Is Target getting its grocery act together?
Back in April 2015, Target CEO Brian Cornell called food a “critically important area of opportunity” for the retailer. He also said remaking the chain’s grocery business would not happen overnight, estimating it would take up to 18 months to accomplish his goal of making “Target a food destination.” Some 16 months in, it appears as though Target is still a ways from achieving the vision set by its CEO. Will it ever get there?
On the company’s earnings call back in May, Mr. Cornell reported that comps were down slightly in grocery. While sales of perishables were up, the center store declined as a result of major resets that included product assortment, visual presentation and category adjacencies. Even so, Mr. Cornell asserted that the changes better positioned Target for success over the long haul.
Among the changes Target has made include moving nutrition bars into the center store. In doing so, Target has established itself “as an industry leading destination for these items,” Mr. Cornell said in May.
Supply chain and in-store food handling issues continue to be a major problem for Target as it seeks to remake grocery. The chain is primarily supplied by C&S Wholesale Grocers, while rival Walmart has developed a self-distributing infrastructure.
Spoilage, as a Wall Street Journal article points out, is a major challenge for Target. The chain is simply not driving frequent enough trips to turn inventory before it goes bad.
“They will continue to have a problem with spoilage,” Kurt Jetta, CEO of TABS Analytics, told the Journal. “They need to double their traffic for perishables to be successful.”
- Can Target Fix Its Grocery Business? – The Wall Street Journal (sub. required)
- Target’s (TGT) CEO Brian Cornell on Q1 2016 Results (Earnings Call Transcript) – SeekingAlpha
- Will Target’s new grocery boss get the job done? – RetailWire
DISCUSSION QUESTIONS: Which of Target’s actions to remake its grocery business do you see as most positive? What work is still needed in order to turn Target into a food destination for more consumers?