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Target Unveils a Christmas Plan to Respond to Walmart’s Price War

Target (TGT) has long been a shopper favorite during the holiday season, popular for its deft mix of discount pricing and a sense of fun in its products and marketing.

So this Christmas period, Target will be selling its usual eye-catching mix of holiday exclusives, including a Target-only Garth Brooks 10-CD boxed set and toys such as a Wonder Woman driving figurine. It’ll also be rolling out a multi-episode TV campaign inspired by the holiday ballet “The Nutcracker,” called “Toy Cracker,” featuring John Legend.

At the same time, shoppers can expect to see Target, eager to return to sales growth, focus more on deals and value than it did in 2015–since it is, after all, a discount retailer.

“We’ve got to couple great experiences and great product with really simple and well-timed promotions,” Target CEO Brian Cornell told reporters at a briefing in New York on Tuesday.

As an example of the latter, Target is trotting out a new kind of deal, such as offering $10 off a $50 purchase on a different product category each week, rather than just on individual products. In December, in the run-up to the peak of the holiday season, the promotion will be expanded to allow guests to save $25 on purchases of $100 or more in a given category.

Some 60% of messaging in Target’s ads and social media campaigns will focus on value, up 20 percentage points over 2015, according to the company.

Last quarter, Target reported a 1.1% drop in comparable sales, dramatically underperforming Walmart (WMT), which is engaged in price warfare with rivals but still saw its comparable sales rise 1.8% in the second quarter.

During the holidays last year, Target offered 10 days of deals, something that raised comparable sales 5% on those days. So the retailer will be bringing that campaign back.

Target will also extend free shipping with no minimum order size through January 1st, something Cornell said would ease the pressure on its e-commerce infrastructure ahead of Christmas itself.

What’s more, Target will try to win low-price cred by offering some 1,000 new pieces from Target’s newly introduced line for kids, Cat & Jack, for less than $30. (Cornell said Cat & Jack is poised to become a $1 billion brand.)

Still, Target will continue to rely on a sense of fun and differentiation to keep its shoppers from drifting to Walmart.

An early effort in the holiday season is an ad campaign surrounding Target’s upcoming exclusive box set from country superstar Brooks, the best selling solo artist in U.S. history, that will run during the Country Music Awards on Nov. 2. Last year, Target’s exclusive edition of Adele’s latest CD brought in millions of additional shoppers.

Some 1,800 toys will be available exclusively at Target, some 15% more than last year. Those include a hoverboard, and Star Wars items (Target says it was the top seller of Star Wars merchandise last year.)

As for the “Nutcracker”-inspired campaign, the eight-minute musical (John Legend will play the role of the Rat King) will be aired on ABC in two four-minute segments during the network broadcast premiere of Disney’s “Frozen” on Sunday, Dec. 11.

A fictional character that will appear in an upcoming Target holiday ad campaign. Courtesy of Target

As part of its efforts to capture revenue from impulse shopping, Target is introducing Wondershop, a prominent front-of-store area where it will collect an assortment of 2,000 new seasonal items in a shop-within-a-shop.

Still, one of biggest changes this year will certainly be a bigger emphasis on deals, keeping customers aware of low prices at a time when shopper traffic has been falling at Target.

“Value is the #1 determinant of where a guest will shop. Deals and value are absolutely critical.” said Rick Gomez, Target’s senior vice president of marketing.