Target is going organic with a new store brand, Simply Balanced. The first products will include drinks and snacks as the big-box retailer expands its grocery selection, much of which is already marketed as a generic alternative to national name brands.
Amanda Irish, senior director of Target’s store brands, said the new line is in response to the growing popularity of organic foods, and they will amp up selections in that category by 25 percent by 2017, eventually including about 250 products priced in line with Target’s Archer Farms and national brands. Target also offers a store brand called Market Pantry, priced about 10 to 30 percent cheaper than national name brands of which 50 percent of products are organic and three-quarters are free of genetically modified ingredients. Target is hoping to eliminate GMOs from that line by 2014.
“Groceries tend to have lower profit margins for Target than other parts of its business,” notes the AP, “but the retailer has nevertheless been touting its groceries in recent years as a way to attract more shoppers and become a ‘one-stop’ shopping destination. Last year, groceries and pet supplies accounted for 20 percent of Target’s overall sales. That’s up from 16 percent in 2009.”[more]
The grocery space is becoming increasingly important to both physical retailers and those online as both Walmart and Amazon have recently invested more heavily in their grocery and produce operations.
Walmart, the world’s largest dry-goods grocer is also the world’s largest single seller of fresh produce. The retailer is now making a freshness guarantee to customers. Walmart is pushing to eliminate the middleman and deliver more produce from farms to store shelves purchasing directly from growers.
Amazon’s Amazon Fresh delivery service, tested in Seattle, will begin rolling out to Los Angeles and San Francisco and as many as 20 other cities, some outside the US in 2014. The online behemoth couldn’t resist the $603 billion dollar grocery business—although the motivating factor isn’t food per se.
“The fear is that grocery is a loss leader and Amazon will make a profit on sales of other products ordered online at the same time,” said supermarket analyst Bill Bishop. “That’s an awesomely scary prospect for the grocery business.”