With grilling season around the corner, Target is turning to its grocery private brands as it looks to stand out as a “big snacking and food destination” this summer, Target Executive Vice President and Chief Growth Officer Christina Hennington said during the company’s first-quarter earnings call on Wednesday.
The retailer is adding more than 125 new items to its Favorite Day and Good & Gather brands, Hennington said, calling the emphasis on food and beverages a “twist” to its usual focus in previous years on sun care, which the retailer will continue to uphold.
The new private brand items aim “to beef up the excitement and relevance during this time,” she said. Additionally, customers can expect to find exclusive flavors from “hot national brands” like Bubly Sparkling Water and Poppi, she told investors.
The new additions build on Target’s recent private brand moves. The retailer is using its own brands to make “surgical investments in supporting price points that were missing from our assortment,” Hennington said. For example, Dealworthy, the company’s low-price private brand focused on everyday basics that launched in February, is already resonating with customers, she said.
“When we introduced the right price points in Dealworthy, the guest noticed immediately and that drove unit and traffic acceleration in those categories,” Hennington said on the call.
Along with the private brand additions, Target executives detailed how the company is working to boost value promotion and its loyalty program as it grapples with evolving shopping behaviors. Target saw comparable store sales fall nearly 4% during its first quarter, driven by a softening in consumer spending on discretionary categories, the company reported on Wednesday.
Consumers are still battling ongoing high prices and starting to shell out more for services and entertainment outside their homes, Target CEO Brian Cornell said on the earnings call. To help ease the strain of inflation on consumers’ wallets, Target is cutting prices on thousands of items this summer, with a focus on food and essential items.
Automatic application of Target Circle deals is helping customers trust that they are getting the best deals when they shop the retailer, while strike-through pricing on the website and app is more clearly highlighting savings, Hennington said.
Target relaunched its Target Circle loyalty program last month and added more than 1 million new members to the platform in Q1. Target Circle Week in April boosted the retailer’s digital performance and drove the highest traffic to the website and app that the retailer has seen in the past year outside of its winter holiday season, Hennington said.
Target also saw its digital sales grow, notching a 1.4% year-over-year bump — marking the first increase in digital sales the company has recorded in more than a year. Around half of the people who open the Target app on a given day make in-store purchases that day, Hennington said.
The company’s same-day services grew nearly 9%, led by growth of more than 13% for its Drive Up option. At more than $2 billion, Drive Up sales were more than 30 times larger in Q1 than during the first quarter of 2019, Cornell said.
