NEW YORK Target Corp. (TGT) is planning a new organic and natural store brand as it works to rev up its grocery business.
The big-box retailer said the new brand, called Simply Balanced, will start with drinks and snacks like corn chips on Sunday. The line is an outgrowth of similar products within its existing Archer Farms store brand, which is positioned as a premium alternative to national name brands.
Amanda Irish, senior director of Target's store brands, said the new line is in response to the growing popularity of organic foods. Although they still account for less than 10 percent of overall grocery sales, she said organic foods are growing at twice the rate of conventional groceries.
As such, the Minneapolis-based company also plans to announce next week that it will boost its organic food selection by 25 percent by 2017.
The rollout also reflects a broader push by supermarkets and big-box retailers to improve the image of their store brands. Store brands usually carry fatter profit margins for retailers than name brands and help lure shoppers with exclusive offerings to fend off competition.
Supermarkets aren't just focusing on cheaper prices when it comes to store brands, either. Many now have tiered store brands, with a line intended as a cheaper alternative, as well as more premium lines that compete with or seek to be better than those made by companies such as Kraft Foods (KRFT) and General Mills (GIS).
In addition to Archer Farms, for example, Target also offers a store brand called Market Pantry that is about 10 to 30 percent cheaper than national name brands.
The new Simply Balanced line, which will eventually include about 250 products introduced over the next five months, will be priced more in line with Archer Farms and national brands.
About half the items in the line are organic, and three-quarters of it is free of genetically modified ingredients. Target says it will eliminate all genetically modified ingredients from the line by the end of 2014.
Groceries tend to have lower profit margins for Target than other parts of its business. But the retailer has nevertheless been touting its groceries in recent years as a way to attract more shoppers and become a "one-stop" shopping destination.
Last year, groceries and pet supplies accounted for 20 percent of Target's overall sales. That's up from 16 percent in 2009.