MINNEAPOLIS – Target has warned its top CPG suppliers that they may be taking a backseat to fresher, healthier items in the retail giant’s stores as Target aims to emphasize its healthier options.
Shoppers have long been shifting to fresh and healthy-sounding foods at the expense of center-store canned and bagged goods, but the move by Target’s new chief executive, Brian Cornell, is among the starkest signals yet that the changing tastes of American consumers will leave some big brands in the lurch, according to the Wall Street Journal.
The news source cites canned soup and other processed foods as categories that will have less emphasis moving forward, with priority given to higher-end sauces and oils.
“That doesn’t mean that mac and cheese is being eliminated, but clearly assortment is being shaped around what consumers are looking for,” Cornell said in a recent interview with the WSJ. The CEO has personally attended some of the meetings with suppliers, ahead of the expected physical restructuring of Target’s grocery areas.
Target will begin segmenting goods throughout the store into three categories. The top ranking goes to the broadly defined “signature” categories of baby, children, style and wellness. Food products tied to those categories will get outsize resources and attention. The other categories for products will be “outperform” or “perform.”
According to reports, the company has a clear idea of what will fit in “signature” and “perform,” but is still working out what will qualify for the middle category. The difference is crucial. Brands that fall into the bottom “perform” category will remain on the shelves but won’t get featured as frequently in circulars or in stores. They will also likely face more competition from Target’s private-label brands, which the chain plans to push heavily.
The WSJ describes Target’s product shift as “a surprise blow” to suppliers, many of whom had helped the retailer to build its grocery offer over the past decade, including creating exclusive products and sharing extensive consumer research. The news source cites sources who say the CPG suppliers are considering whether to shift the money they’ve been spending on in-store marketing with Target to retailers that are willing to give them more support.
Target, however, is confident that its approach will provide its food aisles with a more distinctive offering that is more appealing to younger shoppers who increasingly favor smaller, organic and natural brands.