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Analysis: Target’s new grocery brand gives it advantage over many other grocers

Over the past few years, Target has been a master of own brand development. Its labels in everything from fashion to party goods have been well-conceived, nicely executed and, most importantly, have resonated with consumers. They have also helped to differentiate Target from other retailers and have played a role in protecting margins as price comparison is more difficult with exclusive labels.

The one area where Target has been lacking, to date, is grocery. Aside from the simple store refreshes, this is an area that has not been advanced. As a result, while they are perfectly functional, Target’s grocery aisles feel neither innovative nor special. Target is hoping that its new brand, Good & Gather, will change that perception.

In our view, the new label is a major step forward that introduces excitement and interest to the food department. Good & Gather both creates a more cohesive and compelling food offering as well as being a platform for the launch of some new and interesting lines which should entice consumers.

The positioning of the brand, which offers great taste and good value for money, is correct for Target. Our own customer data show that Target’s shoppers also frequent a wide variety of other outlets from Whole Foods all the way down to dollar stores. This means there is a significant opportunity for Target to enlarge its share of wallet in food, by offering products that are relatively inexpensive but where there is no compromise on taste and quality.

The inclusion of sub-brands - such as organic, kids, premium and seasonal - within the Good & Gather family is smart as all of these components have tremendous growth potential. Target is now able to tackle these under one banner, which saves them from creating confusion with a raft of different brands and lines.

Overall, we are impressed with Target’s Good & Gather initiative. We believe that it will help the company drive the next phase of its growth in the lucrative, but highly competitive grocery market. In essence, it gives Target a near and medium-term advantage over many other grocers which have neither significant invested in own-label or their stores.
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