LAS VEGAS — When Target entered the grocery space just over a decade ago, the company saw incredible potential for growth and quickly turned it into a $15 billion business. But the rapid expansion into fresh food and beverage left the grocery department without much of a point of view, said Stephanie Lundquist, executive vice president of food and beverage at Target, during her keynote address at Groceryshop in Las Vegas.
"In the rest of the store, we were 'Tar-zhay,' but in food, we were simply functional or transactional," said Lundquist.
Today, that is no longer the case. Grocery makes up one-fifth of Target's business and the food and beverage category has seen eight straight quarters of comparable sales growth, she said. The company has 10,000 team members dedicated exclusively to its grocery department to support operations and service.
"We are in the food and beverage business to drive growth for our company," said Lundquist.
In a show of increasing value put on its growing grocery business, Target launched Good & Gather, a private label food and beverage brand that hit store shelves Sunday. The brand will roll out in several stages beginning with 650 products now, 1,000 more in the spring and another 1,000 later, reaching more than 2,000 items by the end of next year.
"This is the biggest brand launch we've ever done in food, and when it's completed next year, Good & Gather will be the biggest own brand Target offers. Period," said Lundquist.
This means that the company will phase out existing private label brands Archer Farms and Simply Balanced, as well as reduce the scope of its Market Pantry line. More importantly, Lundquist said it will give Target a very clear position in food and beverage, with a brand that elevates the grocery department and reflects the innovation and value customers expect from the retailer.
"I think every retailer probably has a lot to gain by investing in their private brand and really the way to do that is to be strategic in determining what that private brand should stand for, what multiple brands should stand for as a complete offering and where it plays within the store," Jean Ryan, senior director of brand strategy and design at consulting firm Daymon, told Grocery Dive in an interview following Target's initial launch announcement for Good & Gather.
For Target, the Good & Gather line was designed based on hundreds of hours of consumer research, where Lundquist said the Target team listened to customers to learn what they want. They ate with them. They shopped with them. They even came into their homes to talk about their shopping habits. The company also saw that customers were gravitating to national brands like Clif Bars, Oatly and Annie's, which showed their interest in better-for-you options.
Good & Gather addresses this consumer interest in healthier products and quality ingredients. Lundquist told the audience at Groceryshop that all the private label line products will be free of artificial flavors and sweeteners, synthetic colors and high-fructose corn syrup. The brand will span all grocery categories including produce and deli, salad kits, prepared meats and pasta.
According to research from Daymon, over 80% of shoppers trust private label brands as much as or more than national brands. Ryan said some of the more interesting private label brands coming to market right now are aligned with consumer preference for plant-based products, organic foods and items with healthier attributes.
"Those are the ones that I think are doing a good job of seeing and meeting consumer needs — often sometimes even before national brands get there," she said. As retailers like Target pay attention to what their shoppers want and start to define their own brands based on that, they will be able to innovate and experiment even more with their private label offerings.
With Target's plans to continue pursuing growth in grocery, Good & Gather could help the company offer more on-trend food options and meal solutions to its shoppers under one cohesive line. "Our goal in grocery is to be Target," said Lundquist.
With 2018 being the company's best year for food and beverage in more than a decade and 2019 looking even better, Lundquist said Target's strategy is working and guests are responding. No longer is Target simply functioning in grocery, it is here to compete.