Own Brand Expansion Vital To Target's Growth Plan
Target’s 2024 fiscal year ended with a thud as the retailer reported a drop in fourth-quarter sales inclusive of the holiday season and a decline in full-year net sales.
But the silver lining in a difficult year for the Minneapolis, Minn.-based retailer was its growing portfolio of more than 40 owned brands that accounted for $31 billion in sales this past year (about 30% of total company sales), with about one-quarter of those proprietary brands each bringing in at least $1 billion in annual sales.
As Target works to bounce back from 2024, the retailer has implemented a multi-pronged plan to recharge sales, which includes continued own brand innovation.
Part of that innovation is the recent launch of Good & Gather Collabs with celebrated chefs, which kicked off March 9 with Chef Ann Kim. The James Beard Award-winner runs acclaimed restaurants Pizzeria Lola, Young Joni, and Hello Pizza in Target’s Minneapolis hometown. The initial assortment now in store includes four premium wood-fired pizzas ($7.49 each) and three restaurant-quality appetizers ($6.49 each).
“This is another example of delivering everyday discovery and delight in our grocery aisles,” said Rick Gomez, executive vice president and chief commercial officer with Target. “It is a big step forward in our journey to make Target a retailer that doesn't just sell food but celebrates food.”
Gomez’s comments came during the retailer's recent investor conference call to discuss fourth-quarter and full-year results.
Beyond the new Collabs line, he said Target’s Good & Gather and Favorite Day own brands combined will see more than 600 new items this year.
“Good & Gather is one of the biggest and fastest-growing grocery-owned brands in the U.S. and on the brink of becoming Target’s first $4 billion own brand,” Gomez said. “For many CPG brands, a dozen new items represent a big year.”
Target is also working to boost its assortment sold under its Essentials umbrella, which includes several of its own brands. This includes up&up, which is close to becoming a $3 billion brand and includes more than 2,000 items, the opening pricepoint dealworthy brand launched in 2024, and Everspring, touted by the retailer as its elevated sustainable offering.
From Target's Rick Gomez...
“Good & Gather is one of the biggest and fastest-growing grocery-owned brands in the U.S. and on the brink of becoming Target’s first $4 billion own brand."
“New brands and brand refreshes are a key tool for helping us meet consumer needs, which is why our relaunch of Boots & Barkley, our pet accessories brand, is so exciting,” he said. “Pet care is a big growth opportunity and new products (recently) set in stores.”
Additionally, Essentials will grow with the addition of 14 new brands in nutrition this spring to build on consumers' interest in wellness. Also, more than 2,200 new baby and toddler items will be launched, with half of those items Target exclusives, including 200 new products from its Cloud Island baby own brand.
With new brands on the way, Gomez said it’s equally important to keep existing own brands from becoming stale. He pointed to up&up, which in his words needed a refresh. Target redesigned packaging graphics, completed improvements to about 40% of the assortment, added new fragrances, and added more sustainable packaging.
The same was done with its All in Motion performance brand. The line was updated with new fabrications, new colors, and new silhouettes with the investment leading to double-digit growth in the fourth quarter.
With a robust product development cycle in the offing for Target with its broad and growing private label assortment, the retailer is also working to diversify its country of production strategy to get products to market more quickly.
Since 2017, Target’s own brands have reduced the products it sources from China from 60% to around 30% currently, with a target of less than 25% by the end of 2026, putting the retailer four years ahead of schedule.
Gomez said Target has been effective in reducing its reliance on Chinese-made apparel, with only 17% of its assortment now made in the Asia country. This has been made possible by shifting production to the Western Hemisphere to countries such as Guatemala and Honduras.
“This has the added benefit of helping us get product from factories to U.S. consumers even faster,” he said. “So we're excited to continue pursuing opportunities in the Western Hemisphere across all owned brand categories and in the U.S. where possible.”
