“Wow! Target has built something extremely special here.” That’s instantly what rushed into my head as I sat in the audience attentively listening to Stephanie Lundquist, President of Food & Beverage at Target, deliver her keynote speech during the 2019 Groceryshop conference. The focus of that speech was the launch of Target’s new Good & Gather private label brand. Admittedly, getting excited about a retailer launching a new private label is far from my normal behavior. Yet there I was envisioning the different strategic scenarios in which Good & Gather could drive massive results for Target’s growing grocery business.

As suspected, launching Good & Gather ended up being a game-changer for Target, as the private label surpassed $1 billion in sales in just over nine months. With almost 2,000 products, Good & Gather is now the retailer’s largest owned brand by assortment. Analyzing the early success of Good & Gather reveals several important lessons major CPG brands can learn from the private label brand.

Put Yourself Out of Business

Target already had three successful private label brands with product offerings in the grocery category. Archer Farms debuted as Target’s first private label food brand in 1995 and evolved into premium grocery products. Market Pantry launched six years later, focusing on more value-oriented pantry staples. Simply Balanced came in 2013 with a primary value proposition of no artificial flavors, colors or preservatives. This multi-tier private label approach isn’t particularly abnormal, as Kroger also uses this strategy, but it can be complicated to differentiate multiple brands in customers’ eyes. Target understood that even the most successful businesses constantly need to reinvent themselves. Good & Gather replaced Archer Farms and Simply Balanced and cut down on the product assortment of Market Pantry. This move likely deleted a lot of great products that customers love, but Target is confident that they have a better solution under the Good & Gather brand.

On-Brand First, On-Trend Second

Target’s nickname “Tarzhay” is perceived as a gift from its customers. The lovingly French-sounding twist on “Target” reflects the elevated shopping experience the company has created while still being a discount mass retailer. When Target expanded its grocery assortment in the late 2000s, it needed to quickly transform its store fleet to handle the new merchandising strategy. Though categorical revenue performance over the next decade was acceptable, the grocery department and its food and beverage private labels just didn’t feel very “Tarzhay.”

In early 2017, Target made an announcement that it would undergo another massive transformation to adapt to rapidly evolving customer preferences. This offered a perfect opportunity to reflect on its earlier store reformatting process and re-examine all aspects of the business to ensure they were on brand for “Tarzhay.” This included asking tough questions about the food and beverage private labels Archer Farms, Simply Balanced and Market Pantry, which according to Stephanie Lundquist, “felt functional or transactional compared to the rest of the store.” The creation of Good & Gather set out to solve that problem by focusing on brand propositions and creative design that was on-brand for “Tarzhay,” paired with on-trend product development that rivaled many upstart CPG brands.

Demand-Side Innovation

When creating Good & Gather, Target wanted to get a deep understanding of its customers rather than simply supplying the market with products that check generalized boxes. The retailer spent hundreds of hours on customer research – it shopped with customers, ate with customers, and sought honest feedback from customers in order to get a full picture of why they were buying certain grocery products. Target knew that every decision customers made was important and that even the smallest habitual details could help it see patterns in pain points that might turn into potential solutions. Target used this consumer input, along with internal sales data, as the basis for Good & Gather’s initial product assortment and brand propositions.

Copying Is So Yesterday

When most consumers think about typical private label products, they imagine copycats of national brands. But Good & Gather does not subscribe to typical standards. Target instead wanted its newest private label to be a beacon of innovation. With increased competition and substitutes everywhere, Target knew it needed to reach for excellence. The company allowed its food scientists and culinary experts to think big while coming up with truly special creations. That’s why you see products that you would normally expect from leading natural brands, such as avocado toast salad kits and beet hummus. This “stand out from the crowd” mentality is further reflected in Good & Gather Signature, a line of 60 premium products, including pizzas, pastas and coffee, that are hand-crafted with specialty ingredients and bursting with flavor – providing the type of innovation consumers need to keep mealtime interesting.

Be There When It Matters

Due to restricted living situations, the majority of Americans are now eating at home more frequently. This has provided challenges for consumers but also opportunities for retailers like Target. Aside from risking exposure to COVID-19 when grocery shopping, the biggest challenge consumers face as a result of increased at-home cooking is having to plan different meals every day. Right now, consumers are looking for inspiration for delicious meals that are quick and easy to make at home. The economic effects of the pandemic have also created a need for shoppers to seek value. These conditions provide a perfect opportunity for private labels to step up and fill massive gaps in the market, and Target has done just that. According to Lundquist, “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.” Thanks to Good & Gather, consumers can enjoy flavorful meals “without all those hours of prep or a huge grocery bill.”

Conclusion

Food has always played an important role in American society, but in 2020, it seemed more important than ever before. Target has saw its importance in the grocery category grow equally, and Good & Gather has been a major reason for that. As Stephanie Lundquist mentioned in her Groceryshop keynote, the retailer’s goal in grocery “is to be Target.” Not only did Good & Gather meet that goal, but it also became the perfect “Tarzhay” grocery brand that customers always wanted.