We Unpack Stephanie Lundquist’s Landmark Keynote and the New Brand Launch

Of all the keynotes at last month’s GroceryShop conference, perhaps no one created a bigger buzz than Target EVP of Food & Beverage, Stephanie Lundquist. The focus of her speech was Target’s new Good & Gather brand, which officially launched in stores that very same day, September 15th.

The new private-label grocery brand will replace Target-owned brands Archer Farms and Simply Balanced, and its presence will also significantly reduce the scope of Market Pantry.

The brand hit Target stores this month strong out the gate, with 650 new products, and it will follow the launch by introducing 1,000 new products this spring and 1,000 more by the end of 2020. By the time all is said and done, it will be the biggest “owned” brand Target offers heading into 2021.

This is a game-changing move for the grocery industry as a whole, as Target is a tremendous market force and has devoted a massive amount of time and resources to ensure this new brand will be a hit. From every angle, Good & Gather appears to be an incredibly smart brand that is in lock-step with market-driving trends.

Here are five reasons we think Good & Gather is poised to be a huge success:

  1. They’ve re-tooled grocery with the Target flair

Target launched into the grocery business chain-wide in 2008, and over the next 4 years they quickly remodeled over 1,000 stores to accommodate fresh food. Within just a few years, they transformed it into a $15 billion business, bringing it in line with their other, more established categories, from a revenue standpoint. But from a brand standpoint, the hasty assembly left it somewhat out of alignment with the rest of the store.

According to Lundquist, “Because we moved so quickly, we ended up with a food and beverage department without much of a point-of-view. In the rest of the store, we were Tar-zhay, but in food, we were simply functional, or transactional. And that’s not what a Target experience should ever be.”

Target’s new vision for grocery is fresh, innovative and high quality. The Good & Gather branding features clean, upscale-looking design – very much within the overall Target motif. Per Target, all of the foods in the line must pass rigorous taste and quality standards. In perhaps the 8 most powerful words of her keynote, Lundquist summed up their strategy in the simplest of terms: “Our goal in grocery is to be Target.”

  1. It was built around consumer input

The Good & Gather line was created using enormous amounts of consumer input. Target deployed teams of researchers for “guest immersion trips” where they gathered hundreds of hours of direct input from customers. Those conducting the study posed as 3rd party researchers in order to solicit the most brutally honest and uncolored opinions about Target as possible – good and bad alike.

Researchers visited consumers’ homes to conduct interviews, tagged along to observe them on Target trips and more to build a 360 degree perspective on what the customers wanted. This informed everything from the product assortment to the basic philosophical pillars behind the brand itself.

  1. Healthy food with natural ingredients

Target paired these immersion trips with deep analysis of their own data. In crunching their massive amounts of sales data, Target noted their customers had above average interest in “Better-for-you” brands like Oatley, Annie’s and Clif Bars. This, along with their consumer research, led to their decision to ensure their Good & Gather products would contain no artificial flavors, no synthetic colors, no artificial sweeteners and no high fructose corn syrup, across the board.

This tracks with trends in the wider marketplace, positioning the Good & Gather brand well for success. According to a 2018 Food Insight survey, 69% of consumers prefer a product with no artificial ingredients, if given the choice. And according to a 2018 study by Kerry Consumer Insights, 93% of consumers preferred sweeteners other than high-fructose corn syrup. The same study found 87% of consumers preferred natural sweeteners such as honey, sugar, molasses or agave, vs. high fructose corn syrup or aspartame.

Unilaterally positioning their private-label as the healthier, natural alternative should give them a leg up on many of the national brands with whom they plan to compete.

  1. Private-label brands are at peak popularity

One out of every four products sold in the United States is private label, according to the Private Label Manufacturers Association. The group says private label brands are worth between $129 and $170 billion, and according to a 2019 PLMA survey, 25% of consumers are buying more private label products today than they were five years ago.

The traditional philosophy has been to take a three-tiered approach with private label brands: a high-end line, a rich middle tier and a value line for basics. But the success of single tier private labels like Costco’s Kirkland Signature brand have called that traditional thinking into question. Costco’s Kirkland Signature line cracked $39 billion in sales in 2018 (over 2.5X Target’s entire grocery business) and UBS recently valued the Kirkland brand at $75 billion.

Target seems to be trying to mirror Kirkland’s success with Good & Gather, aiming for a sweet spot where value, taste and wholesomeness converge.

  1. Store formats and buying options

The final reason has been a running storyline all year. The retailer has made great efforts to expand buying options to accommodate a customer base with busy lives. Target acquired Shipt in 2017, which allows them to offer delivery in as little as one hour, and the brand is in heated competition with Amazon and Walmart for market share in the growing market for same and next day delivery. The company has also had good success with BOPIS (buy online, pick-up in store), offering curbside pickup parking at many of its locations. These options will certainly make it even easier to get Good & Gather into the hands of consumers.

Target has also been experimenting with small format stores, many of which are located in dense urban areas that lack convenient nearby grocery options. In these cases, Good & Gather will have the decidedly advantageous position of being the best and most convenient option, so much so that it may become a major growth driver for these small format stores, and Target in general. Target sees these small format locations for their potential not only as stores, but as digital fulfillment hubs for a growing eCommerce side of their business whilst they’re engaged in a fiercely competitive battle for the last mile in retail delivery. Increased traffic for the grocery business makes these small format locations that much more viable.

What do you think about Target’s new Good & Gather brand? Which of the 5 reasons will be the biggest key to their success? How do you think they will impact the industry as a whole? We’d love to hear what you think. Sound off on social media now and join the conversation.