Target meets discounters, an even cheaper brand

Mark Tritton, Target's Derivatives Manager, said the new range of consumer products is an attempt to compete with generic brands in pharmacies and discount chains. "It's about showing people that I do not have to go to Aldi or that I do not have to go to

General Dollar

find what I'm looking for, "he said in an interview.

Smartly is the last step taken by the retailer to offer more competitive prices, a change of strategy after the company started to lose ground against competitors such as

Walmart
Inc.

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and

Amazon.com
Inc.

AMZN -1.04%

In 2017, Target CEO Brian Cornell said the company would sacrifice profits for lower prices, helping the retailer win back customers. In August, the company released its best quarterly results in more than a decade.

Since Mr. Cornell announced his investment plan last year, the company is abandoning some of its well-known brands and launching new ones. Storing exclusive products is part of its strategy to counter competition from Amazon and other channels. Private labels also tend to be more profitable for retailers.

Over the past two years, Target has created 20 brands, mainly in the clothing and home categories. During the summer, he launched his first brand of electronic products called Heyday, with items like headphones and speakers, all sold under $ 60.

Target said that Smartly had an average price of about 70% lower than traditional brands, such as

Procter & Gamble
Co.

labels like Tide, Gillette and Charmin. The new line will be Target's second generic brand for toiletries, with prices around 50% lower than those of its Up & Up brand.

"Am I saying that we are looking to replace a key brand like Tide with Smartly? Absolutely not, "said Tritton.

Smartly products are sold in small quantities, like a single roll of paper towels, to attract Generation Z and millennia customers, including students and 20-year-olds who are starting their first job. Target's market research has shown that these buyers are not as loyal to well-known brands.

Most Millennials are cost conscious and are more inclined to try new products, but they are also looking for items that are said to be healthy and good for the environment, said David Garfield, Division Manager. consumer products from the consulting firm AlixPartners. "It's a challenge for retail brands and private brands to offer value, but also enough other attributes," he said.

By mid-October, Smartly items will be sold alongside other products in their respective aisles and can be purchased online through Target's replenishment program, which allows customers to fill a box of products and pay a fee. fixed shipping. The company has announced its intention to make room for Smartly by removing the worst performers in each product category.

Meanwhile, the market for generic staples has become more crowded. Last year, Brandless, a San Francisco-based start-up, began selling basic products such as fluoride-free toothpaste and dish soap at a price of $ 3. The German grocer Aldi has also opened new stores in the United States and gained popularity by selling a reduced selection at unbeatable prices.

Competition has forced players such as Walmart to reorganize their brands. In 2016, the chain of big box stores scrapped a discount store brand in a rare blue package called Price First, as part of a larger overhaul of all of its private label products. The company is now selling its cheapest food products under Great Value and its Equate toiletries, with boxes and bottles more reminiscent of traditional brands.

Mr. Tritton said that Target's merchants had been thinking about Smartly's design for months, eventually ending up on a minimalist package. Some products also contain scents, although the package on a Smartly bar of soap says that it "smells good, well, nothing".

-Sarah Nassauer contributed to this article.

Write to Khadeeja Safdar at [email protected]