Photo: Target
Target begs your indulgence with its new store brand
Target this week released news that it will introduce a new wide-ranging snack products store brand that appeals to American’s desire to get a little decadent and self indulge.
Favorite Day, the new brand, will roll out in Target’s stores on April 5 as part of a shopping event of the same name. The line of more than 700 products, which covers segments such as bakery, beverage mixers, cake decorating supplies, candy, premium ice cream and salty snacks, is described by the retailer as a “high-quality, carefully crafted” and just right for those moments when its customers want to treat themselves.
“We’re thrilled to build on Good & Gather’s success and the strength of Target’s food and beverage business by debuting our new owned brand, Favorite Day,” said Rick Gomez, chief food and beverage officer, Target, in a statement. “Rooted in guest insights and developed by our talented Target team, Favorite Day is a sweet and savory addition that tastes amazing, makes life’s little moments of indulgence even sweeter and continues to differentiate Target’s owned brand portfolio.”
Mr. Gomez, who joined Target in 2013 and was named to lead its grocery operations in February, has received praise for launching the chain’s loyalty programs and for his role in driving its digital growth. Prior to joining the retailer, Mr. Gomez put in more than 20 years working for major brands, including MillerCoors, PepsiCo and Quaker Oats.
Grocery is one of the key pillars of CEO Brian Cornell’s growth plan since the category drives regular Target store runs and online orders for its delivery and pickup services. Target has announced plans to expand its assortment of groceries available for its in-store or curbside pickup programs to include more fresh, frozen and refrigerated items.
“When we studied the behavior of guests who first shopped for these items through one of these services last year, we saw an average increase in shopping frequency of about one visit per month compared with a control group,” said Michael Fiddelke, Target CFO on the chain’s fourth quarter earnings call. “On average, these guests increased their food and beverage spending between 20 percent and 30 percent and, importantly, spent about 20 percent more in other categories.”
- Target’s Newest Owned Brand is About to Become Your *Favorite* Indulgence – Target
- Keep on growing is Target’s mantra as chain announces leadership moves – RetailWire
- Target CEO says record-setting 2020 was no ‘fluke’ – RetailWire
- Target (TGT) CEO, Brian Cornell on Q4 2020 Results – Earnings Call Transcript – Seeking Alpha
Discussion Questions
DISCUSSION QUESTIONS: How likely is Target to replicate the same level of success with its grocery store brands as it has in categories such as apparel? Where do you see the biggest opportunities for Target to grow its market share in grocery?
Poll
BrainTrust
Paula Rosenblum
Co-founder, RSR Research
Lee Peterson
EVP Thought Leadership, Marketing, WD Partners
Another day, another smart move by Target! The whole snacking and indulgence space, from baking to buying ready-made treats, is growing right now and shows no signs of slowing down. So, on that basis alone, it’s a good move to develop an own-brand focused on the segment – especially with a line that looks like it has been designed with the core customer in mind. Moreover, when you look at consumer behavior data, having a great assortment of indulgence based products helps move the needle when people decide where to shop. So this, plus the previous brand developments with Good & Gather, should help strengthen Target’s market share in groceries.
Grocery drives traffic, period. Target has done an exceptional job at curating and building their own house brands, and now turning its attention to grocery will be equally successful in my opinion. With more than 700 products across a wide range of categories, Target is smartly casting a wide net and will no doubt focus on those that perform best. Given the loyalty Target shoppers have and trust in quality brands, I’m sure Target will see many successful product lines emerge.
I feel like the first half of this question implies that Target has not had success with its grocery brands. My sense for it is that this move is exactly capitalizing on its grocery brands’ current success. Target has always been … targeted … (sorry) in its approach to store brands, and that focus almost always pays off. The best way to use store brands is to fill a need that the retailer sees that national brands are not filling. With Favorite Day, I guess you can say box checked – or maybe, target hit? 😉
One thing I think Walmart learned is that you don’t build a private label in grocery and sundries overnight. While this may ultimately prove successful, Target needs some creative ways to get shoppers to actually try it.
Everyone knows grocery is a traffic driver. A profit generator? Not so much. You would think Target had learned that already. Also, having ordered via Shipt during the height of the pandemic, I know that as a general rule, Target doesn’t have the greatest handle on its grocery inventory. I’m just not sure the investment to get everything up to snuff is worth it.
Target has a proven track record in developing and marketing own-brand products. Given they take trends and sales into consideration when making these decisions, I am certain that their snack line will be successful. We all need a treat these days!
I’d give very high odds that Target will be very successful with this launch. They have proven to be excellent students of the market. They learn from market leaders and then offer their own proprietary version. And they are not bashful about their agenda. Target used Champion’s C9 brand to develop their active business and then replaced C9 with All in Motion. I have not studied Target’s grocery assortment, but my guess is that Favorite Day replaces one or a couple of national brands on the shelf — at better value for the customer and better margins for Target. For a retailer as smart as Target, a brand has to be powerful indeed to not be at risk of being replaced by a proprietary version.
While Target will have success with its private label brand, Favorite Day, I can’t help but think of all the vendor brands that funded Target’s own brand development. I guess that’s the price one pays when Target moves palettes of your product. It’s great while it lasts. Target, Walmart, and others track what products are selling. The successful ones become targets (pun intended) for private labeling. Another great conversation between the merchants and the brand managers!
Target’s proprietary brand efforts are really paying off. This is the best possible way to separate themselves from the likes of Walmart and Amazon. Keep it going!
Target is very likely to replicate its ongoing success with own brands, provided it remembers to carefully pick its … well … targets. Own brand grocery strategies call for a scalpel, not a shotgun, so starting with “indulgent” foods was a very smart move. Target should continue to look for grocery categories that fit the psychographics of its shoppers, say, gourmet meal kits.
I believe with the introduction of the Up & Up and Good & Gather labels they have a good start and Favorite Day will be keep building upon that. I know Archer Farms was the umbrella label, but it covered so many products and meant so many things that it got lost when Target decided to get serious about building grocery sales.
I give Target a lot of credit for launching new and reinvented private brands in apparel and soft home over the past few years, but I would be cautious about brand proliferation in grocery. Right now (for example) you can buy Target-branded ice cream under the Market Pantry, Good and Gather, and Archer Farms labels, and now Favorite Day is joining the fold.
This may be a “Good-Better-Best” strategy, but Target is also selling national brands from Breyer’s to Haagen-Dazs using ice cream as an example. I hope Target’s internal brand management team is adept at differentiating between all of these labels.
Target is in a tough spot. Their grocery is not well developed enough to be a go-to — at least not in our neighborhood. Certainly there are superstores which could be. But the Target brand is not around grocery. So I don’t think customers will care enough about these for them to be anything other than an incremental addition.
Also the fashion brands are critical to shopper traffic. One of my students once observed that the only reason she could get her daughter to shop for clothes at Target was that the designer brands made it cool enough. There doesn’t seem to be a similar value here.
Too many food players are focused on offering national brands and me-too private label, making price/promotion the primary differentiator. Creating new brands and product innovation is a standard play in other categories at Target. I am excited to see more of it in food (macarons at national scale). It is the assortment that draws me to walk the race-track at Target on a regular basis.
If my understanding of Target’s soft goods success is correct — and I probably shouldn’t claim patrimony as it’s really the conventional view — it came from offering “better,” i.e. higher quality or more stylish discount goods; or to be more precise, it offered the perception of that. So to do the same in grocery it would have to offer higher quality or more stylish, presumably trendy foods. It’s possible I guess, but it’s a tall order. And that task is complicated by the fact that grocery really isn’t their forte. I’m not sure it ever can be, given the relatively small number of Targets that exist in the universe of supermarkets (Walmart overcomes this seeming shortfall by offering a dominant position in small towns and lower income neighborhoods, a much different demographic than Target … well, targets).
Developing private label programs makes sense in most areas and Target certainly knows that! They do a great job with it and I expect they’ll see some success in grocery. Using data, specifically customer identified data, is they best and smartest way to uncover and grow opportunities — something Target is a relative expert in.