Target Retreats From Grocery Staples, Pivots to Private Labels and Wellness

Target is conceding the grocery staples war to Walmart and Kroger, betting instead that a scaled private-label portfolio and a hard push into wellness can rebuild the foot traffic and margin it has steadily lost since 2022.

The numbers behind the retreat are stark. Target's same-store sales fell 3.8% in Q1 2025, badly missing analyst estimates of a 1.84% increase, while Walmart US comparable sales rose 4.5% in the same period. Weekend store visits at Target dropped 6.1% year-over-year in 2025; at Walmart, the equivalent decline was just 0.6%. Since Walmart pulled decisively ahead in 2022, Target's comparable-store performance has been erratic at best: up 2.2%, down 3.7%, up 0.1%, and down 2.6% across fiscal years 2022 through 2025.

At the center of Target's differentiation play is Good & Gather, the private-label food brand launched in 2019 to replace Archer Farms and Simply Balanced. Good & Gather now generates nearly $4 billion in annual sales, and Target leaned further into it through 2025: hundreds of new items are being added, including chef collaborations such as Korean-Inspired Bulgogi Meatballs developed with chef Ann Kim. Brad Jashinsky, a retail analyst at Gartner, put the challenge plainly: "It's not easy to all of a sudden have half your store be grocery, and it's not going to happen overnight."

Good & Gather anchors a tiered food private-label architecture that also includes Favorite Day for snacks and indulgences, and Market Pantry at the opening price point. The household essentials brand up&up, carrying more than 2,000 items, is approaching $3 billion in annual sales. Target added a fourth pillar in 2024 with the launch of Dealworthy, a value-focused brand aimed at budget-sensitive shoppers.

Across food, apparel, and home, Target's full owned-brand portfolio has tripled in revenue over the past decade to more than $30 billion annually, with 10 individual brands each topping $1 billion. The broader market is moving in Target's favor here. Industry-wide private-label sales grew nearly 4% in 2024, reaching $271 billion according to research firm Circana, as inflation and tariff concerns pushed shoppers toward store brands.

The wellness push runs alongside the private-label strategy. Target expanded into functional beverages, including prebiotic sodas and better-for-you energy drinks, and is rolling out a roughly 20% increase in its vitamin and nutrition selection chainwide in April 2026. Food and beverage already grew nearly 7% year-over-year in Q3 of fiscal 2025, even as Target's total net sales fell 1.5%, making grocery and wellness the company's clearest growth categories.

That growth will need to accelerate under new leadership. Brian Cornell, who led Target from August 2014 and added more than $30 billion in revenue during his tenure, stepped down as CEO on February 1, 2026, moving into the executive chair role. Before departing, he acknowledged that Target "has not been performing up to its potential for the past few years." Chief Operating Officer Michael Fiddelke was named his successor.

Fiddelke also inherits a structural disadvantage in e-commerce that underscores how far the competitive gap has widened. Target's invite-only third-party platform, Target Plus, had roughly 1,325 sellers as of late 2024, compared with more than 200,000 active sellers on Walmart's marketplace as of mid-2025. The April 2024 launch of Circle 360, a paid membership offering unlimited free same-day delivery, represents Target's most direct loyalty play, but narrowing the platform divide will require far more than a curated roster of Bulgogi Meatballs and prebiotic drinks.