Target and Starbucks Launch Exclusive Holiday Drink as Both Brands Battle Slumping Sales

Target and Starbucks are joining forces this holiday season in a bid to win back cautious consumers and revive slowing store traffic. Beginning Monday, shoppers will find a new Frozen Peppermint Hot Chocolate available only at Starbucks cafés located inside Target stores – the first holiday beverage collaboration between the two companies.

Nearly all of Target’s 2,000 U.S. stores house a Starbucks, making the partnership a major seasonal push at a time when both brands are feeling the strain of shifting consumer behaviour. Inflation, tariffs and weakened sentiment among low-income shoppers have dragged down discretionary spending throughout the year, hurting chains that rely on impulse purchases or premium-priced goods.

Target, which has posted two consecutive quarters of declining foot traffic, has also faced backlash over its handling of diversity, equity and inclusion initiatives. Starbucks, meanwhile, is one year into a turnaround effort under its new CEO, contending with store closures, layoffs and repeated labour disputes.

Despite these pressures, both companies are hoping the popularity of Starbucks’ limited-edition beverages will help draw customers into Target stores during the crucial holiday sales window. Target described the new Frappuccino-style drink as the “perfect companion for holiday shopping runs.”

Retail analyst Neil Saunders of GlobalData told CNN the collaboration fits into Target’s push to bring “more novelty” to in-store visits – something consumers increasingly respond to. Exclusive menu items, he said, could entice curious shoppers even if the overall impact on traffic is modest.

The drink starts at $5.95 for a grande, with early access available to members of Target’s paid loyalty programme before the nationwide release on Tuesday.

The partnership is one piece of a broader strategy to energise Target’s holiday performance. The retailer is rolling out in-store demonstrations for toys, makeup and tech gadgets throughout November and December, and has reportedly encouraged staff to create a more inviting atmosphere for shoppers.

Target reports its latest earnings on Wednesday after announcing roughly 1,000 corporate layoffs last month. Sales have fallen for three straight quarters, and the company’s stock has dropped more than 30% this year.

Saunders cautioned that the drink alone will not “move the foot-traffic dial in a major way,” but added that in a challenging retail climate, “every little bit helps.”