Target Tries to a Get Handle On the PFresh Format
When Target first launched its PFresh grocery program in its conventional discount stores, the aim was simple: give its guests more reasons to visit the store more frequently and, in turn, drive greater sales of higher profit non-grocery items. The chain billed the concept as a convenience, but as a Star Tribune (Minneapolis) article points out, convenience is in the eye of the beholder and Target appears to be still trying to figure out how to best manage PFresh to its advantage.
One of Target’s strategies to encourage shoppers to buy more than groceries is to place its PFresh department towards the back of its stores. That alone runs contrary to the notion that consumers can do a quick in/out trip to buy a small number of items, such as bread and milk.
"It’s like Target is saying ‘we are going to call you on your bluff,’" Amy Koo, an analyst with Kantar Retail, told the Star Tribune. "You may have intended to buy food but you really want to buy clothes."
"Target’s greatest strength is the near-bullet-proof loyalty it enjoys from many of its customers. Its loyal base looks for excuses to make purchases at Target and groceries are a perfect reason to make the trip sooner than later," said Carol Spieckerman, president of newmarketbuilders and a RetailWire BrainTrust panelist in a 2012 discussion on this site. "Target’s biggest opportunity for improvement is to create a more intimate shopping experience in grocery, and across the store for that matter. The hike to grocery is cold and cavernous and Target’s uber-spaced departments render the term ‘adjacency’ an oxymoron. If Target is to get the full benefit of those (hopefully) more frequent food-driven trips, it needs to tighten things up or forfeit its cross-the-aisle opportunity."
Kantar’s Ms. Koo said PFresh offers Target an opportunity for greater growth if the chain focuses more on convenience to attract new, less affluent customers. Rival Walmart, its been well documented, has gone the reverse route in recent years with mixed results.
- Target’s complicated relationship with PFresh – Star Tribune (tiered sub.)
- Target Continues P-fresh Makeover – RetailWire
- Is Target on the Right Path? – RetailWire
- Groceries Target-Style – RetailWire
Is Target, generally speaking, on the right path with its PFresh initiative? What changes should the chain consider to gain further benefit from grocery sales?
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7 Comments on "Target Tries to a Get Handle On the PFresh Format"
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Carol Spieckerman said it all in her 2012 post, Target needs to make it easier for customers to find what they want and create a more intimate shopping experience. It’s not easy to locate items in a Target superstore. Sections of the store and aisles are not well labeled, consuming valuable time and energy.
Target seems to be great at launching initiatives, but poor on real-world follow through.
If PFresh is working to drive sales and cross traffic then something is terribly wrong with the rest of the store, because store for store sales have struggled at Target. PFresh is an incredibly expensive remodel that drives a low gross margin sale, and it puts Target in even more head to head competition with the lowest cost grocery retailer in America…Walmart. PFresh will be low ROI…forever.
Neither Target nor Walmart has cracked the fresh categories, but Meijer has. Meijer started as a food retailer, thinks like a food retailer, and places food front and center for easy shopping. Target and Walmart started as mass merchants, think like merchants and added food. The result is both Target and Walmart simply do not get the inventory turns to be competitive in selling fresh products.
These retailers need to ask the basic question, why do we want the consumer to visit our store? What is the consumer’s top-of-mind when deciding where to shop? I know the hardware store will have filters. I know the auto parts store will have oil, etc. Consumer communication must support to attract.
Yes. Follow the trail of the others who are doing the same thing in the mass category (Walmart) becoming more of a full destination location for their customers, delivering more revenues to the bottom line, and providing the right in-store mix will all become Target’s next step if it wants to make this a successful strategy.