Shoppers who buy brand-name products usually cite quality as a reason, while shoppers who buy store-brand products usually cite price. Retailer Target believes it is possible to have the best of both, and the company, seen as a more upscale retailer in recent years, is focused on promoting its new private-label brands.

Competing in a crowded retail space with disruption from e-commerce companies, store brands or private label brands, once “uncool,” are now a differentiating strategy for retailers like Target. Taking sales share away from national brands, private label brands continue to set new revenue records across the board. In the 1990s, Target teamed up with architect Michael Graves for an exclusive design partnership.

Additionally, in-house brands like Merona and Mossimo, no longer produced, earned Target a devoted following of shoppers interested in affordable priced fashion available only at Target.

The company hopes to win back customers with about a dozen new brands of clothes and furnishings, which include A New Day (womenswear), its first-ever menswear line, Goodfellow, Project 62 (home décor), Joylab (athleisure), and Hearth and Hand with Magnolia, a home and lifestyle label created in conjunction with HGTV stars Chip and Joanna Gaines.

With $2 billion in sales its first year, the company's children's clothing line Cat & Jack is a reminder of what might come of its new private label launches—and it is not at all private that these very products will continue to be Target's focus for growth.

Questions for Critical Thinking

1. Why do you think retailers carry brand-name items alongside their own inhouse brands? From your own experience, are the national brands worth the additional cost? Why or why not?

2. Many retailers are tapping into what is called “Millennial pragmatism,” which addresses how consumers in this demographic group demand to know more about what a brand stands for beyond its bottom line. How are retailers appealing to Millennials with products, imagery, and appeals of a private-label brand without the higher price tag?