Target sees initiative on organic, natural products to hit $1B in sales this year

MarketsAssociated Press

Target Corp. is betting big on organic and sustainable products.

The nation's second-largest discount retailer is nearly doubling the number of brands and products in the organic and sustainable arena under an initiative launched last April called Made to Matter. The program challenges its brands and new suppliers to come up with new products or new twists.

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An exclusive collection of 16 brands and over 100 individual products were unveiled last year ranging from bleach-free diapers to nonaerosol air fresheners. Now, the retailer, based in Minneapolis, is rolling out more than 200 products and 31 brands over the course of the year.

Company officials believe sales for the brands included in the program could hit $1 billion this year, and if this initiative were a stand-alone brand, it would already be one of the company's 10 largest labels, according to Kathee Tesija, executive vice president and chief merchandising and supply chain officer. Target is expected to report annual sales of $73.2 billion next week.

The Made to Matter program is being expanded as Target is re-examining its grocery business. During the recession, Target rapidly expanded into groceries in an effort to increase customer visits. But that move also diluted its "cheap chic" cachet.

Now, under its new CEO Brian Cornell, the company is looking to set itself apart by marketing different products in the grocery and health and wellness aisle. It's part of a broader strategy to focus on a few categories like fashion and home furnishings.

I think this program has enormous potential and will continue to play an important role in differentiating Target from other retailers," Tesija said.

Tesija noted brands featured in the program experienced a 30 percent increase in sales growth. Overall, Target said growth in naturals and organics industry continues to grow 1.5 percent faster than the overall market, which has been expanding at about a 10 percent rate.

The new products include items from a brand called Paddy's Bathroom, which uses mild ingredients to make natural soaps for children that are in colorful packaging. And customers can find veggie pouches from Happy Baby that contain a full servings of vegetables like spinach for kids.

About 75 percent of the products this year are new; the rest are new scents and flavors of previously sold products. The items included in Made to Matter are exclusive to Target for six months. Products range in price from $1.25 to $49.99.