The retailer agreed to purchase Cooking.com and Chefs Catalog, which should broaden online options for Target customers.
The Target Corp. logo is seen on a shopping cart at a store under construction in Chicago, Illinois, U.S., on Tuesday, May 15, 2012. Target Corp., the second-largest U.S. discount retailer, raised its full-year earnings forecast after warm weather helped drive sales in the first quarter. Photographer: Tim Boyle/Bloomberg John Griffith
Target Corp. is cooking up a new kitchen-based business.
The Minneapolis-based retailer said Thursday that it will create a new subsidiary called TCC Cooking Co. anchored by its new acquisitions of Cooking.com and Chefs Catalog.
Terms of the acquisitions, which close in 30 days, were not disclosed.
In a statement, Target multimedia chief Casey Carl said the additions offer expanded online options for customers. “We know consumers are increasingly looking online for cooking solutions to make their lives easier,” Carl said.
Founded in 1979, Chefs Catalog sells cookware, cutlery and kitchen tools with brands like All-Clad, Le Creuset and KitchenAid. Luxury retailer Neiman Marcus owned the business before selling it to private equity firm JH Partners in 2004.
Cooking.com operates uniquely branded online stores, including Food Network Store, Calphalon Store and Rachael Ray Store. The website offers 30,000 kitchen products as well as recipes, cookbooks and user-generated cooking content.
Cooking.com and chefscatalog.com boast strong online review sections and recipe forums, multimedia features that allow Target to more deeply engage consumers, said Amy Koo, an analyst with Kantar Retail consulting firm in Boston.
In addition, the deals offer Target interesting cross-channel opportunities, such as selling merchandise from Cooking.com and Chefs Catalog in Target’s physical stores.
But for now, consumers will not notice much change, Target spokesman Eric Hausman said. Cooking.com and Chefs Catalog will retain their own employees, websites and brands, though Target could seek more related acquisitions in the future. Chefs Catalog CEO Tim Littleton will run TCC Cooking Co. and report to Target’s Carl.
Aside from relaunching Target.com in 2011, Target’s latest dealmaking arguably represents the company’s most aggressive foray into e-commerce yet. Over the past years, the retailer has slowly but surely added muscle to its digital operations. The retailer has rolled out brands exclusively on Target.com, opened an office near Silicon Valley and invited outside developers to redo Target’s mobile offerings.
“Looking out at Target’s broader multichannel strategy, [the two acquisitions are] a significant play in that direction,” Hausman said.
It’s no coincidence that Target’s online gaze is fixed on cooking and kitchenware. The company has increasingly touted its food offerings, through its P-Fresh grocery format and a new marketing/social media campaign that blends the retailer’s fashion sensibilities with food in a tongue-in-cheek manner.
In fiscal 2011, food made up 19 percent, or $13 billion, of the company’s nearly $70 billion in annual revenue compared with 16 percent, or $10.4 billion, of Target’s total revenue two years prior.
Koo said Target’s acquisitions of Cooking.com and Chefs Catalog gives them instant credibility among kitchen enthusiasts.
“Target has been focused on building its Internet business the last few years,” Koo said. “These deals give them the more well-known brands” in cooking and kitchenware that can set the retailer apart from the competition.
Thomas Lee • 612-673-4113