Two of America’s most challenged retail giants are teaming up this holiday season in a bid to draw customers. Target and Starbucks hope an exclusive Frozen Peppermint Hot Chocolate will spark foot traffic and excitement. Both companies have been feeling the pinch from inflation, changing consumer habits, and declining store visits. With Target’s discretionary sales slipping and Starbucks facing labor unrest, the partnership is as strategic as it is festive. Could a holiday beverage really tip the scales? Let’s break down the story.
Exclusive Holiday Drink Launch
Target stores with Starbucks cafés are getting a first-of-its-kind collaboration: a Frozen Peppermint Hot Chocolate. The new drink is only available in select locations, creating a sense of urgency. Fans of both brands can grab it starting Monday, with early access for Target loyalty members.
Retail Giants Feeling the Pressure
Both Target and Starbucks have struggled this year due to inflation and cost-conscious consumers. Discretionary spending at Target is down, while Starbucks faces criticism over pricing and competition from cheaper coffee chains. The timing for a partnership couldn’t be more urgent.
Holiday Fandom as a Sales Strategy
Starbucks’ specialty drinks have a loyal following, and Target hopes this enthusiasm will bring shoppers in. By leveraging limited-time, exclusive offerings, the two companies aim to combine brand loyalty with holiday excitement.
Target’s Foot Traffic Struggles
Target has faced two straight quarters of declining store visits. Backlash over diversity program changes and broader economic trends have hurt shopper confidence. Foot traffic is key for boosting in-store sales, especially during the holiday season.
Starbucks Turnaround Challenges
Starbucks’ new CEO is one year into a turnaround plan that includes closing underperforming stores and reducing staff. Strikes and labor dissatisfaction have added pressure. The brand hopes exclusive beverages can offset some of these operational challenges.
The Frappuccino Factor
The Frozen Peppermint Hot Chocolate is Frappuccino-based and positioned as a festive shopping companion. Priced starting at $5.95 for a grande, it taps into both novelty and indulgence. The drink’s appeal lies in its holiday exclusivity.
Target Loyalty Perks
Members of Target’s paid loyalty program get early access to the drink before the public. This approach encourages sign-ups and rewards existing customers, blending marketing with sales strategy.
In-Store Holiday Experiences
Beyond the beverage, Target is enhancing its store experience with toy, makeup, and tech demos. Employees are being encouraged to greet shoppers warmly, aiming to make stores feel more inviting and festive.
Market Analyst Insights
Neil Saunders of GlobalData says exclusive drinks are unlikely to dramatically increase foot traffic. However, every little bit helps, especially when a retailer is facing declining sales. Novelty and limited-time offers are part of the “nudge” strategy.
Financial Backdrop for Target
Target reports earnings this week, following layoffs of around 1,000 corporate employees. Sales have fallen for three consecutive quarters, and the stock has lost more than a third of its value this year. The stakes for holiday performance are high.
Could a Drink Really Drive Traffic?
Analysts remain skeptical that one beverage can reverse broader trends. Yet Target and Starbucks are betting that festive fun and brand loyalty will combine to deliver incremental gains. Even a small boost matters during peak shopping months.
