Target Lures Customers With Indulgent New Food Label, Favorite Day

This week, Target announced its newest private-label food and beverage brand, Favorite Day, featuring 700 sweet and savory items spanning ice cream, beverage mixers and baked goods. The brand is set to launch April 5. Target’s latest brand comes as an enticement to bring customers back to stores again after the Covid-19 pandemic. Favorite Day’s wide variety—including cupcakes, mocktails and snacks—will all be sold under $15. Most will be offered through the retailer’s same-day services. Inside Target’s $4 Billion Makeover Growth during the pandemic Private labels have grown during the pandemic thanks to supply chain issues with products like hand wipes and paper towels, according to Sucharita Kodali, retail analyst at the research firm Forrester. “If people can’t find what they are looking for, they buy substitutes,” Kodali said. This is common during natural disasters as well, she noted. The pandemic has given big-box retailers like Target a considerable advantage, according to Sarah Marzano, senior principal at the research advisory group Gartner. “Retailers offering a broad array of categories were at a great advantage to cater to those behaviors,” she said. Target, with its latest private label, is looking to inject more exclusivity into its line as well as continue leveraging the grocery category to incentivize foot traffic into stores. Shoppers are increasingly looking to reduce their in-store shopping and accomplish more with each trip, Marzano added. A 2020 Gartner report noted another Target private label, Good and Gather, expanded amid the pandemic's surge in grocery sales by offering an affordable alternative to national brands. Consumer desire for comfort Marzano said Favorite Day’s focus on snacking and more indulgent categories makes it clear Target is tapping into consumer desire for comfort during a trying, stressful period. “The new label should help them round out their current grocery private-label offerings and allow them to build incremental private label sales that complement their existing grocery private-label assortment,” Marzano said. As things go back to normal, however, the challenge may be retaining some of that momentum and the right mix of exclusive offerings to ensure customers keep coming back, Marzano highlighted. An uptick in private labeling Private labeling in consumer goods is not new. Although it’s a practice dating back to the early 1800s, according to Gartner, a 2018 report stated private labeling has recently seen an uptick, as retailers respond to more brand-agnostic and price-conscious approaches from younger generations. This follows a stagnant period in the early to mid-2010s. More recently, retailers have used their in-house brands to drive consumer loyalty, rather than just offering cheap, generic substitutes. Many retailers, including Costco and Amazon, have made this concept their own, ultimately luring customers to their stores with their in-house brands. For over a decade, Amazon has been expanding its private-label lineup across major categories. The ecommerce giant offers an assortment of more than 100 distinct brands, competing with its sellers—or "frenemies"—as it attempts to capture a larger share of consumer spending. Like Amazon, Costco has also seen success with its popular Kirkland Signature private label, which was first introduced in 1995. According to a report in Costco’s monthly magazine, Costco's Kirkland slightly differentiates itself from name-brand counterparts instead of recreating what already exists. In Costco's 2018 annual report, the brand revealed Kirkland sales exceeded $39 billion, compared to $35 billion in 2017, constituting almost a third of all Costco sales. Not necessarily an Amazon ripple effect As Amazon leads with its private-label business, it’s hard not to wonder if retailers are not also copying Amazon’s success. Kodali, however, said the rise of private labels isn’t about copying Amazon, as this strategy long preceded the retailer. The success of in-house brands also threatens traditional consumer packaged goods (CPG), it's also worth noting. Retailers with private labels have the advantage of controlling their supply chain, increasing margins and reducing their overhead. For CPGs to stay ahead, they need to push up their supply chain capacity and figure out how to be more nimble if they don’t want to lose share, Kodali said. “That is expensive, but so is losing share,” she said. PepsiCo Wants to Calm a Stressed Nation With Driftwell