Retail

Target To Introduce New Private-Label Food Brand

grocery produce

Target has announced that it’s launching a new private-label food brand called Good & Gather in a move to boost its grocery business, according to a report by CNBC

The new brand will arrive at Target stores on Sept 15, and Target said by the end of 2020 there will be upwards of 2,000 items being sold by the brand. The items will include things like milk, eggs, pasta, veggies, salads and organic pizza crusts. 

“We’ve been hard at work [on this] for the last couple years,” said Stephanie Lundquist, head of food and beverage at Target. “Food and beverage play such an important role for Target’s business … for the Target experience.”

Lundquist said that about 75 percent of customers, in addition to shopping Target’s regular products, put at least one food item in their baskets when shopping. This also translates into bigger baskets. 

“One of our biggest strengths is the fact that we are a one-stop shop for our guests,” she said.

Brian Yarbrough, an analyst at Edward Jones, said Target has a lot of potential for growth in the sector, and some analysts say Target has never really been strong in the food department, even while it touts its other private-label offerings in departments like clothing and furniture. 

“Grocery is the one spot in their stores they haven’t fixed yet,” Yarbrough said. “But they are in a much better spot than they were four or five years ago.”

Yarbrough said that while Walmart gets upwards of half of its business from customer grocery shopping, Target only gets about 20 percent, which shows that it is ripe for growth.

Target has recently pulled itself out of a sales slump, especially since 2016, when sales dropped 5 percent to $69.45 billion from $73.79 billion a year before. It went up slightly in 2017 to $71.88 billion and then to $75.36 billion in 2018. 

Analysts predict sales of $77.44 billion in fiscal 2019, while Target shares are up 27 percent so far this year. 

The company’s private-label brands are part of what helped, as Target wants to increasingly become the store for items that people can’t find unless they go on Amazon.

“I think the reason they haven’t done as much in food to date … is food is much more competitive,” said Neil Saunders, managing director at GlobalData Retail. “Food is also much higher risk because the margins are lower. … I think the staples are what they are, and for the everyday things you need, Target does a reasonable job.”

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