Target looks to expand the reach of its $1B+ Good & Gather grocery brand
It’s probably safe to say at this point that the Target-owned Good & Gather grocery brand has lived up to the retailer’s expectations. The line, which launched last September with 650 SKUs in the chain’s stores, has helped drive more Target runs to the tune of $1 billion+ in sales. Target is looking to build on the momentum created by the brand during the novel coronavirus pandemic by adding another 600 items to the brand’s lineup.
New Good & Gather additions will bring the total number of SKUs in the line to around 2,000, covering virtually every grocery category. Among the new items are bite-size everything crackers, butternut squash pasta sauce, frozen uncured pepperoni pizza, frozen zucchini spirals, jalapeno avocado hummus and meatless burgers. Each item, like the entire Good & Gather line, is made without artificial flavors and sweeteners, synthetic colors and high fructose corn syrup. Select items from the line will be available on target.com in addition to the chain’s stores.
“Food plays such an important role in our guests’ lives,” Stephanie Lundquist, president, food & beverage, Target, said in a statement. “And now, as guests are eating and cooking at home — and appreciating good value — more than ever, Good & Gather’s delicious, high-quality assortment and affordable price continues to set Target apart, while helping our guests discover the joy of food every day.”
Target has been looking to grow its grocery business as a means to drive more frequent traffic to its locations. Grocery sales, pre-pandemic, represented about 20 percent of the chain’s total. Walmart’s, by contrast, drove about half its revenues from grocery before COVID-19 hit.
CEO Brian Cornell, speaking on the retailer’s earnings call last month, said Good & Gather has helped grow Target’s own-brand food and beverage business more than 30 percent in 2020, “significantly outpacing the market and growing market share.”
CNBC, citing UBS as its source, reports that Target was the seventh-largest grocer by sales in the U.S. with three percent of the market at the end last year. The top two on that list were Walmart with 21 percent of the market and Kroger with a 10 percent share.
- Good & Gather’s About to Get Bigger—and *Even More* Delicious – Target Corporation
- Target revs up its grocery game with hundreds of new products, including gourmet pastas and coffees – CNBC
- Target Corporation (TGT) CEO Brian Cornell on Q2 2020 Results (Earnings Call Transcript) – Seeking Alpha
- Will a new grocery private label spur more Target runs? – RetailWire
DISCUSSION QUESTIONS: How would you rank the strength of Target’s Good & Gather own-brand compared to competitive private labels offered by its grocery rivals? What must Target do with and beyond Good & Gather to grow its share of the grocery market?
Richard J. George, Ph.D.Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Richard J. George, Ph.D.Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Richard J. George, Ph.D.Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Richard J. George, Ph.D.Professor of Food Marketing, Haub School of Business, Saint Joseph's University
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20 Comments on "Target looks to expand the reach of its $1B+ Good & Gather grocery brand"
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Managing Director, GlobalData
When it first arrived in stores I was disappointed by Good & Gather – mainly because the offer was so piecemeal. However as the range has grown so has my opinion of it. Not only do the products look nice but the reformulation of ingredients and recipes means they taste really good. This is backed by a few surveys we have conducted among Target shoppers – the appeal of the Good & Gather brand has grown over time. In short, this will help Target grow its share of the grocery market. However I still maintain that they need to do more with range development and in-store offer if they are to move to the next level.
Consulting Partner, TCS
Target has been a relatively late entrant into grocery. It’s great to see them ramping up the private label brand. Success in private label needs high degree of customer trust to encourage customers to bypass more well known brands, particularly in highly sensitive categories like grocery. It is to Target’s credit that they executed well. It should spin a stronger virtuous cycle.
The first Super Target opened in 1995 — the first Walmart Supercenter opened in 1988. So Target has been attempting grocery for the past 25 years.
It took Walmart much less than 20 years to become a very effective grocer.
So I would not call Target a late entrant. I would call Target a company who has always refused to spend the labor necessary and make the adjustments to its logistics systems necessary to get the grocery business right.
I think they may finally be getting it this time.
Founder, Branded Ground
I know we’re not *really* supposed to self-reference, but I LOVE this private label brand. It fires on all cylinders — novelty, delicious products, great design/branding and addressing foodie trends (healthy, quick and easy). I think they’ve set a new bar for the private label playbook, and this is an excellent strategic move considering their struggles with the grocery category. Will it drive trips and baskets? We’ll see — it’s sure driving mine.
Professor of Food Marketing, Haub School of Business, Saint Joseph's University
Target has recognized that its own label can be a real point of differentiation when shoppers consider which grocery store to visit. Unlike the early days of private/own label in which low price, threshold quality was the norm, the Target private label offerings of high-quality assortment and affordable prices are a difference maker. Going forward, more of the same on own label and greater investment and presentation of fresh products (meat, produce, etc.).
Loyalty & Marketing Strategist, Comarch
I absolutely agree with you, Richard! Today’s consumer is more health conscious and reads the labels to understand what they are putting in their body. Target’s move to provide these healthy options through their private label brand is a great strategy and meets consumer need and demand.
Senior Vice President Marketing, PDI
Good & Gather’s share of the grocery market grew because Target’s share of grocery market grew. The quality of the brand is fine, but consumers buy Good & Gather out of convenience. Consumers buy it because it’s in the Target where they are already shopping. If Target plans to distribute the brand outside of Target, they are likely over-estimating brand loyalty.
I would argue that the reason consumers bought the brand is because the other national brand options they wanted were out of stock, so they just took this brand as a last resort. But forced trial can be a way by which to gain customers if they like what they were forced to try…
Senior Vice President Marketing, PDI
Valid point. I have indeed purchased this store brand for this reason. I’ve also bought the brand again, because it was high-quality. Really, if Target wants to increase in-store grocery sales of their brand, they should make meal deals. Buy X (name brand item), get Y and Z (Target brand items) for free. With name brand item paying a promotional cost that covers Y and Z.
CFO, Weisner Steel
Perhaps they should try the Aldi approach and be ALL private label. Of course the downside to that is, if your overall operation isn’t compelling or you can’t keep your own labels in stock, people won’t come back.
I don’t think this would work well for Target based on who Target’s customer is, in the grocery category. While Target is very private label heavy throughout the store, in the food area Target actually has a pretty heavy assortment of branded items, including some items I cannot find elsewhere in various categories. While Target’s customer seems to be happy with private label items in most non food categories I just don’t think the customer is there yet on food, and also do not think Target’s food private label has a good enough quality or price to justify being the only item on the shelf. Going only private label would kill their grocery sales. They could try to shift to that model over time, a long time, like 10-15 years.
CFO, Weisner Steel
I agree: mine was more of a hypothetical “devil’s advocate” argument, and I think you’ve shown – in this case at least – the devil shouldn’t get his due. Target needs to work on what should be without controversy: keeping the shelves filled. Going forward there will be less and less excuse for not finding what you want (whatever brand it may be).
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
A private label war is easy to win. Make the products as good as, if not better than, the national brands and charge less. It appears Target has done that. Anything less than that is just going through the motions.
Managing Partner, Advanced Simulations
I’m not sure expanding higher-end products is the ideal move AT THIS TIME. When cash is tight for many people, butternut squash pasta sauce is pretty low on the list of items needed. Adding high-end products might be fine in the future, but I don’t think it’s going to drive business into Target – if you’re not buying food at Target now, you’re not buying food there in the near future.
Merchant Director
I like the Good & Gather product line, packaging, etc.- I like what it stands for but I also know it was a reiteration of something that was already in place that moderately executed across the chain. Now that Target has put a stake in the ground, the success of Good & Gather is very important – my suggestion would have been to wait until the entire line was developed to do a big brand launch. The line was pretty small when it did launch and I just don’t think it made a big splash but adding more assortment is a promise that Target is committed to the success of the line.
Founder | CEO, Female Brain Ai & Prefeye - Preference Science Technologies Inc.
Picking up frozen and packaged private label food products while shopping Target is a really nice convenience. Crossing the chasm to a full-blown grocery store with a deep variety of perishables and selection is a different consumer need.
Strategy & Operations Transformation Leader
Target has truly capitalized on the significant value proposition that private labels offer their price-conscious consumers. The rise of quality private labels, such as Target’s Good & Gather, is a critical strategy for grocery operations. Especially as it provides high quality, diverse products at the price points that can very effectively compete with the branded CPG items.
Consumer behaviors are shifting, as well as how much they will pay for grocery items. Target has stepped up its private-label game and is a formidable opponent to the national CPG brands. A solid private label strategy can also help to increase consumer loyalty to the Target brand, and essentially become the one-stop shop for all their consumer’s grocery items.
Consultant, AdoniisCollections.com
Great quality and great packaging! Target needs to continue where possible with growing the brand and offerings, but really having a great private label is simply a Win-Win for all.
CFO, Weisner Steel
A brand is only as strong as who owns it (there are exceptions of iconic brands in failing companies, but this isn’t one of them). Target’s grocery is the weak link in its operation, so G&G follows.
What should it do? I’ll offer up a usual remedy: work on out-of-stocks. In my visits to Target over the past few months, I’ve repeatedly seen the same items out of stock … or are they even still carried? Sure this is a difficult time, but three months?!