Rick Gomez believes Target has found the secret to success for its groceries business.
It's been a year since Gomez was named chief food and beverage officer at Target Corp., a business that generates one-fifth of its sales and during the pandemic became even more important.
Over the years, the Minneapolis-based retailer has continued to expand its grocery selection including adding more fresh food, national names as well as its own private label products, which Target calls "owned brands." Good & Gather, which launched in 2019, became its flagship food and beverage brand.
When the pandemic came along, Target's grocery business is one reason it was allowed to stay open when other retailers were forced to close. The need for social distancing in the pandemic's early days drove Target to quickly expand its drive-up and delivery services.
Gomez said he thinks the company's same-day services, private brands and the way its food complements its other store products will continue to "put Target on the map when it comes to groceries."
Excerpts from an interview:
Q: What sets Target apart in food and beverage from other stores?
A: We have been on a multiyear journey in food and beverage really to build credibility in the grocery space. I'm so proud of what the team has done. We have a rallying cry in which we say we've gone from being just a retailer that just sells food to a retailer that celebrates food. There are a couple of examples that really differentiate Target from others. The first is our industry-leading same-day services so [customers can] drive up, order pick up or Shipt. It really was about safety and contactless during the pandemic, but it's evolved and become a really easy and convenient way to get your groceries. The second thing that really differentiates Target is our owned-brand portfolio. So Good & Gather we launched two years ago. It's well over a $2 billion brand and then most recently we launched Favorite Day. The last thing I would say that differentiates Target is how we show up for those key holiday moments and this is a benefit of having a multicategory business.
Q: Many consumers shopped for groceries online at the height of the pandemic. What are some of the long-term effects of this change?
A: During the pandemic, we saw guest behavior change. We saw a lot of trial of our same-day services. For a lot of people, it was their first time trying these contactless services. The feedback from guests has been incredibly positive. What started as a trial looking for a safer option during the pandemic has continued as a really easy, convenient way for our guests to get their groceries. We expect that those services will continue to grow. The growth that we've seen in same-day services is really astonishing. We grew 45% last year and that's on top of over 230% over the previous year. ... We think that will continue.
Q: What do you attribute for Good & Gather's strong growth?
A: We are seeing success in a lot of different areas on Good & Gather. One of the big hits has been plant-based as our guests are looking for more healthy and sustainable options.
Q: What is the strategy to grow owned brands?
A: We think about our owned brands as truly brands. Not labels but brands. Good & Gather stands for high-quality ingredients, great taste and affordability. We made a commitment that it will have no artificial flavors, no artificial colors, no high-fructose corn syrup and it will be delicious and affordable. Favorite Day plays a different role in our portfolio. It is the craveable, indulgence sweets [and savories] there that's meant to be a little bit of a treat for yourself or for your family. We also have Market Pantry, which is a family favorite and is offered at a great value.
Q: Target has made it a goal to add more products from diverse vendors. Can you explain the intention?
A: Being inclusive with our assortment is very important to Target. It makes our assortment more relevant and more compelling. We have really accelerated our work to have more brands that are from Black-owned and Black-founded companies in particular. I'm really proud of that work. A year and a half ago we had about a dozen and we are on pace to have more than 50 Black-owned brands by the end of this year. They are great products. ... There's a brand that has a great story behind it called Me & the Bees and it's a little girl, a little African American girl who has a line of beverages that are lemonade that are made with honey. And it's her [great] granny's secret recipe and we have it now in four different flavors and it makes me really proud that we are making a difference by having more Black-owned brands in our assortment.
Q: What are some of the biggest personal lessons in your career?
A: What people buy and feed themselves and feed their family is really important to them. For me, I grew up Latino and food was a big part of our culture whether it was tamales on holidays or rice and beans during the week, it was a way we elevated our culture. I think it's really important to just remind ourselves and reinforce that food and beverage is a deeply personal business. I think one of the things I'm reminded of as we went through the pandemic and I was in this role was just I was so impressed with the resilience of our team members. Their ability to show up every day during a pandemic and provide the food and essentials that our guests were looking for was really impressive.
Q: Consumers are dealing with high levels of inflation. How can Target's grocery business continue to grow while keeping prices in line?
A: It is really important to Target to be able to offer value and affordability for our guests. And we think about affordability in a pretty comprehensive way. Certainly there is price, but beyond that we have Target Circle, which offers personalized offers. We have RedCard, which offers another 5% discount, and then we have our owned-brand portfolio, which offers exceptional value. We think about it pretty broadly.
