How Target plans to cure shopping woes

July 30, 2016

By GlobalPost WriterKatie Little, CNBC

People wait in line to get an early start on Black Friday shopping deals at a Target store on November 22, 2012 in Rosemead, California.
Frederic J. Brown

Hoping to drive sales during what is typically a slow period in the crucial holiday shopping season, Target joined with Neiman Marcus to debut a much-hyped-about collaboration with 24 designers on Saturday.

Buzz has been building for the last several weeks since the company announced it would partner with the high-end designers, including Diane von Furstenberg, Tory Burch and Jason Wu, to produce more than 50 items ranging in price from $7.99 to $499.99.

The pieces will be available at both stores and on their websites. For many designers, the collection has offered them a chance to break with their typical offerings to explore new areas, such as the plates that women's wear maker Tracy Reese has created.

"One thing to keep in mind is that these are 24 designers that typically wouldn't be attainable to most people," said Dustee Tucker Jenkins, Target's vice president of communications. "Their price points can be a bit high — sometimes in the thousands of dollars — so we are making most items under $60. We are making these designers available to people who normally would not get to experience them."

Following a disappointing one-percent decrease in same-store sales in November, Target will be counting on the partnership with the high-end department store to drive holiday shopping traffic.

"Dec. 1 is a time that's kind of quiet typically for retailers, and so we believe that this will give people something to get excited about this holiday season," Jenkins said.

Target is no stranger to recruiting designers, many of whose pieces normally sell for steep prices at Nordstrom, Saks and other high-end retailers. Since its pioneering collaboration with Michael Graves 13 years ago, the company has recruited more than 100 designers to offer limited-time collections.

But sometimes these collaborations become a little too popular such as last September when demand for Missoni for Target was so high that the discount retailer's website crashed, and items quickly sold out. Some purchasers even received emails saying their orders would be delayed or cancelled.

"People marked their calendars," said Target Spokesperson Joshua Thomas of the collaboration. "They called their friends. They made their lists, and they plotted their paths."

Many of those who were able to snap up items turned to eBay and Craigslist to hawk their newly purchased items at steep mark-ups — a secondary market that Target wants to cut down on this time around.

"The collections become like collectibles so as a result, their street value increases significantly," Thomas said.

"The demand for the collaboration that we created with Missoni was truly unprecedented so we are taking key learnings from that launch and applying them to future partnerships," Thomas added.

To cut down on eBay re-sales, Target has more than doubled the inventory of the Missoni collection levels and shortened the time frame for returns to Jan. 5 from its usual 90-day window. Target and Neiman Marcus are also limiting purchases to up to five of each item per transaction.

Still, eBay re-sales are inevitable, and some items of the Target-Neiman Marcus collection have already been listed on the online marketplace at several times their original price tag.

But not everyone is upset about this.

"I think it's like basketball tickets," said Wu, who is partnering with Target for the second time. "When something is hot, people will always be reselling it — I guess as a compliment to this collaboration."

Target also offered tips for those set on snagging their favorite looks from the new collection in stores.

"If there are items that you are dying to get, have a plan, divide and conquer and then the last tip would be to follow social media" for information on where items are still in stock, Thomas said.