Target Launches Baby Boutiques to Attract Busy Families

Target has converted about 200 locations—roughly 10 % of its footprint—into “baby boutiques.” The sections let shoppers test strollers, car seats and high chairs and feature premium brands such as UPPAbaby (including a $1,000 stroller) and Stokke, adding nearly 2,000 baby items.

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CEO Michael Fiddelke, who took the helm in early February, inherited a three-year sales slump. Target’s baby category holds 17.6 % of the market, down from 18.6 %, while Walmart leads with 27 % and Amazon 24.4 %. Although U.S. births have fallen 16 % since 2007, families with children under five spend twice as much as the average shopper and visit stores twice as often. The retailer announced $5 billion in capital expenditures this fiscal year—over $1 billion more than the prior year—to fund store openings, remodels and the boutique concept. It projects net sales to rise about 2 % year-over-year, with growth each quarter, and says it expects to return to annual sales growth this year while expanding baby boutiques to more stores, though a rollout schedule is not set.

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The boutique rollout aims to win first-time parents, a segment that can lift basket sizes across groceries, clothing and other categories, creating an on-ramp to higher sales and multi-year wallet share growth.

Target launches baby boutiques in 200 stores to...

Analysts note Target “is not in as good a position as others” amid fierce competition from Walmart and Amazon. A potential boycott by a major teachers’ union and higher gasoline prices could curb back-to-school spending, especially for lower-income shoppers. Sources differ on traffic trends: corporate reports show a four-quarter decline, while Placer.ai indicates a recent uptick.

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• “We see an incredible opportunity at Target to really deepen our relationships with busy families and become their first choice for even more of life's everyday needs,” — Cara Sylvester, Chief Merchandising Officer

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• “We lost the clarity and the discipline that make Target a place loved by busy families.” — Cara Sylvester, Chief Merchandising Officer

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• “I don't think Target is in as good a position as others in that regard,” — Simeon Gutman, Morgan Stanley retail analyst

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• “It's one of these categories where I think they have a right to win, and they ought to,” — Simeon Gutman, Morgan Stanley retail analyst

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Target will report first-quarter earnings on May 20, offering an early test of the boutique strategy, while observers monitor any teachers-union boycott and further rollout decisions.

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