Target is taking its fashion-powered approach to Canada, where Walmart is tweaking its everyday low-price model in anticipation of a north-of-the-border battle royale. At home, Target is playing the grocery card just about every place it can, continuing a multi-year campaign to remodel stores with expanded supermarket offerings.
Installation of the PFresh format will be completed in about two-thirds of the chain’s nearly 1,770 stores by the end of 2012; Target also unveiled 90 retrofitted locations in June. “By remodeling these stores, we bring an expanded offering of fresh food and added convenience to our guests,” says Target senior vice president of grocery Annette Miller.
Target’s food offerings are a limited assortment of what can be found in a full-service supermarket — no bulk produce, butcher or deli counter, for example — but it does get good marks for its private brands, notably those carrying the Archer Farms label. In addition, the PFresh format seems to be gaining traction with consumers, though not all industry observers are convinced Target will succeed with groceries.
“Too many consumers do not realize Target sells groceries,” says supermarket industry consultant David J. Livingston, noting that food is roughly 19 percent of store sales. “When you add in drug and pharmacy, it may be about 30 percent,” he says. “A $40 million-a-year Target is like having a $230,000-per-week grocery store.” This is well below what comparable Walmart supercenters do in this area, he says.
Taking a more optimistic stance, Carol Spieckerman of consulting firm newmarketbuilders says, “Target’s biggest opportunity for improvement is to create a more intimate shopping experience in grocery, and across the store for that matter… If Target is to get the full benefit of those ... more frequent food-driven trips, it needs to tighten things up or forfeit its cross-the-aisle opportunity.”