Target’s Favorite Day offers snacks and indulgences.
Target
Target is launching a food and beverage brand focused on snacks and indulgences, as the retailer aims to give customers reasons to keep coming back, even after the Covid pandemic.
The new private label, Favorite Day, will include more than 700 products such as premium ice cream, bakery items, drink mixers, mocktails and cake decorating supplies. It will hit store shelves and Target’s website in early April.
Rick Gomez, director of food and beverage, said that Target has been developing Favorite Day for more than a year, but said it has gained relevance as people eat more meals at home and want little ways to escape a stressful period and monotonous.
“Now, more than ever, people need a little reward, a little indulgence, a little joy each day,” he said.
Groceries are less profitable than other goods Target sells, but they generate traffic. Target tried to differentiate itself from competitors and improve margins by introducing exclusive brands in all categories of goods, including food and beverages. Almost two years ago, the company launched a supermarket brand called Good & Gather and announced plans to eliminate two own brands, Archer Farms and Simply Balanced. Good & Gather generated about $ 2 billion in sales last year.
Good & Gather is Target’s flagship brand, with more than 2,000 products. They are made without artificial flavors and sweeteners, synthetic colors and high fructose corn syrup – and include a new signature label with sauces for gourmet pastas, coffees and pizza. Favorite Day, on the other hand, is geared towards treats. Target has another own food and beverage brand, Market Pantry, which is made up of low-priced basic products, such as flour and coffee filters.
The pandemic has increased Target’s profile and share price. As shoppers reduced trips to the store, they gravitated toward the large retailer because of its wide range and online options, such as sidewalk pickup. Some consumers have directed more dollars towards items such as decorations, gym clothes and video game consoles, as they spend less on travel or dining out.
Comparable sales for Target, a key metric that tracks sales in stores that have been open for at least 13 months and online, increased 19.3% in fiscal 2020 compared to the previous year. Digital sales increased 145% year on year. Food and beverages generated about $ 18 billion – or about 19% – of Target’s total $ 92.4 billion sales in 2020.
The company’s stock rose almost 67% in the past year. But the stock retreated from its 52-week high of $ 199.96, reached on January 13, due to concerns that the 2020 performance will be hard to beat.
Target gained about $ 9 billion in market share last year, but did not say how much came from food and beverages or specific categories of goods. The growth of the food retailer, however, has outpaced the industry and almost all major competitors, according to market research firm IRI.
Target’s total sales for food and beverages grew by almost 21% in 2020 compared to the previous year, according to IRI. This is more than the sector’s growth rate of around 15% and double that of Walmart, the country’s largest grocer, which saw total food and beverage sales increase by about 9% in the year.