Target may remove big food from store shelves
Target is looking to differentiate itself from the competition in grocery and that means, in part, offering products not found on the shelves of other stores. Of course, the items found on those shelves are from the very companies that have dominated grocery for decades — Campbell Soup, General Mills, Kellogg, Kraft and others. So, is Target really ready to walk away from major brands all in the name of differentiation? It just might be.
According to a Wall Street Journal report, Target has informed some of its top food suppliers that it plans to reduce promotions of their brands. Instead, the retailer intends to invest more in four key "signature" categories that represent about 25 percent of its sales: Baby, Kids, Style and Wellness.
"Food," CEO Brian Cornell told analysts on a March 3 call, "is more than 20 percent of our business, and it ties very closely to our focus on wellness."
"Our guest has told us, they expect to have food in our stores, but they’d like us to offer more choices to support their wellness goals, more natural products, more organic, more gluten-free, items that have simple, cleaner ingredient labels."
While many of the large CPG companies have sought to add organics and gluten-free items, primarily through acquisitions, they sometimes face a credibility gap when it comes to Millennials. Younger consumers often view smaller firms that have organic or other health-related features as part of their founding mission as being the real deal while big food is seen as being opportunistic, or worse, predatory.
Target, according to the Journal, plans to segment food categories into three groups: signature, outperform or perform. Signature brands will get full promotional support while perform items will not be featured in ads or displays. The company is still trying to figure out what items will fit into the middle group.
- Target Puts Some Food Suppliers on the Back Burner – The Wall Street Journal (sub. required)
- Target’s CEO Brian Cornell Hosts Financial Community Meeting (Transcript) – SeekingAlpha
- Target looks to bag market share through its grocery biz – RetailWire
Do you think it would be wise for Target to delist large numbers of products from the grocery industry’s biggest food manufacturers? What mix of products do you think would work best for the chain?