Target’s New Approach To Get Grocery Shoppers

The Lempert Report
June 28, 2021

Target took on Amazon’s Prime Day with its own event, Deal Days, that went far beyond competing with the online giant on electronics and other hard goods.

Target used the event for the first time since launching Deal Days 3 years ago to promote groceries, adding discounts to the likes of meats, soda and even breakfast cereals. According to CNBC, groceries were a key reason why Target’s sales soared and its market share grew during the pandemic.

Target, they report, got a head start in the early months of the health crisis, as it kept its doors open through lockdowns as an essential retailer As people hunkered down at home, dinner ingredients, pantry staples and snacks drove trips to the store. When competitors reopened, Target still drew in shoppers with its variety of merchandise from eggs to workout tops as people consolidated trips and filled up bigger baskets. Target sees its grocery aisles as a way to keep people coming back to the store as the retail environment as a whole returns to being somewhat normal.

Part of Targets’ strategy is to distribute $10 gift cards to customers who spend $50 or more on food and beverages while using one of its same-day services like curbside pickup and home delivery service, Shipt, which is owned by Target. The strategy has been noticed by competitors. In response, Walmart added groceries for the first time to Deals for Days, and will cut prices on foods like ribs, watermelon, ice cream and coffee. Amazon sold some groceries for $1, and its wine brand, Cursive, was on sale. Target’s sales last fiscal year grew by more than $15 billion — more than its sales growth in the previous 11 years combined. On a fourth-quarter earnings call on March 2, Target’s Chief Financial Officer Michael Fiddelke said customers tended to visit its stores more, increase their food and beverage spending by 20% to 30% on average, and ring up more sales in other categories after they bought fresh or frozen food through curbside pickup or store pick-up for the first time.

The company has also shared that food and beverage drove 20% of its overall sales for the year, making the category the second largest sales driver after beauty and household essentials, which drove 26%. During the pandemic, the company launched a private brand of snacks and desserts and a collection of gourmet pastas, coffees and more. According to Adobe Data, U.S. Online spend surpassed $11 billion over these few days and project a 6.1% growth over last year’s big sales days. Analysis of Amazon’s Prime Day found that only 16% of shoppers availed themselves of the deals on foods and beverages. Keep your eyes focused on food at Target.