Organic line drives sales at Target, SuperTarget

ANDREA RICKETTI
STAFF WRITER

As the demand for organic products continues to skyrocket, Target and SuperTarget stores are starting to introduce a private-label organics line, which will offer consumers a one-stop-shopping experience for their grocery needs.

The big-time retailer said the new brand will be called Simply Balance. The brand will start with drinks and snacks, namely corn chips. The line is aiming to be an organic stretch from its existing Archer Farms store brand, which is marketed as a premium alternative to national name brands.

Senior director of Target’s store brands Amanda Irish said the new line is in response to the ever growing-popularity of switching to organic foods. Even though organic food accounts for less than 10 percent of overall grocery sales, she believes that the popularity organic foods will continue to grow at a rate twice as fast as that of conventional groceries. The Minneapolis-based company plans to grow its organic foods section by 25 percent by 2017.

Target is pushing for this change in order to meet the demand for organic products; however, it is also trying to improve its image as a competitor and leader in the industry. Traditionally, store brands usually carry heavier profit margins for retailers opposed to name brands. This helps in luring shoppers with exclusive offerings to fend off competing stores.

Supermarkets are not just concentrating their energy on cheaper prices when it comes to store brands. Many stores have tiered store brands, with a line intended as a cheaper alternative as well as more premium lines. These premium lines compete and seek to be better than those made by companies such as Kraft Foods and General Mills. For example, besides the brand Archer Farms, Target also offers a store brands called Market Pantry. This particular brand is roughly 10 to 30 percent cheaper than national name brands. The new line, Simply Balance, will eventually include about 250 products over the next five months. The line aims to be priced in line with Archer Farms and other national brands.

Even though all of these changes are positive for Target, the company has had strict criticism from the press. Critics claim that Target’s organic food is a scam and that it is not truly organic. To combat the criticism, Target has devised a plan to eliminate negative attention. Target stated it will eliminate all genetically modified ingredients from the line by the end of 2014 as the main criticism against Target’s organic food was the genetically modified ingredients. By eliminating them, the company can truthfully claim that it is organic.

Despite the fact that groceries tend to have lower profit margins for Target than other parts of its business, the retailer has nevertheless placed an increased concentration on its grocery section. The grocery sales have risen by 16 percent, since 2009. Target hopes to keep this positive trend through its organic line.

Contact the writer:
andrea.ricketti@scranton.edu

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