According to sources familiar with the matter, Target recently informed its suppliers of canned and bagged foods that priorities have changed from prepackaged products to healthier and fresher ones.
Brands like Campbell Soup Co and Kellogg Co would no longer be promoted like they used to be since Target plans to use the money to market healthier foods instead as their customer base currently requests.
Corn flakes and super-sweet breakfast cereals seem to lose popularity to yoghurt, low-calorie and eco-friendly organic products. Also, canned soups will no longer be promoted by America’s second-largest discount retailer. Target announced that it would focus more on healthy and fancy products such as exotic sauces and oils.
Canned and bagged foods currently face a steep decline in sales since many consumers choose to buy foods that do not fuel their health concerns. Target’s move just confirms the trend and signals that big-name brands need to rethink their product-line if they wish to survive.
Target CEO Brian Cornell announced that the company will focus more on infant, children, and wellness products and foods that are tied to those categories. These products will be labeled as “signature” categories and will be the retailer’s top priority.
Mr. Cornell also said that brands such as General Mills Inc and Kellogg Co would fall into the lowest category, dubbed “perform.” Those brands will remain on shelves but they won’t be promoted as heavily as they were. They will also have to compete with Target-branded products since the retailer announced large investments in its brands.
Sources also claim that “perform” products may have to face diminished shelf space, as newer brands will try to catch customers’ attention. Kellogg CEO John Bryant declined to comment on his company’s current relationship with Target.
“We need to grow the business over time if we expect to hold shelf space,”
Mr. Bryant said.
Target argues that promoting unhealthy, prepackaged food brands was no longer profitable, as many other retailers do the same thing. In order to thrive and lure young clientele, retailers have to bet on distinctiveness and promote organic and natural brands, the retailer explained.
Target also said that it would heavily invest in consumer research to develop its private-label line of products, which may further harm its old suppliers.
CEO Cornell said he was aware that the move might not favor suppliers but it was a necessary measure to return the company to growth. And Mr. Cornel may know what he is talking about since he had worked in both retail and supplier businesses for more than 30 years.
Image Source: Daily Gazette
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