Dive Brief:

• Target on Thursday announced an exclusive fragrance line dubbed "Good Chemistry," as well as a line of kids sports apparel through a partnership with British athletic wear brand Umbro, according to posts on its Bullseye blog.

• "Good Chemistry" is a nod to Target’s commitment a year ago to develop beauty, personal care, baby and consumer goods with more transparency. By 2020, those products will be without phthalates, propylparaben, butyl-paraben, formaldehyde, formaldehyde-donors and nonylphenol ethoxylates. The vegan and paraben-free scents are made with essential oils and will be available in all Target stores and online starting Jan. 21 for $9.99 to $24.99, according to a company blog post.

• Also about a year ago, Target launched what it called the "largest team sports push in Target history," becoming an official partner of Major League Soccer, sponsoring the revamped Minnesota United FC professional club, and partnering with youth soccer organizations. The new Umbro collection for kids, which will be available starting late February, features more than 90 pieces of Umbro soccer apparel, footwear and equipment in kids’ sizes XS to XL for $4.99 to $19.99.

Dive Insight:

Less than a year ago, Target executives promised a deeply researched and developed merchandise differentiation effort — part of a massive $7 billion plan to overhaul stores and digital operations. 

At that point, the retailer had already begun to see traction with a revamp of key kids merchandise, Cat & Jack kids apparel and Pillowfort kids home, and used the same research and design approach for new decor brands. "We will touch more than $10 billion of current volume with the expectation that we will accelerate growth within our most differentiated and profitable categories," CEO Brian Cornell said then. Price would still be a major way to compete, he promised, and, indeed, the retailer subsequently slashed prices on commodity products​ like grocery and consumer product goods.

Target for decades has competed on its signature "cheap chic" effort, pioneering collaboration with haute designers for the mass market. These days it's taking that a step further with not just short-term, limited edition tie-ups with the likes of Victoria Beckham and Lilly Pulitzer, but also exclusive partnerships and private labels developed in house, with more longevity, in strong retail segments. Beauty sales, including scents, for example, promise to continue to rule retail this year. 

"Target’s push into beauty demonstrates that they are trying to combat an increasing trend of sales shifting from mass merchandisers to specialty beauty stores (like Sephora or Ulta) and online (to platforms like Amazon)," Tom Gehani, director of retail client strategy and research at L2, told Retail Dive in an email, noting that, from 2011 to 2016, mass merchants like Target went from 14% of beauty sales to 12%, while specialty retailers like Sephora and Ulta grew by 22%. 

"Across all of the categories in their assortment, exclusivity will become increasingly important to maintaining differentiation, and fragrance and beauty, in particular, represent an area where the opportunity to 'trial' the product in stores is important, and a differentiating factor Target can have over Amazon," he also said.

Umbro, a British soccer label with a deep history, is a smaller, select sports brand. That's the sort that could attract shoppers, according to a "sneakernomics" report released earlier this month by Matt Powell, vice president and senior industry advisor at The NPD Group. Powell, however, warned that fewer kids are playing sports these days. The focus could also resonate with Hispanics, an important demographic for Target.

"There are so many things that drew us to soccer — it’s multicultural, watched and played by families and is growing immensely in popularity," Rick Gomez, Target senior vice president of marketing, said in a company blog post.

That all pushes Target's average prices up compared to rivals, though it gives the retailer a differentiated ability on price, too. A 2014 Profitero study found that mass merchant's pricing to be 10% higher than Amazon, while a more recent study in November found Target to be 16.9% more expensive than Amazon across 15,592 exactly matched products. Still, other Profitero pricing analysis has found Target to be competitive when it comes to commodities, Keith Anderson, Profitero senior vice president of Strategy and Insights, told Retail Dive in an email earlier this year.

"I don’t know that they really struggle to compete on price the way some people perceive them to," Anderson said. "Target does carry items closer to the 'better' and 'best' category, but on exactly the same item, Target really is competitive. People walk into Walmart and walk out pleased about the prices, and people walk into Target and walk out with things they hadn’t planned on buying, so they perceive Target as more expensive."