(Updates shares in sixth paragraph.)
Jan. 12 (Bloomberg) -- Target Corp., the discount chain that brought cheap chic to the masses, is going mom-and-pop.
Target previously confined itself to cutting deals with such designers as Michael Graves and Missoni, and now plans to sell dog treats, home goods and other products designed by small businesses most Americans have never heard of.
With cheap chic now commonplace -- even Staples Inc. plans to sell Martha Stewart-brand office supplies -- Target needed a new way to stand out, said Brian Robinson, the chain’s director of fashion and design partnerships. The idea is to laud American entrepreneurs, he said.
Since the recession “people want to believe we are a country of innovators, and these types of stories people are hungry for,” Robinson said in an interview.
The Minneapolis-based retailer could use a boost. Its December same-store sales rose 1.6 percent; analysts projected a gain of 3.3 percent. The retailer has been driving sales growth by putting fresh grocery sections in more stores and getting more customers to sign up for its REDCard, which offers 5 percent off purchases.
The shares rose 1.6 percent to $49.81 at the close in New York. They dropped 15 percent last year.
Target’s new initiative is an attempt to attract consumers increasingly used to “going off the beaten path and buying more artisanal and specialized products,” said Matt Arnold, an analyst at Edward Jones & Co. in Des Peres, Missouri. It “extends what they’ve always been about, which is a differentiated shopping experience.”
The chain began selling designer goods more than a decade ago, earning the nickname “Tarjay,” and has since watched competitors such as Kohl’s Corp. and J.C. Penney Co. follow suit with product lines from celebrities such as Jennifer Lopez and fashion brands like Liz Claiborne.
Target’s five new partners include Boston-based Polka Dog Bakery, which sells a five-pound can of treats made with peanut butter and Parmesan cheese for $66, Privet House, a Greenwich, Connecticut home goods store, and The Candy Store in San Francisco, which markets sweets like fine wine.
Target, which will continue partnering with fashion designers, started looking at hundreds of U.S.-based boutiques about 18 months ago. Prices for the 400 exclusive items, which will go on sale at Target’s 1,700 U.S. stores and online in May, will range from $1 to $160.
They will be available for a limited time before others rotate in later this year. The stories of the business owners will be featured in advertising and in-store marketing.
“This whole thing has been surreal since we’re such a small business,” said Diane Campbell, 39, who founded The Candy Store in 2007 with her husband Brian. The company, which has four employees,“isn’t really sure what’s about to happen. We’re a true mom-and-pop.”
--Editors: Robin Ajello, Kevin Orland
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