Target Makes a Test Run at Trendy Sportswear Biz with C9 Store

Target Stores
Target Stores

Target (TGT) will make a play for fitness enthusiasts with the fall launch of an activewear store based on its C9 by Champion brand, marking the chain's first spin-off retail concept.

With C9 Active Apparel, Target is dipping its discount-store toe into the booming athleticwear market occupied by expanding high-end retailers like Lululemon Athletica (LULU) and Gap's Athleta chain (GPS).

The 3,000-square-foot C9 store will open on Oct. 14 in a ground floor space in San Francisco's Metreon Shopping Center, where a 100,000 square foot CityTarget (the discounter's urban format) will also debut. But C9 won't bear the Target name, nor feature the iconic Bullseye logo.

San Francisco, with its high proportion of fitness-minded residents, is a natural venue for C9, Jessica Deed, a Target spokeswoman, told DailyFinance.

The store will offer a full assortment of athletic apparel and gear for men and women, including everything from running shorts and yoga pants to sports bras, water bottles and yoga mats. While pricing information for the new store isn't yet available, items in the C9 by Champion line at Target currently retail for under $50, "with the majority of pieces available for less than $30," Deed says.

By contrast, a trip to a Lululemon in New York City turned up little merchandise selling for less than $50. The product mix included items like women's yoga pants for $86, a sports bra for $48 and men's cycling tees for $54.

With C9, Target could be angling to differentiate itself from retailers like Lululemon and Athleta, and brands such as Under Armour, by offering a lower priced activewear option, Tim Shimotakahara, vice president of investment banking for D.A. Davidson & Co., tells DailyFinance.

Target active apparel
Target active apparel

Still, the C9 move is somewhat surprising for the chic-cheaper discounter. Why would Target, the nation's only mass-merchant couturier -- known for its high-profile brand partnerships with upscale designers like Missoni and Jean Paul Gaultier -- pick athleticwear as its new retail concept? Because it sells, Deeds explained. "C9 has really grown into one of Target's most popular brands."

What's more, activewear is "a hot, growing market that has significantly higher profit margins than many other product categories," Shimotakahara says. Active outdoor apparel alone, excluding team sports related garments, generates an estimated $3.6 billion in sales, he says, citing figures from the Outdoor Industry Association.

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And Americans' increasingly informal lifestyle is creating a stronger demand for fitness fashion. "You see people wearing activewear in all different social situations," he says.

While Deeds said there are no plans per se to expand the C9 concept beyond that one store, industry analysts are betting that if it does well, Target will do just that.

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"Target has obviously paid attention to the success of specialty retailers like Lululemon and Athleta, and the same concept at mass price points could be a winner," said Richard Seesel, a principal at Retailing in Focus LLC, in an online forum about C9 on RetailWire.

The store's boutique size "also follows the trend of 'smaller is better' relative to the massive scale of sporting goods stores like Dick's and The Sports Authority, where fitness-wear is a small part of the assortment," he said. C9 "has a lot of growth opportunity across the country."

But one analyst wondered if by going with the Champion label, Target is banking on a brand that's past its sell date, particularly when it has to vie with the trendy image of stores like Lululemon, for one.

"Champion doesn't have that cachet," said the analyst.