Target expands food, but when will operations improve?

August 14, 2009

So Target is banking more on food to build some regularity in its traffic

So Target is banking more on food to build some regularity in its traffic. Of its 23 new stores, which opened July 26, 17 are general merchandise format with expanded food options, and two are full-grocery SuperTargets.

By ‘expanded food option,’ Target means the added convenience of fresh food - produce, meat and bakery goods within its 135,000-square-foot design. By contrast, the SuperTarget stores add an on-site bakery and deli within its 186,000 square-foot format.

Some key questions, which raised in its June 3, 2009 essay on Target’s operational sins in grocery, are: What would compel consumers to traverse a store that is triple the size of a supermarket to try to buy food from a merchant that is more about style than sustenance? How many disappointments would they withstand (out-of-stocks) before they abandon the notion that they could fulfill their household food needs for at least several days at a Target?

When the dry cereal one wants is on a top shelf that only Shaq could reach, that frustrates shoppers. When dozens of refrigerator showcase doors show empty racks where the likes of milk and yogurt should be, shoppers lose faith that missions can be completed, or that any random packages that are present have been properly handled.

Seriously, if Target can’t satisfy shoppers with packaged goods, are they destined for success with service perishables, where the performance bar is higher? 

We would hope for customers’ sake that Target works out its operational kinks. What else the chain must do - and perhaps they already are with the new locations or soon will be - is address food’s deep location within the store. While existing stores can’t feasibly relocate refrigerators and freezers, perhaps some new layouts can add shopping convenience to the chain’s value prices in new locations.

The 17 new stores with ‘expanded food options’ are scattered around the United States:  Vista South, CA; Lisbon, CT; Spring Hill East, FL; West Melbourne, FL; Cedar Falls, IA; Hammond, LA’ Las Vegas and Decatur, NV; Greenland, NH; Chili, NY; Exeter Township, Hanover Township, Lower Nazareth and West Pottsgrove Township, PA; Huntsville, TX; Hampton, VA; Martinsburg, WV; and Waukesha South, WI.

While all eyes are on Walmart with food, we believe Target has the potential to rise from its current food shortcomings and compete well against grocers, wholesale clubs and other supercenters. The retailer already has fair prices, and decent representation of national brands, and well-regarded private labels such as Archer Farms, Choxie and Market Pantry. It’s just not enough yet when people demand convenience, value, healthful choices, and store operations that respect their individual time and effort on the shop.