FD Buyer: Do Target’s Customer Counts Seem Lower on the Food Side?
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Dairy Buyer magazine.
Industry observers generally like what Target is doing with its PFresh remodels, which add more space for food than in its traditional stores. Interviews with vendors, brokers, consultants and competing retailers give the Minneapolis-based chain high marks on private label item innovation, creative merchandising, meal solutions and advertising.
But one perception — whether fair or not — that seems common in the industry is that their customer counts on the food side seem low.
One competitor of Target offers the following rationale, "I still find that to be true in a lot of markets. I’ve been in three Target supercenters recently, and the non-food side was busy, while you could go bowling on the food side. I believe the reason you don’t see a lot of food shoppers in a typical Target supercenter is that the shoppers for the fashion and non-food tend to be somewhat upscale, and the food side seems to be focusing on Walmart as a competitor."
The competitor added, "If there’s an upscale traditional food retailer like H-E-B, Wegmans or Publix competing with Target, it’s my gut feel that Target doesn’t do as well there. I think Target competes better with the traditional non-upscale food retailer. When I visit Denver, for example, it seems the Target supercenters have good traffic on the food side, perhaps because of who they compete with in that market."
"The challenge of supercenters is in getting shoppers to cover ‘both sides’ on one shopping research," added Dan Raftery, president of Raftery Resource Network. "Old research has shown that people will think in terms of just one side. They may go to the other side the next day for groceries, but today they are shopping for a new toaster oven and that focus keeps them from crossing over. But as long as a supercenter has enough traffic and more than half of sales are not food, the store can make money. That’s the hypermarket formula. Walmart’s recent profit issues are directly related to the share increase in food sales. This is a very complex issue."
Some of those interviewed say senior decision-makers are too isolated and out of touch, and some say they don’t like how food is put in the far end of the PFresh remodels they’ve seen. As one competing retailer put it, "In the ones I’ve seen, they’d taken out the garden center and added food in that location. But they closed off the entrance on that side. So you have to come in at the far other end of the store, then walk all the way over to food, and walk all the way back to the checkout. It’s not easy for them to make food shopping a destination with that kind of format."
Discussion Questions: How would you rate Target’s expansion efforts in food? To what degree is weak traffic in the food area at Target, if any, an overall issue with grocery in the supercenter concept versus Target’s own inherent positioning and food strategies?