Target Corp. is seeing significant growth potential in its food and beverage business, according to chairman and CEO Brian Cornell. Despite improved performance in discretionary categories, Cornell believes there is still plenty of runway for the company’s burgeoning food and beverage segment. With a unique combination of national-brand partnerships and strong owned brands, Target has been able to increase its food and beverage sales by nearly $9 billion over the past four years, reaching a total of $24 billion in revenue.
In fiscal 2023, food and beverages accounted for approximately 23% of Target’s total sales, up from 19% in 2019. This growth has been driven by a focus on affordability, differentiation, and convenience. Cornell highlighted the importance of the food and beverage category in driving traffic to Target stores, with a 3% increase in overall traffic during the second quarter. This increase in traffic was a key factor in the company’s first comp-sales uptick in over a year.
One of the strategies that contributed to the growth of Target’s food and beverage business was the decision to lower everyday prices on thousands of popular products. This move, announced in May, led to an acceleration in both unit and dollar sales trends in the food and beverage categories. Additionally, Target’s seasonal merchandising has been a key growth driver, with new items across snacking, grilling, and entertaining categories contributing to low single-digit comp sales growth.
Rick Gomez, chief commercial officer at Target, emphasized the importance of newness in driving growth for the food and beverage business. With over 150 new own-brand products and 500 new national-brand products launching for the fall season, Target is leveraging popular flavors like pumpkin spice, apple, and pecan pie to fuel growth. The retailer’s private label brand, Good & Gather, has been particularly successful, surpassing $1 billion in sales within a year of its launch and on track to reach $4 billion in sales.
In addition to affordability and newness, Target is also focusing on convenience to drive growth in its food and beverage business. Digital sales account for over 18% of the company’s total sales, with double-digit growth in Drive Up curbside pickup and same-day delivery through the Target Circle 360 online membership program. With consumers increasingly seeking simple solutions, Target is committed to providing ease and convenience in its food and beverage offerings.
Overall, Target’s food and beverage business has been a significant driver of growth for the company, with continued opportunities for expansion. By emphasizing affordability, newness, and convenience, Target is well-positioned to capitalize on the growing demand for food and beverage products among consumers. With a focus on both national-brand partnerships and owned brands, Target is poised to continue building out its food business in the years to come.