Photo: iStock | Target
Will Baby and Toddler Foods Fuel Target’s Private Label Expansion?
Target has expanded its Good & Gather private label brand to encompass food for babies and toddlers as the retailer continues to push its house selection into new product categories. The move could help Target harness the power of private label growth in a category where quality is top of mind, building loyalty with shoppers while boosting sales for the company.
Private label products have been steadily shedding the perception that they are inferior to national brands, and rising food prices have accelerated this transformation. A recent survey by Attest found that 58% of Americans are “very likely” to purchase private label items, while another 27.3% are “somewhat likely” to buy private label products. In comparison, less than 4% said they are “unlikely” to buy private label brands.
Additionally, a study by FMI found that 41% of consumers have purchased more private brands since 2020, and 30% say that higher grocery prices were the reason for doing so, according to SmartBrief.
All Good & Gather products, including the new baby and toddler foods, play into private label brands’ newfound status as high-quality products. The entire label is free from artificial flavors, synthetic colors, artificial sweeteners, and high fructose corn syrup. The latest additions to the line aim to combine an emphasis on health with items that will appeal to little ones, including teethers, yogurt bites, bars, and biscuits in flavor combinations ranging from strawberries and beets to apples, cinnamon, and spinach.
Price matters too, and most of the new items will be $5 or under. While inflation may be slowing down, it remains at the top of many shoppers’ minds, and parents in particular are looking for economic relief wherever they can find it. A December 2022 study by the Pew Research Center found that 25% of parents said there were times in the past year when they weren’t able to afford food for their family or pay their rent or mortgage. Having a less expensive option from an established brand could help Target bring in these shoppers and keep them in its stores.
Good & Gather’s kid-focused assortment is expanding beyond toddlers as well. The company is also launching an “assortment of new lunchbox-sized items” in time for the back-to-school season, Target Chief Growth Officer Christina Hennington said on a call with investors. Rolling out affordable food options for children of all ages could be a great strategy for Target to fuel its growth and continue outpacing Walmart.
Discussion Questions
DISCUSSION QUESTIONS: Will the focus on baby and children’s products help Target penetrate a new market for its private label goods? Does consumers’ current emphasis on less-expensive products make this a particularly good time to expand private labels into new categories?
Poll
Loading …BrainTrust
Neil Saunders
Managing Director, GlobalData
Lisa Goller
B2B Content Strategist
Target’s Good & Gather range has been a huge success. The products look and taste far better than the Archer Farms and Simply Balanced lines that they replaced, and they have helped to make Target’s own brand food offer more cohesive and compelling. As such, it is not surprising that the company is expanding into baby and toddler foods. Target already has a strong kids and baby business, built off its general merchandise proposition and brands like Cat & Jack. An improved food offer will encourage more parents to explore the grocery aisles and should earn Target some incremental dollars.
Target’s new private label foods will help parents nourish the whole family for less. This line extension reflects demand for quality, health and value, and it will increase Target’s desirability.
Consumers’ price consciousness makes it the perfect time to promote private labels as worthy alternatives to national brands.
Target has been one of the leaders in the industry when it comes to private-label merchandising. From food to apparel to home decor, they are the envy of their competitors. One of the key strategies in this area is quality, of course. Target has more than earned credibility with consumers in this area. Private Label success is also about keeping the program fresh with new brands that position their products perfectly for their targeted market. Mom and baby has always been a strong focus for Target. Good & Gather promises no artificial ingredients or flavorings. This aligns well with what parents seek when choosing healthy food for their kids. This alignment between the brand and Target’s guests feels perfect. This should be a huge hit for Target.
It seems every year in the past 50 years has been a record for a year for private labels. The growth has been driven by inflation (2022 up double digits). Also, by offering better products (President’s Choice, et. al.). The annualized growth rate over that period has been more than 5%.
Target’s move into baby foods is a big if. The product is promoted as healthy. If healthier than branded products, this will be a big win. But they all are factory foods when you come down to it.
The cynic in me says, “Why would you give a baby anything made in a factory?” However, we will. I guess I trust Target more than others.
I believe baby food is a good progression for Good and Gather. They have set the standards for the brand and they keep expanding to the line with cleaner/good for you products.
Gene’s last line in his post reminds of the movie “Baby Boom” (I am aging myself) but it was about breaking into the baby food business with homemade baby food that was different than what was in the market (at the time). When they were thinking about where to move the headquarters, they said “Country Baby made in Cleveland?” Doesn’t sound really country…. At any rate, they will do well with this expansion.
I believe it will be a “muted” success due to the fact that the demographics are weakening. Families are not having as many children, however this is a great way to lure new families into Target.
This makes a lot of sense given Target’s usual audience. I’m sure this will be quite successful.
Based on the current state of the consumer and the upcoming younger generations who seek value-based products in non-discretionary categories, this will be a big win for Target. While demographics point to people having fewer children, those kids will grow up knowing (and recognizing the brand). My son, when he was two years old, told me “Everyone runs on Duncan”. So for those naysayers who think young kids don’t remember brands; they do!
Expanding the Good and Gather brand assortment into new areas that are important to some of their most valuable segments is smart. As I remember, baby formula and baby food are frequently purchased and maybe a trip driver but they are obviously purchased for a short time. Frequent trips with young ones may likely lead to long-term loyal customers. Why give young families another reason to go to another store?
Let’s answer the last question first: you bet! Altho I’m not going to abandon my disbelief in the theory that grocers are all price gouging, I AM willing to go along with the idea that many brands are taking advantage of loyalty….at their peril.
I think Target’s latest foray will be like their prior (grocery) forays: OK, but not overwhelming, I don’t think it’s the execution, per se, it’s just that there really aren’t enough Targets around to be convenient for most people; a recent trip to buy some towels – they aced that one! – also involved a detour to the pantry section: some prices were great – and out-of-stock – and many were just meh!…I’m not going to drive ten miles just for meh!
Yes, these products will help Target continue to grow their private label brand, as Target seeks out new categories to enter their private label brands. Because they are positioning these as low-cost private label brands that have no artificial anything, but instead embrace an all natural position, the consumer perceives the Target private label brand as a premium brand, that competes in the organic/all-natural category, but at a discount price.
High quality private label brands have the ability to differentiate retailers. Target has tried across a variety of categories and has seen significant success in Cat & Jack as well as Good & Gather. Both brands with strong appeal to families. Adding in baby and children is a no brainer as consumers continue to look for less expensive alternatives to national brands.
Of course, in this economic climate, private label is having a (good) moment. Historical consumer insights suggests consumers who try new brand tend to stick with them for a while.
Therefore, this is a ripe moment for Target and Good & Gather both short and longterm. However, Baby is one category where quality reigns supreme. Target will have to earn their fair share of wallet by first convincing picky moms that Good & Gather is as good as the leading brands. That’s really where the rubber will meet the road in this experiment.