Target is reaching for the stars – Blake Lively, Taylor Swift and Ariana Grande – to help lure customers into stores.
The Minneapolis-based retailer is leaning into flashy partnerships with celebrities like Lively, Swift and Grande in an effort to boost sales, which have been under pressure in the post-pandemic world.
The partnerships reflect how Target is doubling down on so-called discretionary goods – those things you don’t really need but can’t resist putting in your cart – in stark contrast to rivals who have posted gains by focusing on staples like groceries.
After four quarters of declines in same-store sales, Target finally started to turn things around in the second quarter with a 2% gain in same-store sales. Discretionary purchases improved for the fourth consecutive quarter, the company said.
The company is “looking to build on the momentum” it has seen in discretionary categories, CEO Brian Cornell said on a call with analysts. “We see much more opportunity ahead of us.”
Cue the global superstar Taylor Swift. Target signed a deal to sell her first book, “The Eras Tour Book,” and her new album, "The Tortured Poets Department: The Anthology” exclusively in stores on Black Friday, and online after that.
Shopping at Target is about getting products “you can't get anywhere else,” Rick Gomez, executive vice president and chief commercial officer at Target, said in the announcement.
Target also landed a partnership with Blake Lively to launch an exclusive line – Blake Brown Haircare – which it said in the second quarter was its most successful hair care launch. The company has exclusive merchandise from “Wicked,” the smash musical turned movie starring Grande and Cynthia Erivo, including Elphaba- and Glinda-themed clothing for adults and kids.
But whether it will be enough for Target remains uncertain. Its stock is up about 5% in 2024, but that’s still about 70% less than its pandemic peak. That is compared with a more than 20% rise in the S&P 500 and 55% increase for Walmart shares.
Target’s revenue is projected to dip slightly to $106.76 billion this year, but analysts expect to see more growth in 2025. Profit is expected to grow slightly this year to $4.4 billion.
“Taylor Swift is one of the few people that I think that could probably make a sizable splash” for Target, said Gary Frayter, celebrity brand and social media director at Kronus Communications.
Target has partnered with Swift on albums, often vinyl versions, as far back as 2008, when she was still known as a country artist.
Since then, Swift has transformed from a top-selling country crossover to a one-woman economic force. She’s credited with breathing life into everything from concert tours to movie theaters, driving as much as $5 billion in economic impact to the cities that hosted her Eras Tour. She even gets props for increasing Super Bowl viewers – especially women.
“When you’ve got big names like Taylor Swift involved, it draws people in who are already huge fans,” said Tom Jauncey, CEO of Nautilus Marketing.
Target plans to add Taylor Swift’s first authored book to its selection of books about her. Credit: Coralie Carlson
Once in the store, those customers often pick up other items, too, boosting overall sales.
“It’s a solid strategy that works well because it taps into that emotional connection people have with these celebrities, which is key in a busy retail market,” Jauncey said.
But the Taylor Swift effect isn’t free. Target didn’t disclose how much they paid to secure the deal and didn’t respond to multiple requests for comment. However, Frayter estimated that it likely cost the company “millions and millions and millions of dollars.”
Even just an Instagram sponsorship for a well-known celebrity not quite in Swift’s stratosphere could cost $100,000, Frayter explained.
The Wicked merchandise was also working fans into a frenzy, with customers nearly causing a brawl at one St. Louis store over Elphaba- and Glinda-themed Stanley cups, as captured on a TikTok video.
Others were less impressed. Deyna Kambourova, a 17-year-old in New York City, said she’s a fan of the musical but didn’t want any Wicked merch. She said she’d stick to Target for toiletries and clothing basics like tank tops, but some of her friends would likely be drawn in for Swift’s book: “That would entice them.”
Yet it remains to be seen whether Swift and the singing witches can make a meaningful boost for Target at a time when higher inflation and interest rates have continued to pressure households. Consumers have shifted away from discretionary purchases and focused more on staples, which has benefited its competitors. Walmart has seen astronomical success through its low-cost groceries, which have drawn a steady stream of customers through its doors.
Nearly 60% of Walmart’s sales come from groceries, compared to less than a quarter at Target.
“You're generally not going to Target to buy food,” explained Scott Mushkin, CEO of R5 Capital. “You buy it because you're there. Walmart is the complete opposite. You're going there to buy your food, and you may buy other stuff there, too.
“But the traffic driven to Walmart is enormous,” he said.
Walmart’s sales are up 6% in the last quarter compared to 2023, and have had steady gains in the last five years.
Tight budgets make customers more likely to seek the lowest prices for groceries, leading them right through Walmart’s doors. The company has even made inroads among wealthier shoppers, expanding its customer base, with perks like curbside pickup.
“Overall, I do think that Walmart, from a competitive standing, is quite solid. And I think that we'll see kind of their competitive standing continue to probably grow,” said Noah Rohr, an analyst at Morningstar. “I wouldn't be surprised if Walmart continued to take some share from Target in the coming years.”
Target has announced low-cost promotions such as a $20 Thanksgiving dinner for four. But its focus on discretionary goods remains clear, exposing the company to the same economic pain that its customers feel. By definition, discretionary goods aren’t essential.
Target’s partnerships could provide a boost, but the company’s larger success may rely more on the health of the economy than on celebrity books and movies. Customers need to feel comfortable enough to make the small splurges that they have been putting off.
Taylor Swift albums make up nearly half of the music available at this Target. An exclusive anthology album and vinyl version will add to the selection on Black Friday. Credit: Coralie Carlson
“If the economy improves with the middle-income consumer and the lower middle-income consumer, Target will feel a lot better,” Mushkin said.
Across the retail industry, spending on general merchandise has been improving each quarter, said Joe Feldman, an analyst at Telsey Advisory Group. “We've seen that trend continue,” he explained.
For now, it’s a waiting game, and one that investors are watching closely. For some, Target is a cyclical play. But anything that increases traffic to stores – from Swift to lower interest rates – will be viewed positively.