Discount retailer Target Corp. calls to mind many things. A porterhouse steak isn't one of them.
But as the chain that brought the world a Michael Graves-designed fondue set plunges deeper into the food business, it is adopting an increasingly common tactic in the grocery industry: launching its own line of high-end beef. Sutton & Dodge Steakhouse Quality Angus Beef, named after a fictitious butcher and an equally mythical restaurateur, hits stores this summer, with cuts ranging from rib-eye and T-bone to tenderloin and New York strip.
Sound strange? Food Lion LLC, the no-frills supermarket chain, just introduced a line of premium beef called Butcher's Brand. Moderately priced Safeway Inc. is finishing its rollout of Rancher's Reserve, another all-Angus beef brand. Even Wal-Mart Stores Inc., better known for cheap clothes than fine meats, is getting into the business, with a line of premium deli meats dubbed Prima Della.
Premium store-brand meats, once the territory of gourmet specialty stores, are quickly trickling down into mainstream supermarkets and the big-box discount chains as retailers jostle to stand out in an increasingly crowded field of grocers.
The not-so-subtle strategy, retailers say, is to lure customers into their stores with high-end meats that cannot be found anywhere else -- Sutton & Dodge can be found only at SuperTarget, the chain's larger-format stores -- and hope they stick around to do the rest of their food shopping.
Beef, said Safeway spokesman Greg TenEyck, is a "determining factor in selecting a supermarket and remaining loyal to it."
Food industry analysts say the shift to premium meats reflects the steady evolution of store brands from their humble roots two decades ago as cheap alternatives to name-brand products into their emerging status as destination products in their own right.
Target has created Archer Farms and Market Pantry grocery products. Safeway has Safeway Select, plus Signature brand soups, salads and sandwiches. And Giant has Orchard Harvest foods, Pure Power cleaning products, and Nature's Promise organic products.
"Supermarkets are now positioning these products to be as good as, or better than, national products," said Karen Brown, a senior vice president of the Food Marketing Institute, a Washington-based trade group.
One reason: Retailers typically earn more profit on store brands than they do on national ones because they control the manufacturing and marketing costs, said Jason Whitmer, a grocery industry analyst at FTN Midwest's Research Securities Corp.
With more supermarkets pushing more of their own brands, sales of so-called private-label products grew 18 percent between 1999 and 2003, compared with 14 percent for national brands, according to Progressive Grocer, an industry trade publication.
But why the sudden popularity of high-end store-brand beef? In part, grocery stores are trying to cash in on what's left of the high-protein diet craze, which has dramatically lifted sales of beef, industry analysts say. Supermarket sales of beef hit $65 billion in 2004 and are expected to grow 4.5 percent this year, according to Progressive Grocer.
The biggest factor, however, is competition. With a big-box chain like Wal-Mart stocking more food and using its vast purchasing power to undercut competitors on price, grocery chains are scrambling to distinguish themselves. Most are zeroing in on fresh food departments -- produce, baked goods and meats -- because the profit margins are high and customers consistently rank them as the most important in the store.
"In the grocery industry, you win in meat and produce," said Greg Duppler, senior vice president and general merchandise manager at Target, which operates SuperTarget stores in Leesburg and Gainesville. (Regular Targets do not house a full grocery department.)
But what exactly constitutes premium beef? The most common criteria are the breed of cattle (Angus or not), the grade of the meat (choice, vs., say, select), how long the meat is aged, how it is cut, and its fat content, known as marbling, which gives beef its flavor.
Butcher's Brand, from Food Lion, uses only choice and select cuts, the meat is aged at least 14 days, cut by a butcher in a store and inspected to insure there is sufficient marbling, said spokesman Jeff Lowrance. Rancher's Reserve, from Safeway, follows similar guidelines, but all of the meat is Angus, a breed of cattle known for producing tender beef. Target's Sutton & Dodge also uses Angus, which is aged between one and two weeks, but the meat is cut and packaged before it reaches stores.
Despite higher costs, the retailers are offering the premium meats at roughly the same price as the old ones. "We're investing in our customers to earn their loyalty," Safeway's TenEyck said.
Wal-Mart, meanwhile, has introduced a line of premium deli meats, sold under the name Prima Della, that includes Angus Corned Beef and Black Angus Roast Beef, offered only at its "supercenter" stores. At nearly $7 a pound, the meats are about $2 more per pound than Wal-Mart's regular cold cuts. There is also a new Sam's Choice Spiral-Cut Double Glazed Premium Smoked Ham, which sells for about $2.28 per pound, with an average ham costing between $18 and $20.
Dede Priest, vice president for food development at Wal-Mart, said the chain has not carried the kind of high-end food that consumers want when entertaining guests. (A new nine-layer meat lasagna and Key lime pie are also designed to fill that gap.) "We want to hook shoppers up with products they now go somewhere else for," she said.
But Whitmer, the FTN Midwest analyst, warns that the rush toward premium store-brand meats could undermine a chain's original motive -- standing out from the pack. "Everyone is doing it," he said. "It is a very easily copied strategy."
And premium beef could prove a harder sell than, say, store-brand potato chips. Grocery executives said beef buyers develop a strong loyalty to a single retailer based on past experience and, given the high price of red meat, are not easily tempted to experiment with an unfamiliar brand.
Lin Phelps, a 57-year-old Frederick resident, buys her beef at Giant Food, which has carried Angus for years. "I don't have any scientific information to go by," she said, "so I buy it based on reputation."
To promote their new premium meat lines, retailers are rolling out splashy advertising campaigns and elaborate product packaging. At Food Lion, Butcher's Brand steaks are wrapped in gold and black, and signs posted across the meat department boast that the meat is "tender, juicy and flavorful." Rancher's Reserve at Safeway is "guaranteed tender" with a money-back offer for unsatisfied meat eaters. (Only a handful of shoppers have actually taken Safeway up on the offer, TenEyck said.)
But for sheer stagecraft, nothing tops Target's campaign for Sutton & Dodge. Hanging above the meat case are photos of the two characters, one in a butcher's apron and one in a chef's coat, while, in another shot, their meat is pictured on a restaurant table. The signs are framed in wood to evoke a steakhouse.
Target worried that calling the meat "rancher's this or farmer's that or Grade A" would only confuse shoppers, said Duppler, the senior vice president of merchandise. So it has taken a "steakhouse approach," he said, "to separate ourselves from everyone else."
For Target, which is relatively new to the food business, Sutton & Dodge represents a crucial test of consumers' willingness to buy all of their groceries at the big-box chain -- a test Target's supermarket competitors will watch closely.
Wendy Sommers, 35, who splits her grocery shopping between Giant and the SuperTarget in Leesburg, put three Sutton & Dodge steaks in her basket last week, tempted in part by the marketing campaign. The name, she said, "sounds like Morton's [steakhouse] -- high quality."
Now that SuperTarget carries premium beef, she said, "I can get everything here."