnout at the Target-Missoni launch. In fact, each of Target's limited-edition collections has sold out in a matter of hours. And this time won't be any different.
The highly anticipated holiday collection brings together 24 of the most sought after designers in luxury fashion, including Marc Jacobs, Tory Burch, Diane Von Furstenburg, Oscar de la Renta, and Carolina Herrera. More than 50 unique gifts will be included in the collection, ranging from children's couture dresses and women's apparel to home goods. Best of all, most of the items will be priced around $60.
To really put this in perspective, consider this: Marc Jacobs' wool-cashmere blend scarf for Target will be sold in Target and Neiman Marcus stores on Dec. 1 for $69, whereas the least expensive Marc Jacobs scarf sold at Neiman Marcus costs $795. Clearly, both Target and Neiman Marcus are creating value for their customers through this collaboration.
But don't worry...
If you aren't able to snag some of the swag when it debuts on Dec. 1, there's always the secondary market. In the past, many designer-for-Target items have appeared at marked-up prices on eBay (Nasdaq: EBAY ) . The auction website has become the go-to destination for sold-out designer items.
Flashback to the Jason Wu for Target launch earlier this year: A Jason Wu women's shift dress that originally sold in Target stores for $39.99 was selling on eBay just hours later for nearly three times the retail price. Target knows how to spark demand -- a trait that is sure to lift eBay's spirits this holiday season.
A winning strategy
Target's smart initiatives also give investors a reason to smile. You see, unlike other big box retailers, like Best Buy (NYSE: BBY ) and Wal-Mart (NYSE: WMT ) , which are losing the battle against "showrooming," Target is using differentiated merchandise to lure more shoppers into its stores. Therefore, Target is creating value for not only its customers, but also its shareholders.
Exclusive in-store product offerings mean shoppers get one-of-a-kind pieces at affordable prices. I suspect this will be a winning combination heading into the holiday shopping season. More than this, Target stretched this concept to include designer devices, such as Apple's (Nasdaq: AAPL ) iPad. However, instead of just hawking iDevices, Target relies on the store-within-a-store format to get the job done.
Not unlike the mini-Apple stores found in select Best Buy locations, Target's concept stores sell Mac products and are staffed by Apple specialists. This creates a unique shopping experience that you won't find at other discount stores like Wal-Mart.
Blazing new trails in the retail industry is just the beginning for Target. The discount chain is also expanding its fresh food business, offering a price-match program for the holidays, and introducing new boutique experiences through its ongoing design program known as The Shops at Target.
Braving new territory
Offering branded goods at a value should also pay off for the company in Canada. Target is on track to open between 125 to 135 stores in the Great White North by 2014. The retailer plans to begin opening its first stores in the region as soon as March of next year. Looking ahead, I think this is a major growth opportunity for the company.
Together, these strategies are creating long-term shareholder value for Target investors. That's why I believe Target is a core stock for your portfolio.
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