FD Buyer: Do Target’s Customer Counts Seem Lower on the Food Side?

Discussion
Nov 09, 2011
Warren Thayer

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?

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19 Comments on "FD Buyer: Do Target’s Customer Counts Seem Lower on the Food Side?"


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Dr. Stephen Needel
Guest
9 years 6 months ago

While Target has always talked a good game, they have the look of older Walmarts where food was an afterthought. I don’t think you can count on fashion/general merch crossovers on the same trip — that’s trying to change shopper behavior in a way that’s unlikely to succeed. Walmart works for food because you can easily/happily do your whole grocery shopping there with a pretty good selection relative to a full-time supermarket.

Ed Rosenbaum
Guest
9 years 6 months ago

As I was reading this article I began to wonder what the difference was between the Target’s store layout and Walmart’s layout. Mainly they are quite similar, with food on one end and traditional big box retail the other. There is an entrance to both making it convenient to select the main entrance for the visit you are making. Then I asked myself why is it I prefer to shop Walmart vs. Target. Both come behind my preference for Publix despite the pricing differential. I don’t know the answer. What I do know is there has to be a specific item(s) on sale with a drastically reduced price before I go to Target for food products.

J. Peter Deeb
Guest
9 years 6 months ago

My impression after visiting several PFresh Target stores is that there are several issues that have not been addressed. Those include the positioning at the far end of the store, the lack of educating the consumer to what the PFresh Target offers, the lack of one stop shop mentality in the typical Target shopper, and the proximity to full service supermarkets, many in the same shopping center. All of these require some investment in awareness both in advertising and in store excitement. I have not seen much of either from Target.

David Slavick
Guest
David Slavick
9 years 6 months ago

For the discerning grocery shopper the PFresh shopping experience is not attractive. Seriously, where do you start to address the lack of delighting the customer? The list is endless. Putting the section in the back of the store is an obvious move to pull you in so that the basket isn’t consumables only. For those shoppers that love Target (and many do for all the right reasons) it is convenient, but at a premium price. If you want to shop a hypermarket that does it right with outstanding fresh produce, incredible meat/poultry selection, depth of selection in all staples and excellent price/value relationship, go to a Meijer store in the Midwest/East Central region. Based out of Grand Rapids, MI, they do it right. First time I ever bought 4 tires, 4 packages of Huggies and 4 boxes of Cheerios, 4 lbs of delicious seedless grapes all in the same trip/cart.

Mark Heckman
Guest
9 years 6 months ago
Recent visits to Super Targets lead me to believe they are making progress in their merchandising and their product mix on the food side of the business. Perishable quality and merchandising still has a ways to go to compete with the best of breed, but center store departments are improving. But the “classic” challenges that all supercenter-type stores have in getting cross traffic throughout the store during a single shopping trip are amplified at Target, as their shopper is more likely to be inclined to be a loyal traditional supermarket shopper, than compared to a Walmart shopper. The “competitor” quoted in the discussion article made note of this and I agree whole heartedly that shopper psychographics are a barrier to getting folks shopping on the food side of Target, when they already are loyal to HEB or Publix, or even Whole Foods for their groceries. Meijer, Walmart and other super center formats have experimented with strategic placement of high traffic non-food grocery categories outside the traditional grocery area. This attempt to lure shopper out of… Read more »
Gene Hoffman
Guest
Gene Hoffman
9 years 6 months ago

You don’t see a lot of brimming bascarts full of food in Target checkout lanes. Target is trying, so it seems, to be a successful food retailer but on its own terms.

Target focuses heavily on high quality, imaginative private label and clean and pleasant store settings. While Target has their effective 5% discount card and are competitive in food pricing, they don’t really seem to be reaching out for the largest buying group of food-consumers. Their meat departments have small appeal to heavy meat-consuming families.

Target seems proud of the type of customer base it has developed. Perhaps they don’t wish to have their customers photographed and showed unflateringly on the Internet and whiz-bang devices such as has befallen some of their competitors. That suggests the question: What price glory?

David Livingston
Guest
9 years 6 months ago
Yes, I agree, go to most any Pfresh or SuperTarget and the grocery side is like a food museum. They simply don’t generate the sales per square foot that most of their competitors do. One thing they do right is on price. Where they get it wrong is they haven’t been able to communicate to shoppers that Target sells groceries. Sure in the Twin Cities, shoppers know Target sells groceries. But other areas, perishables have taken a back seat. Few would consider Target a prime choice to purchase perishables. Most go for the cheap dry groceries and the 5% RedCard rebate. When I compare sales at individual Target stores from year to year, while they are typically below average performers on the “food ops” side, same department sales are often growing faster than nearby competitors. It will probably take another 10-15 years for them to mature. They just start out at such horribly low sales levels it seems to take years just to reach 40-50% of what a Walmart Supercenter does out of the box.
Adrian Weidmann
Guest
9 years 6 months ago

Being based here in Minneapolis, we are immersed in the Target brand. The Target food shoppers appear to be focused on prepared foods and specific ‘last minute’ items. It is extremely rare to see anyone in the Target checkout lane with a full compliment of grocery items. The baskets are typically a hybrid collection of items from both sides of the store. 2-3 food items, socks and a shirt. My observations seem to support Mr. Raftery’s point on the hypermarket formula. It may be enough to simply address the food accessibility and convenience factor to support the food business as long as the traffic is high enough.

Mark Burr
Guest
9 years 6 months ago

Target has a market position overall. I think they understand that. I’m not so sure that competitors or observers do. If every retailer was viewed through the eyes of or utilizing Walmart as the benchmark, the same article would likely be written. I’m not sure that viewing their efforts through the eyes of a competitor or from the basis of Walmart is the right view. Walmart has not been able to improve comp sales in a considerable period of time. Other retailers have similar challenges.

The question is, is Target doing what they said they would do? Yes. Are they doing it the way that others think they should or in a traditional way? Maybe; maybe not. What are their results based upon what they said they would be? Is their planned execution into food being carried out as they said it would? Are Target’s customers, whom they know best, responding to it in the way they respond to Target overall? All of these are different measurements than those of Walmart or anyone else.

Mel Kleiman
Guest
9 years 6 months ago

When most Target shoppers think of groceries they just don’t think of Target. Plain and simple, there’s no real compelling reason to go there for groceries.

Art Williams
Guest
Art Williams
9 years 6 months ago

Target continues to very slowly improve its handling of food, but still has a ways to go in my view. They are actually quite boring: they don’t have the best pricing, they don’t have the largest selection, their ads are not very stimulating, and their fresh departments are ho-hum at best. The only claim to fame that I see are that they are the cleanest grocery stores in the area. It has been suggested that is because they aren’t very busy and it is easy to keep clean. That is not true and the parking lot is full every day, but more for non-food items. If they are happy with the way things are, then they should continue on as they are.

Jerome Schindler
Guest
9 years 6 months ago

I consider myself a value shopper with price, while important, being only one factor. While at Target for other reasons, I always shop their grocery section, and it might marginally cause me to visit Target a little more often, but overall I don’t see the grocery dept. as that compelling. Unfortunately the space taken for additional grocery items appears to have eliminated a lot of general merchandise SKUs.

Drew McElligott
Guest
Drew McElligott
9 years 6 months ago

I suspect there’s a wide range of results on food sales depending on geography (and regional competition). But as a consumer, I’ve observed the checkout setup/staffing at Super Target is very erratic and struggles to effectively handle checkout traffic. They typically have a seemingly endless row of checkouts with a fraction of them open. And they frequently get “caught” with heavy volume and open a new checkout in response but about a half-hour too late. As a customer it makes the experience extremely frustrating, projects the impression that they don’t know their store and customer patterns, and I do wonder how much of their dysfunction in this regard relates to the grocery component.

Hedda Schupak
Guest
Hedda Schupak
9 years 6 months ago

I can’t comment as an expert in the grocery field, only as an editor and retail analyst (in the jewelry arena), and as a Target customer. But I think it failed on both sides of the aisle. The groceries took away space from the selection of SKUs that make Target so special, and added nothing worthwhile in return. Yes, it’s great for saving a trip if you are in Target and also happen to need a few basic things like milk and eggs, and their specialty foods are really good. But as a replacement for a full-line grocery store it’s inadequate. If it were up to me, I’d keep the specialty foods because that’s a USP, and keep a convenience area for basics, but give the rest of the space back over to the things that make Target special — or turn the grocery section into something more like the Food Hall at Marks & Spencer in the UK. Target has a more upscale customer than Walmart, and that customer also wants upscale food.

Hayes Minor
Guest
Hayes Minor
9 years 6 months ago

From what I’ve seen, Target is fairly average in its delivery on the grocery section. There is nothing special in the produce section — definitely nothing organic. And most of what I’ve witnessed shoppers doing is grabbing a ‘fill in’ item and leaving. From a shopper trip perspective, Target has definitely “checked the box” on providing fresh food, yet if this is a category they wish to truly compete in they are going to need to up the ante just a bit.

Craig Sundstrom
Guest
9 years 6 months ago

“Today they are shopping for a new toaster oven and that focus keeps them from crossing over.”

This is quite a coincidence: Sunday I did indeed go to Target to buy a toaster oven; and no, I didn’t, “cross over” into foods (I didn’t even buy some h/b items I had planned, since it was too much to carry). Why not? Well why would I? On the way — more or less — I passed Lucky, Safeway, Andronicos and Berkeley Bowl, all of which offered vastly greater selections (I can even buy a single lemon, if I wish); had this been a grocery trip rather than an appliance one, I would never have even made it to the front door.

Lee Peterson
Guest
9 years 6 months ago

OK, at the risk of sounding very “designy”,IMO, the Target brand is just not very conducive to fresh grocery adaptation. Think of their brand elements: bright red, white, stark, modern, almost trendy . . .which works for apparel, but American consumers are not used to thinking “fresh food” in an environment like that. Almost (can’t think of an exception) all our grocery stores are and have been warm, comfortable, inviting . . .you know, like the product itself.

Europe is another story. They have no problem with ‘modern’. But here, it’s an adjustment. Aldi is a movement in that direction, but that’s an entirely different customer.

Chris Partlow
Guest
Chris Partlow
9 years 6 months ago

“I need to go pick up some groceries. I think I’ll swing by Target after work.” How many times have you heard that sentence? And that’s no slight on Target. I think Target is great. But their food area seems to be a bit of an afterthought. As if the someone suggested it and they said “Well, if we have to”. They can’t compete with grocery stores because they don’t offer the variety grocery stores do. I think they aren’t doing themselves any favors with their positioning/strategies but I don’t think the “grocery in the supercenter” concept is an idea that can work either.

And yet, I don’t think this is bad for Target. Make their food area smaller and focus on building their brand. Offer people the option but don’t make it so big that it’s taking away from their more successful areas. A supercenter is not a grocery store but there is an area somewhere in between, they just need to find that balance.

David Livingston
Guest
9 years 6 months ago

I went into a Target last night, next door to a Wegmans. The Target had not yet done the Pfresh remodel. My advice to Target…don’t even bother. With Wegmans next door — one of the worlds premier grocery retailers — well, Target trying to sell groceries would be like a hotdog stand next to Fogo de Chao.

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