Is Target & Warby Parker's Partnership A Bigger Gamble Than It Appears?
In the latest edition of Omni Talk’s Retail Fast Five, sponsored by the A&M Consumer and Retail Group, Mirakl, Simbe, and Ocampo Capital Chris Walton and Anne Mezzenga discuss: Target teaming up with Warby Parker to bring in-store eyewear services to select locations—but is this a brilliant retail move or a risky bet? 🤔 In this week's episode, sponsored by the A&M Consumer and Retail Group, Simbe, Mirakl, and Ocampo Capital, we break down how this partnership benefits both brands, potential operational challenges, and why Warby Parker’s slow expansion rate raises questions. Should Target just acquire Warby Parker outright? Let’s discuss!
For the full episode head here: https://youtu.be/rTReEPz6yR8
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Transcript
Target and Warby Parker are teaming up.
Speaker A:According to Yahoo Finance, Target Corporation and Warby Parker are partnering to bring designer quality, affordable eyewear to even more consumers through the retailers newest shop and shop, Warby Parker at Target.
Speaker A:Each Warby Parker at Target Shop and Shop will offer products and services including glasses, sunglasses, contacts, eye exams and vision tests that are consistent with the eyewear brand's current omnichannel experience.
Speaker A: ll open in the second half of: Speaker A: d shops are slated to open in: Speaker A:Chris, are you buying or selling the Target Warby partnership?
Speaker B:Interesting.
Speaker B:And I, I gotta tell you, I'm, I'm a little mixed on this one I think.
Speaker A:Really?
Speaker B:Yeah, yeah.
Speaker B:For Target and all the crap it's taken around its Target, you know, reputation, I think, I think it's a good move.
Speaker B:It's a no brainer and it definitely re establishes that positioning, you know, by way of the partnership.
Speaker B:For Warby though, and I, I've got a lot of unanswered questions.
Speaker B:First, first let's go back and look at Warby.
Speaker B:Let's look.
Speaker B:Yeah.
Speaker B:First let's go back and look at Warby in general.
Speaker B:Right.
Speaker B: le, Warby's been around since: Speaker B:and Canada.
Speaker B:Okay.
Speaker B:That means they've opened roughly 18 stores a year since they started.
Speaker B:And that's for a concept that could literally be in every town in America.
Speaker B:Like every town has, you know, an eyeglass store, you know, or for the most part every major town does.
Speaker B:Which tells me honestly, if I'm thinking critically about this, or at least opens a door for this thought that they don't have their operating model down yet because that pace is pretty slow for a business that's been in operation for 15 years.
Speaker B:Right.
Speaker B:I mean look at like, look at aldi like opening 250 stores, you know, like, it's crazy.
Speaker B:But, but so, so now they're going into Target.
Speaker B:Okay, sure, Warby is getting a great deal.
Speaker B:Right.
Speaker B:They're getting a smoking deal on those five stores because Target really needs them for all the other things we've already alluded to.
Speaker B:But the operating dynamics are going to be different.
Speaker B:One, you're now inside of a Target, very different than what Warby knows.
Speaker B:Two, the locations I'm in general, I'm guessing, having run Target, stores are going to be much smaller that, you know, are going to afford Warby, much less showroom space than the traditional stores that they're used to operating and much less backroom space too.
Speaker B:And three, you know, all that explains why only five have been announced yet, because Warby probably understands there's a lot that they don't know in terms of what this is going to look like, how it's going to work operationally, can they succeed, can they get the profit, you know, out of this, this partnership that they want to.
Speaker B:But.
Speaker B:So net, net, net net.
Speaker B:I like the move.
Speaker B:I just wonder if five years from now we'll really see Warby Parker inside of Targets everywhere.
Speaker B:And is the incremental benefit against the cost for either party really going to be that high?
Speaker B:Because at the end of the day, and the question that I have is, yeah, and this is a kind of a question for the Target leadership again too, in terms of how well are they seeing around the corners?
Speaker B:Why isn't Target just buying Warby now before helping to make it more valuable and then losing its negotiation leverage in the long run?
Speaker B:Why don't they just make it part of Target like if they really see the long term value here?
Speaker B:So, so that's why I'm mixed on this.
Speaker B:I think it's, it's good, it gets the Target back.
Speaker B:But, you know, I got a lot of questions in the long run.
Speaker B:I don't think this is a slam dunk in any way, shape or form.
Speaker A:I don't know.
Speaker A:I think, I think you have to.
Speaker A:This is still a new partnership and I don't know that like, maybe there will be an opportunity to acquire the company if the five locations work, if the tests work.
Speaker A:I actually think this is a great move for Warby because while, yes, you have different, you know, targets are, some are, Targets are owned, some are leased, all the buildings and things like that.
Speaker A:You're essentially working with one landlord as, as Warby here for all of these Target locations, which is much easier, I would imagine, than going into new community, a new location, a new spot every single time and having to work out those negotiations.
Speaker A:I, I would, I would like fact check you a little bit on the size of the operation.
Speaker A:I mean, I think we've seen Warby certainly like in Manhattan, they have a much grander, you know, like, flagship style store.
Speaker A:But I think if you look at the Warbies around here like they're, they're, their space is pretty condensed.
Speaker A:And if you look at the Target opticals, like, there's not huge back rooms at those Warbies.
Speaker A:Like, I've actually looked at the ones.
Speaker B:No, there's probably back rooms.
Speaker A:Yeah, I think.
Speaker A:I think it's.
Speaker A:I think space they can work with.
Speaker A:But I just.
Speaker A:I'm so thrilled, Chris, because I think if you look at the headlines here and how Target is incorporating Warby, it's.
Speaker A:It's available on target.com it's available, like, in the stores.
Speaker A:Like, I just think this is a move from Target.
Speaker A:It's good to see them in the news making the right decisions about how to approach this partnership.
Speaker A:And I do think that starting small and starting with the five locations is.
Speaker A:Is important for whatever the future of this partnership looks like.
Speaker A:And quite frankly, I was really surprised to.
Speaker A:To see that they only mentioned that once yesterday in their earnings call, you know, and they weren't talking about this as a growth opportunity, you know, as much as they were about Wicked last quarter when they were talking about that.
Speaker A:Like, I think this is something that really could show some great potential for Target and I think, you know, brings some traffic back into them.
Speaker A:Warby hasn't had a crazy growth trajectory, but there's still some more cachet in this brand that I think we have to take for, like, take into account here.
Speaker A:If this becomes the next lens crafters, Warby's lost all of its cool.
Speaker A:So I think there's still some, like.
Speaker A:There's still some, like, scarcity that has to be available to get the traffic drivers that I think Target and Warby are going to need with this partnership.
Speaker A:But.
Speaker A:But, yeah, well, I think.
Speaker A:Oh, go ahead.
Speaker A:Yeah.
Speaker B:No, no, I was going to.
Speaker B:I was.
Speaker B:Well, I was going to actually have you put your money where your mouth is on that.
Speaker B:So, like, the.
Speaker B:One of the locations is the Bloomington store, probably less than two miles from another Warby location.
Speaker B:Of those 200 that we mentioned, which is right down the block from us.
Speaker B:Both of these, given your druthers, which one are you going into if you just need eyeglasses and an eye exam?
Speaker A:I.
Speaker A:I don't know that that's.
Speaker A:I don't know that that's the question.
Speaker A:I guess for me, it's like, what do I need to get done on a Saturday?
Speaker A:I need to go get new glasses and I need to pick up essentials.
Speaker A:So if that's the case, I'm going to the Bloomington one because I can.
Speaker B:Do you're coordinating your trip around your appointment?
Speaker A:I think so, yeah.
Speaker A:Yeah.
Speaker A:I mean, you'll still have traffic going directly to that.
Speaker A:To the.
Speaker A:A mall where the Warby Parker is here, closest to us.
Speaker A:But if.
Speaker A:If it's a Saturday and I, you know, I don't have to go across the street to go to the Target.
Speaker A:If I go to the mall location of Warby, my house, I can go to one spot and get them all done.
Speaker A:Like, I think there's value there, and I think it's.
Speaker A:It's also exposure of new people, Target customers to this brand who maybe was like, I like Warby.
Speaker A:I don't know much about it, but now when it's in front of them in the checkout lanes, I feel like it's going to happen.
Speaker A:Like, there's just going to be more people engaging with it.
Speaker B:But.
Speaker B:Okay.
Speaker B:All right.
Speaker A:We'll see.
Speaker B:All right.
Speaker B:I like that you backed it up.
Speaker B:Yeah, no, it is.
Speaker B:It's definitely an early test.
Speaker B:I just.
Speaker B:I just have.
Speaker B:I just have a lot of questions operationally.
Speaker B:The other thing is staffing like those.
Speaker B:The Warby stores I've been in are incredibly staffed, too.
Speaker B:And so I'm wondering if that's going to work as you go into targets in the long run.
Speaker B:But anyway.
