- Target will nearly triple the number of Disney shops inside its stores to more than 160 by the end of year.
- The company has turned its big-box stores into mall-like destinations, with scaled-down Starbucks, Ulta Beauty and Disney shops.
- Macy's announced earlier this week that it will expand its toy offering, too, by opening Toys R Us shops inside of its department stores.
The national retailer, which has about 1,900 stores in the U.S., began opening Disney shops in select locations in 2019. With the expansion, more than 160 Target stores will sell Disney-themed merchandise, from toys to costumes, by the end of year.
In a way, Target's partnerships are turning its stores into mini-malls where shoppers can conveniently browse a variety of products under one roof. Shoppers can get a vaccine or fill a prescription at a scaled-down CVS Health. They can order a Frappuccino at a Starbucks cafe. They can find dedicated displays of Apple gadgets and Levi Strauss denim. And they can try a lipstick sample or get beauty advice at mini Ulta Beauty shops, which began opening in select stores earlier this month.
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The retailer's expansion of Disney shops comes ahead of the holiday season — a key time for toy sales. Macy's announced recently that it will expand its toy offering, too. It struck a deal with Toys R Us to open shops inside of more than 400 of the department store chain's locations and online. A larger assortment of Toys R Us merchandise is now available on Macy's website.
Steve Dennis, a retail strategy analyst, said the closure of Toys R Us "put market share up for grabs and a lot of of retailers were looking to grab that back." That's led to heightened competition between retailers like Walmart, Amazon and Target — and turned toys into an appealing merchandise category for Macy's.
He said the Disney shops could help Target stand out and raise its toy department's price point.
"One of the trends that I think they're leaning into is 'How do you create more uniqueness and differentiation for your brand' and kind of elevate it from the typical sort of merchandising?" he said. "What's that extra reason to go to the store or go to the website or perhaps, buy something else on your trip?"
Toys have been a growth category for Target and continued to show momentum in its second quarter, which ended July 31, according to Chief Growth Officer Christina Hennington. She said on the company's earnings call that toy sales grew in the low 20% range year over year during the three-month period.
At Target's mini Disney shops and on its website, shoppers will be able to find items from popular Disney properties, including Star Wars and "Raya and the Last Dragon."
Along with Disney, Target said it will team up with well-known toy retailer FAO Schwarz for the second year in a row. It will have an exclusive, 70-piece toy collection with FAO Schwarz, including items from Barbie and Paw Patrol. It will also have a pop-up shop inside of FAO Schwarz's flagship store in New York City.
Target's shares have risen about 43% this year. The company beat earnings expectations last week, as it saw a strong start to the back-to-school season.