Target has grown its Food and Beverage business by $9 billion since 2019, transforming the category into the retailer's primary traffic driver, according to Forbes. The expansion repositioned Target from discretionary destination to weekly grocery stop, fundamentally changing why customers walk through the door.
The retailer expanded cooler footage, added fresh produce, and curated shelf space for emerging food and beverage brands that typically lack access to mass retail distribution. Target allocated premium end-cap and eye-level placement to smaller CPG companies, trading margin for frequency. The move increased basket size by pairing groceries with Target's apparel and home goods on the same trip.
The mechanism is destination stacking. Target recognized that discretionary categories—home decor, apparel, seasonal—generate high margins but low visit frequency. Groceries reverse that: lower margin, higher frequency, and they anchor the trip. Once a customer is in-store weekly for milk and eggs, attachment rate on higher-margin categories climbs. The $9 billion growth figure reflects both direct food sales and the halo effect on non-grocery purchases during the same visit. By becoming a credible grocery option, Target converted occasional shoppers into habitual ones, then monetized the increased foot traffic across all departments.
For emerging food and beverage brands, Target's expansion created a mass-retail on-ramp that didn't exist at this scale before. The retailer's buyer meetings now prioritize differentiated product with clean packaging and a story—exactly what a small brand can deliver faster than a legacy CPG house. Target's willingness to test emerging brands in limited store sets, then scale winners nationally, gives a scrappy founder a path from farmers market to 1,900 stores without a distributor or broker.
A small physical-product brand copies this by identifying the high-frequency anchor that makes customers return, then layering margin on the back end. If you sell premium candles, add a low-ticket consumable—matchbooks, wick trimmers, seasonal room sprays—that customers reorder monthly. Price the consumable at cost or slim margin, use it to drive repeat visits to your site or booth, then upsell the candle on every third transaction. Run a subscription on the consumable with free shipping at $12/month, and offer a 20% discount on candles to active subscribers. The play is the same: use frequency to earn the relationship, then monetize it with the higher-margin hero product. Track repeat purchase rate and average order value separately—if AOV climbs while repeat rate holds, the anchor is working.
Alternatively, if you're pitching retail buyers, lead with the category gap, not your product. Target succeeded because it saw grocery as the missing frequency driver in its mix. A small brand pitching a retailer should frame the product as the solution to a traffic or basket problem the buyer already has. If you make hot sauce, don't sell flavor—sell the fact that condiments drive repeat grocery trips and your SKU has 4.8-star reviews and 30% repeat purchase rate on your DTC site. Bring the data that proves your product behaves like the anchor item the buyer needs. Retailers allocate shelf space to products that solve their business problems, not products they personally like.
Target's grocery expansion shows that category strategy beats product strategy. The company didn't win by finding better cereal—it won by making cereal the reason to visit, then selling everything else once the customer was there. A small brand applies the same logic: find the low-margin hook that drives frequency, then build the business on what you sell after the hook works.
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